SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549



                                    FORM 10-Q


               Quarterly Report Pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934


For the quarter ended                        Commission File Number
   June 30, 2002                                     0-10442



                       DYCO OIL AND GAS PROGRAM 1981-1
                           (A LIMITED PARTNERSHIP)
            (Exact Name of Registrant as specified in its charter)



         Minnesota                                  41-1411953
(State or other jurisdiction            (I.R.S. Employer Identification
   of incorporation or                               Number)
     organization)



Samson Plaza, Two West Second Street, Tulsa, Oklahoma  74103
------------------------------------------------------------
(Address of principal executive offices)              (Zip Code)



                                 (918) 583-1791
       ----------------------------------------------------
        (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                        Yes     X               No
                            ------                    ------




                                      -1-
<PAGE>




                        PART I. FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

             DYCO OIL AND GAS PROGRAM 1981-1 LIMITED PARTNERSHIP
                                 BALANCE SHEETS
                                   (Unaudited)

                                     ASSETS

                                                June 30,       December 31,
                                                  2002            2001
                                               -----------     ------------

CURRENT ASSETS:
   Cash and cash equivalents                     $129,955         $ 96,490
   Accrued oil and gas sales                       27,007           24,900
                                                 --------         --------
      Total current assets                       $156,962         $121,390

NET OIL AND GAS PROPERTIES, utilizing
   the full cost method                            15,369           17,374

DEFERRED CHARGE                                       313              313
                                                 --------         --------
                                                 $172,644         $139,077
                                                 ========         ========

                        LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable                              $  4,224         $  2,047
   Gas imbalance payable                           13,841           13,841
                                                 --------         --------
      Total current liabilities                  $ 18,065         $ 15,888

ACCRUED LIABILITY                                $ 30,887         $ 30,887

PARTNERS' CAPITAL:
   General Partner, 70 general
      partner units                              $  1,236         $    922
   Limited Partners, issued and
      outstanding, 7,000 Units                    122,456           91,380
                                                 --------         --------
      Total Partners' capital                    $123,692         $ 92,302
                                                 --------         --------
                                                 $172,644         $139,077
                                                 ========         ========






            The accompanying condensed notes are an integral part of
                           these financial statements.



                                      -2-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-1 LIMITED PARTNERSHIP
                           STATEMENTS OF OPERATIONS
              FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)

                                                  2002              2001
                                                 -------          -------

REVENUES:
   Oil and gas sales                             $41,037          $50,472
   Interest                                          436            1,662
                                                 -------          -------
                                                 $41,473          $52,134

COSTS AND EXPENSES:
   Oil and gas production                        $ 8,924          $ 7,691
   Depreciation, depletion, and
      amortization of oil and gas
      properties                                   1,103            2,057
   General and administrative
      (Note 2)                                     8,107            8,171
                                                 -------          -------
                                                 $18,134          $17,919
                                                 -------          -------

NET INCOME                                       $23,339          $34,215
                                                 =======          =======
GENERAL PARTNER (1%) - net income                $   233          $   342
                                                 =======          =======
LIMITED PARTNERS (99%) - net income              $23,106          $33,873
                                                 =======          =======
NET INCOME PER UNIT                              $  3.30          $  4.83
                                                 =======          =======
UNITS OUTSTANDING                                  7,070            7,070
                                                 =======          =======





            The accompanying condensed notes are an integral part of
                           these financial statements.


                                      -3-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-1 LIMITED PARTNERSHIP
                           STATEMENTS OF OPERATIONS
               FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)

                                                  2002              2001
                                                 -------          --------

REVENUES:
   Oil and gas sales                             $72,930          $155,796
   Interest                                          843             3,073
                                                 -------          --------
                                                 $73,773          $158,869

COSTS AND EXPENSES:
   Oil and gas production                        $16,802          $ 24,281
   Depreciation, depletion, and
      amortization of oil and gas
      properties                                   1,972             4,012
   General and administrative
      (Note 2)                                    23,609            25,976
                                                 -------          --------
                                                 $42,383          $ 54,269
                                                 -------          --------

NET INCOME                                       $31,390          $104,600
                                                 =======          ========
GENERAL PARTNER (1%) - net income                $   314          $  1,046
                                                 =======          ========
LIMITED PARTNERS (99%) - net income              $31,076          $103,554
                                                 =======          ========
NET INCOME PER UNIT                              $  4.44          $  14.79
                                                 =======          ========
UNITS OUTSTANDING                                  7,070             7,070
                                                 =======          ========





            The accompanying condensed notes are an integral part of
                           these financial statements.



                                      -4-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-1 LIMITED PARTNERSHIP
                           STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                   (Unaudited)


                                                    2002             2001
                                                 ----------        ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                     $ 31,390         $104,600
   Adjustments to reconcile net income
      to net cash provided by operating
      activities:
      Depreciation, depletion, and
        amortization of oil and gas
        properties                                   1,972            4,012
      (Increase) decrease in accrued
        oil and gas sales                        (   2,107)          13,571
      Increase (decrease) in accounts
        payable                                      2,177        (     506)
                                                  --------         --------
   Net cash provided by operating
      activities                                  $ 33,432         $121,677
                                                  --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from the sale of oil and
      gas properties                              $     33         $  4,123
                                                  --------         --------
   Net cash provided by investing
      activities                                  $     33         $  4,123
                                                  --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash distributions                             $      -        ($176,750)
                                                  --------         --------
   Net cash used by financing
      activities                                  $      -        ($176,750)
                                                  --------         --------

NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                    $ 33,465        ($ 50,950)

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                              96,490           86,891
                                                  --------         --------
CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                  $129,955         $ 35,941
                                                  ========         ========





            The accompanying condensed notes are an integral part of
                           these financial statements.


                                      -5-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-1 LIMITED PARTNERSHIP
                   CONDENSED NOTES TO FINANCIAL STATEMENTS
                                  JUNE 30, 2002
                                   (Unaudited)


1.    ACCOUNTING POLICIES
      -------------------

      The balance sheet as of June 30, 2002,  statements  of operations  for the
      three and six months ended June 30, 2002 and 2001,  and statements of cash
      flows for the six months  ended June 30, 2002 and 2001 have been  prepared
      by Dyco Petroleum  Corporation  ("Dyco"),  the General Partner of the Dyco
      Oil and Gas Program 1981-1 Limited  Partnership (the  "Program"),  without
      audit.  In the opinion of management all  adjustments  (which include only
      normal  recurring  adjustments)  necessary to present fairly the financial
      position at June 30,  2002,  results of  operations  for the three and six
      months ended June 30, 2002 and 2001, and changes in cash flows for the six
      months ended June 30, 2002 and 2001 have been made.

      Information  and  footnote  disclosures  normally  included  in  financial
      statements  prepared in  accordance  with  generally  accepted  accounting
      principles  have been  condensed or omitted.  It is  suggested  that these
      financial  statements be read in conjunction with the financial statements
      and notes thereto included in the Program's Annual Report on Form 10-K for
      the year ended December 31, 2001. The results of operations for the period
      ended June 30, 2002 are not  necessarily  indicative  of the results to be
      expected for the full year.


      OIL AND GAS PROPERTIES
      ----------------------

      Oil and gas  operations  are  accounted  for using the full cost method of
      accounting.  All productive and  non-productive  costs associated with the
      acquisition,  exploration  and  development  of oil and gas  reserves  are
      capitalized.  The Program's  calculation of depreciation,  depletion,  and
      amortization  includes  estimated  future  expenditures  to be incurred in
      developing  proved  reserves and estimated  dismantlement  and abandonment
      costs, net of estimated  salvage values. In the event the unamortized cost
      of oil and gas properties  being  amortized  exceeds the full cost ceiling
      (as defined by the  Securities  and  Exchange  Commission),  the excess is
      charged to expense in the period  during which such excess  occurs.  Sales
      and abandonments of





                                      -6-
<PAGE>




      properties are accounted for as  adjustments of capitalized  costs with no
      gain or loss recognized, unless such adjustments would significantly alter
      the  relationship  between  capitalized  costs  and  proved  oil  and  gas
      reserves.

      The provision for depreciation, depletion, and amortization of oil and gas
      properties is calculated by dividing the oil and gas sales dollars  during
      the  period by the  estimated  future  gross  income  from the oil and gas
      properties and applying the resulting  rate to the net remaining  costs of
      oil and gas properties that have been  capitalized,  plus estimated future
      development costs.


2.    TRANSACTIONS WITH RELATED PARTIES
      ---------------------------------

      Under the terms of the Program's partnership  agreement,  Dyco is entitled
      to  receive a  reimbursement  for all  direct  expenses  and  general  and
      administrative, geological and engineering expenses it incurs on behalf of
      the Program.  During the three  months  ended June 30, 2002 and 2001,  the
      Program incurred such expenses  totaling $8,107 and $8,171,  respectively,
      of which  $6,441 was paid each period to Dyco and its  affiliates.  During
      the six months  ended June 30, 2002 and 2001,  the Program  incurred  such
      expenses totaling $23,609 and $25,976,  respectively, of which $12,882 was
      paid each period to Dyco and its affiliates.

      Affiliates of the Program  operate  certain of the  Program's  properties.
      Their  policy is to bill the  Program for all  customary  charges and cost
      reimbursements associated with these activities.


3.    TERMINATION
      -----------

      On July 31,  2002,  Dyco  mailed a notice  letter  (the  "Notice")  to the
      limited  partners of its  election  to  terminate  the  Program  effective
      October  31,  2002  pursuant  to the  terms of the  Partnership  Agreement
      governing the Program (the  "Agreement") and the Minnesota Revised Limited
      Partnership Act (the "Act").

      As  provided  in the  Agreement  and under the Act,  the Notice will cause
      dissolution of the Program ninety (90) days from July 31, 2002,  PROVIDED,
      HOWEVER,   that  the  limited   partners  of  the  Program  may  elect  to
      reconstitute  the Program with a new general partner as further  described
      below.  Due to this  uncertainty  these  financial  statements  have  been
      prepared on a going concern basis rather than a liquidation  basis.  It is
      expected that Dyco as general partner will file a



                                      -7-
<PAGE>



      certificate  dissolving the  partnership  with the Minnesota  Secretary of
      State on or about October 31, 2002 and, immediately thereafter, deregister
      the Program with the Securities & Exchange Commission ("SEC").

      Upon dissolution,  Dyco and its affiliates may, pursuant to the Agreement,
      withdraw  their limited  partner  interests in any or all of the Program's
      properties by taking their share of the Program's properties in-kind. Dyco
      and its  affiliates  intend to avail  themselves  of this  provision  upon
      dissolution.

      As part of the dissolution  process,  Dyco will actively negotiate for the
      sale of the producing  properties  attributable  to the remaining  limited
      partners'  interests.  These  properties will be offered to all interested
      parties through normal oil and gas property  auction  processes as well as
      appropriate  negotiated  transactions.  It is  possible  that  Dyco or its
      affiliates  may  participate  in  any  public  auction  of  the  remaining
      properties  and may be the  successful  high  bidder on some or all of the
      properties.

      Following  the sale of the remaining  properties  and the  calculation  of
      other assets and liabilities of the Program,  any net cash will be paid as
      a final liquidating  distribution to all of the remaining  partners in the
      Program.  It is expected that any such  distribution will be made no later
      than December 31, 2002.

      As  provided by the Act and the  Agreement,  a majority in interest of the
      limited  partners  may vote to  reconstitute  the Program and continue its
      activities as a partnership with a newly appointed general partner. Such a
      proposal  will be  presented  to the  limited  partners  upon the  written
      request of limited partners representing at least ten (10%) percent of the
      Program's total units. Consideration of such a proposal would require that
      a proxy  statement  be filed  with the SEC.  Dyco and its  affiliates  own
      approximately  50% of the Program's  units. It is expected that they would
      vote "no" on any vote to reconstitute the Program.






                                      -8-
<PAGE>



ITEM 2.     MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
            RESULTS OF OPERATIONS

USE OF FORWARD-LOOKING STATEMENTS AND ESTIMATES
-----------------------------------------------

      This Quarterly Report contains  certain  forward-looking  statements.  The
      words "anticipate",  "believe",  "expect",  "plan", "intend",  "estimate",
      "project", "could", "may" and similar expressions are intended to identify
      forward-looking  statements.  Such statements reflect management's current
      views  with  respect  to future  events and  financial  performance.  This
      Quarterly Report also includes certain information,  which is, or is based
      upon,  estimates  and  assumptions.  Such  estimates and  assumptions  are
      management's  efforts to accurately reflect the condition and operation of
      the Program.

      Use of  forward-looking  statements and estimates and assumptions  involve
      risks  and  uncertainties  which  include,  but are not  limited  to,  the
      volatility of oil and gas prices, the uncertainty of reserve  information,
      the operating risk associated  with oil and gas properties  (including the
      risk of personal injury,  death,  property  damage,  damage to the well or
      producing  reservoir,  environmental  contamination,  and other  operating
      risks), the prospect of changing tax and regulatory laws, the availability
      and capacity of  processing  and  transportation  facilities,  the general
      economic climate,  the supply and price of foreign imports of oil and gas,
      the level of consumer  product demand,  and the price and  availability of
      alternative  fuels.  Should  one or more of these  risks or  uncertainties
      occur or should  estimates  or  underlying  assumptions  prove  incorrect,
      actual  conditions or results may vary materially and adversely from those
      stated, anticipated, believed, estimated, and otherwise indicated.


TERMINATION
-----------

      On July 31, 2002 Dyco  notified  the limited  partners of its  election to
      terminate  the  Program  effective  October 31,  2002.  See Item 5 - Other
      Information  for more  information  regarding  termination of the Program.
      However,  as described in Item 5 there is a  possibility  that the Program
      will be  reconstituted  and continue its present  operations.  Due to this
      uncertainty  the financial  statements  and  management's  discussion  and
      analysis  contained  in this  Quarterly  Report  on Form  10-Q  have  been
      prepared on a going concern basis rather than a liquidation  basis. In the
      event the Program is terminated as expected,  then all  statements in this
      Quarterly Report regarding  future income,  expenses,  or other items will
      not be applicable.



                                      -9-
<PAGE>




LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

      Net  proceeds  from the  Program's  operations  less  necessary  operating
      capital  are  distributed  to  investors  on a  quarterly  basis.  The net
      proceeds from production are not reinvested in productive  assets,  except
      to the extent  that  producing  wells are  improved  or where  methods are
      employed to permit more efficient recovery of the Program's reserves which
      would result in a positive economic impact.

      The Program's  available capital from  subscriptions has been spent on oil
      and gas  drilling  activities.  There  should not be any further  material
      capital  resource  commitments  in the  future.  The  Program  has no debt
      commitments.  Management  believes  that  cash  for  ordinary  operational
      purposes will be provided by current oil and gas production.

      NEW ACCOUNTING PRONOUNCEMENTS

      Below is a brief  description of a Financial  Accounting  Standard ("FAS")
      recently issued by the Financial Accounting Standards Board ("FASB") which
      may have an impact on the  Program's  future  results  of  operations  and
      financial position.

      In  July  2001,  the  FASB  issued  FAS No.  143,  "Accounting  for  Asset
      Retirement  Obligations",  which is effective  for fiscal years  beginning
      after June 15, 2002  (January 1, 2003 for the  Program).  FAS No. 143 will
      require the recording of the fair value of liabilities associated with the
      retirement of long-lived assets (mainly plugging and abandonment costs for
      the Program's  depleted wells), in the period in which the liabilities are
      incurred  (at the time the  wells  are  drilled).  Management  has not yet
      determined  the  effect  of  adopting  this  statement  on  the  Program's
      financial condition or results of operations.


RESULTS OF OPERATIONS
---------------------

      GENERAL DISCUSSION

      The following  general  discussion  should be read in conjunction with the
      analysis  of results of  operations  provided  below.  The most  important
      variables affecting the Program's revenues are the prices received for the
      sale of oil and gas and the volumes of oil and gas produced. The Program's
      production is mainly natural gas, so such pricing and volumes are the most
      significant factors.




                                      -10-
<PAGE>




      Historically,  oil and gas  prices  have been  volatile  and are likely to
      continue to be volatile. As a result, forecasting future prices is subject
      to great  uncertainty and inaccuracy.  Substantially  all of the Program's
      gas  reserves  are  being  sold on the "spot  market".  Prices on the spot
      market are subject to wide seasonal and regional pricing  fluctuations due
      to the highly  competitive  nature of the spot  market.  Such spot  market
      sales are  generally  short-term  in  nature  and are  dependent  upon the
      obtaining of transportation services provided by pipelines. It is likewise
      difficult  to  predict  production  volumes.  However,  oil  and  gas  are
      depleting  assets,  so it can be  expected  that  production  levels  will
      decline over time. Gas prices in early 2001 were significantly higher than
      the Program's  historical  average.  This was  attributable  to the higher
      prices for crude oil,  a  substitute  fuel in some  markets,  and  reduced
      production  due to lower capital  investments  in 1998 and 1999.  However,
      prices for both oil and gas soon  declined  and were  relatively  lower in
      late  2001  and  early  2002 as a  result  of the  declining  economy  and
      relatively  mild  winter  weather.  Recently,  prices  of oil and gas have
      improved,  to some  extent  due to unrest in the  Middle  East.  It is not
      possible to accurately predict future trends.

      THREE MONTHS  ENDED JUNE 30, 2002  COMPARED TO THE THREE MONTHS ENDED JUNE
      30, 2001.

                                                 Three Months Ended June 30,
                                                 ---------------------------
                                                   2002             2001
                                                  -------          -------
      Oil and gas sales                           $41,037          $50,472
      Oil and gas production expenses             $ 8,924          $ 7,691
      Barrels produced                                 41               39
      Mcf produced                                 12,403           11,324
      Average price/Bbl                           $ 22.29          $ 27.21
      Average price/Mcf                           $  3.23          $  4.36

      As shown in the table  above,  total oil and gas  sales  decreased  $9,435
      (18.7%) for the three  months ended June 30, 2002 as compared to the three
      months ended June 30, 2001. Of this  decrease,  approximately  $14,000 was
      related to a decrease in the average price of gas sold.  This decrease was
      partially  offset by an increase  of  approximately  $5,000  related to an
      increase in volumes of gas sold.  Volumes of oil and gas sold  increased 2
      barrels and 1,079 Mcf,  respectively,  for the three months ended June 30,
      2002 as compared to the three months ended June 30, 2001.  Average oil and
      gas prices decreased to $22.29 per barrel and $3.23 per Mcf, respectively,
      for the three  months ended June 30, 2002 from $27.21 per barrel and $4.36
      per Mcf, respectively, for the three months ended June 30, 2001.



                                      -11-
<PAGE>




      Oil and gas production  expenses  (including lease operating  expenses and
      production taxes) increased $1,233 (16.0%) for the three months ended June
      30,  2002 as  compared  to the three  months  ended  June 30,  2001.  This
      increase was primarily due to repair and maintenance  expenses incurred on
      one well during the three months ended June 30, 2002.  As a percentage  of
      oil and gas sales,  these expenses increased to 21.7% for the three months
      ended June 30, 2002 from 15.2% for the three  months  ended June 30, 2001.
      This percentage increase was primarily due to the decreases in the average
      prices of oil and gas sold.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
      decreased  $954  (46.4%)  for the  three  months  ended  June 30,  2002 as
      compared  to the three  months  ended June 30,  2001.  This  decrease  was
      primarily due to the decreases in the average  prices of oil and gas sold.
      As a percentage of oil and gas sales,  this expense  decreased to 2.7% for
      the three  months ended June 30, 2002 from 4.1% for the three months ended
      June 30, 2001.  This  percentage  decrease was primarily due to the dollar
      decrease in depreciation, depletion, and amortization.

      General and administrative  expenses remained  relatively constant for the
      three months ended June 30, 2002 and 2001.  As a percentage of oil and gas
      sales,  these expenses  increased to 19.8% for the three months ended June
      30,  2002 from  16.2% for the  three  months  ended  June 30,  2001.  This
      percentage  increase  was  primarily  due to the  decrease  in oil and gas
      sales.

      SIX MONTHS  ENDED JUNE 30, 2002  COMPARED TO THE SIX MONTHS ENDED JUNE 30,
      2001.

                                                  Six Months Ended June 30,
                                                  -------------------------
                                                   2002              2001
                                                  -------          --------
      Oil and gas sales                           $72,930          $155,796
      Oil and gas production expenses             $16,802          $ 24,281
      Barrels produced                                 53                68
      Mcf produced                                 26,375            26,216
      Average price/Bbl                           $ 22.32          $  27.88
      Average price/Mcf                           $  2.72          $   5.87

      As shown in the table  above,  total oil and gas sales  decreased  $82,866
      (53.2%)  for the six months  ended June 30,  2002 as  compared  to the six
      months ended June 30, 2001. Of this  decrease,  approximately  $83,000 was
      related to a decrease  in the  average  price of gas sold.  Volumes of oil
      sold decreased 15 barrels, while volumes of gas sold increased 159 Mcf for
      the six months  ended June 30, 2002 as  compared  to the six months  ended
      June 30, 2001.  Average oil and gas prices  decreased to $22.32 per barrel
      and $2.72 per



                                      -12-
<PAGE>



      Mcf, respectively,  for the six months ended June 30, 2002 from $27.88 per
      barrel and $5.87 per Mcf, respectively,  for the six months ended June 30,
      2001.

      Oil and gas production  expenses  (including lease operating  expenses and
      production  taxes)  decreased $7,479 (30.8%) for the six months ended June
      30, 2002 as compared to the six months ended June 30, 2001.  This decrease
      was primarily due to (i) a decrease in production  taxes  associated  with
      the  decrease  in oil and gas sales and (ii) the  settlement  of a royalty
      dispute  on one well  during  the six months  ended  June 30,  2001.  As a
      percentage of oil and gas sales, these expenses increased to 23.0% for the
      six months  ended June 30,  2002 from 15.6% for the six months  ended June
      30, 2001. This  percentage  increase was primarily due to the decreases in
      the average prices of oil and gas sold.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
      decreased  $2,040  (50.8%)  for the six  months  ended  June  30,  2002 as
      compared  to the six  months  ended  June  30,  2001.  This  decrease  was
      primarily due to the decreases in the average  prices of oil and gas sold.
      As a percentage of oil and gas sales,  this expense  increased to 2.7% for
      the six months ended June 30, 2002 from 2.6% for the six months ended June
      30, 2001.

      General and  administrative  expenses  decreased $2,367 (9.1%) for the six
      months  ended June 30, 2002 as  compared to the six months  ended June 30,
      2001. As a percentage of oil and gas sales,  these  expenses  increased to
      32.4% for the six months ended June 30, 2002 from 16.7% for the six months
      ended June 30, 2001.  This  percentage  increase was  primarily due to the
      decrease in oil and gas sales.



                                      -13-
<PAGE>



ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
            RISK.

            The Program does not hold any market risk sensitive instruments.




                                      -14-
<PAGE>



                          PART II. OTHER INFORMATION


ITEM 5.  OTHER INFORMATION

      On July 31,  2002,  Dyco  mailed a notice  letter  (the  "Notice")  to the
      limited  partners of its  election  to  terminate  the  Program  effective
      October  31,  2002  pursuant  to the  terms of the  Partnership  Agreement
      governing the Program (the  "Agreement") and the Minnesota Revised Limited
      Partnership  Act (the  "Act").  A copy of the Notice is  attached  to this
      Quarterly Report on Form 10-Q as an Exhibit.

      As  provided  in the  Agreement  and under the Act,  the Notice will cause
      dissolution of the Program ninety (90) days from July 31, 2002,  PROVIDED,
      HOWEVER,   that  the  limited   partners  of  the  Program  may  elect  to
      reconstitute  the Program with a new general partner as further  described
      below. It is expected that Dyco as general partner will file a certificate
      dissolving  the  partnership  with the Minnesota  Secretary of State on or
      about October 31, 2002 and, immediately thereafter, deregister the Program
      with the Securities & Exchange Commission ("SEC").

      Upon dissolution,  Dyco and its affiliates may, pursuant to the Agreement,
      withdraw  their limited  partner  interests in any or all of the Program's
      properties by taking their share of the Program's properties in-kind. Dyco
      and its  affiliates  intend to avail  themselves  of this  provision  upon
      dissolution.

      As part of the dissolution  process,  Dyco will actively negotiate for the
      sale of the producing  properties  attributable  to the remaining  limited
      partners'  interests.  These  properties will be offered to all interested
      parties through normal oil and gas property  auction  processes as well as
      appropriate  negotiated  transactions.  It is  possible  that  Dyco or its
      affiliates  may  participate  in  any  public  auction  of  the  remaining
      properties  and may be the  successful  high  bidder on some or all of the
      properties.

      Following  the sale of the remaining  properties  and the  calculation  of
      other assets and liabilities of the Program,  any net cash will be paid as
      a final liquidating  distribution to all of the remaining  partners in the
      Program.  It is expected that any such  distribution will be made no later
      than December 31, 2002.




                                      -15-
<PAGE>




      As  provided by the Act and the  Agreement,  a majority in interest of the
      limited  partners  may vote to  reconstitute  the Program and continue its
      activities as a partnership with a newly appointed general partner. Such a
      proposal  will be  presented  to the  limited  partners  upon the  written
      request of limited partners representing at least ten (10%) percent of the
      Program's total units. Consideration of such a proposal would require that
      a proxy statement be filed with the SEC. As noted in the attached  letter,
      Dyco and its affiliates own  approximately  50% of the Program's units. It
      is  expected  that they  would vote "no" on any vote to  reconstitute  the
      Program.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

            20.1    Letter to the Program's  limited  partners  dated July 31,
                    2002.

            99.1    Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to  Section  906  of the Sarbanes-Oxley Act of 2002
                    for the Program.

(b)   Reports on Form 8-K.

            None.





                                      -16-
<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                              DYCO OIL AND GAS PROGRAM 1981-1 LIMITED
                              PARTNERSHIP

                                    (Registrant)

                                    BY:   DYCO PETROLEUM CORPORATION

                                          General Partner


Date:  August 5, 2002               By:         /s/Dennis R. Neill
                                       -------------------------------
                                              (Signature)
                                              Dennis R. Neill
                                              President


Date:  August 5, 2002               By:         /s/Craig D. Loseke
                                       -------------------------------
                                              (Signature)
                                              Craig D. Loseke
                                              Chief Financial Officer


                                      -17-