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
 September 30, 2000                                    0-10478



                       DYCO OIL AND GAS PROGRAM 1981-2
                           (A LIMITED PARTNERSHIP)
            (Exact Name of Registrant as specified in its charter)



         Minnesota                               41-1411952
(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 1981-2 LIMITED PARTNERSHIP
                                 BALANCE SHEETS
                                   (Unaudited)

                                     ASSETS

                                              September 30,    December 31,
                                                   2000            1999
                                              -------------    ------------

CURRENT ASSETS:
   Cash and cash equivalents                      $105,606        $  4,991
   Accrued oil and gas sales                       174,600          61,205
                                                  --------        --------
      Total current assets                        $280,206        $ 66,196

NET OIL AND GAS PROPERTIES, utilizing
   the full cost method                            250,499         229,994

DEFERRED CHARGE                                     41,174          41,174
                                                  --------        --------
                                                  $571,879        $337,364
                                                  ========        ========

                        LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable                               $  7,579        $  4,795
   Payable to General Partner (Note 2)                   -         207,000
   Gas imbalance payable                               825             825
                                                  --------        --------
      Total current liabilities                   $  8,404        $212,620

ACCRUED LIABILITY                                 $ 40,141        $ 40,141

PARTNERS' CAPITAL:
   General Partner, 74 general
      partner units                               $  5,234        $    847
   Limited Partners, issued and
      outstanding, 6,000 Units                     518,100          83,756
                                                  --------        --------
      Total Partners' capital                     $523,334        $ 84,603
                                                  --------        --------
                                                  $571,879        $337,364
                                                  ========        ========





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



                                      -2-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
                           STATEMENTS OF OPERATIONS
            FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                   (Unaudited)

                                                   2000             1999
                                                 --------         --------

REVENUES:
   Oil and gas sales                             $286,360         $105,972
   Interest                                           114            1,222
                                                 --------         --------
                                                 $286,474         $107,194

COSTS AND EXPENSES:
   Oil and gas production                        $ 46,782         $ 28,338
   Depreciation, depletion, and
      amortization of oil and gas
      properties                                   14,421            5,017
   General and administrative
      (Note 2)                                     14,328           13,857
                                                 --------         --------
                                                 $ 75,531         $ 47,212
                                                 --------         --------

NET INCOME                                       $210,943         $ 59,982
                                                 ========         ========
GENERAL PARTNER (1%) - net income                $  2,109         $    600
                                                 ========         ========
LIMITED PARTNERS (99%) - net income              $208,834         $ 59,382
                                                 ========         ========
NET INCOME PER UNIT                              $  34.73         $   9.87
                                                 ========         ========
UNITS OUTSTANDING                                   6,074            6,074
                                                 ========         ========




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



                                      -3-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
                           STATEMENTS OF OPERATIONS
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                   (Unaudited)

                                                   2000             1999
                                                 --------         ---------

REVENUES:
   Oil and gas sales                             $634,545          $243,097
   Interest                                           127             2,865
                                                 --------          --------
                                                 $634,672          $245,962

COSTS AND EXPENSES:
   Oil and gas production                        $114,828          $ 89,176
   Depreciation, depletion, and
      amortization of oil and gas
      properties                                   34,388            17,897
   General and administrative
      (Note 2)                                     46,725            50,008
                                                 --------          --------
                                                 $195,941          $157,081
                                                 --------          --------

NET INCOME                                       $438,731          $ 88,881
                                                 ========          ========
GENERAL PARTNER (1%) - net income                $  4,387          $    889
                                                 ========          ========
LIMITED PARTNERS (99%) - net income              $434,344          $ 87,992
                                                 ========          ========
NET INCOME PER UNIT                              $  72.23          $  14.63
                                                 ========          ========
UNITS OUTSTANDING                                   6,074             6,074
                                                 ========          ========



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



                                      -4-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
                           STATEMENTS OF CASH FLOWS
            FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                   (Unaudited)


                                                  2000               1999
                                                --------          ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                   $438,731           $ 88,881
   Adjustments to reconcile net income
      to net cash provided by operating
      activities:
      Depreciation, depletion, and
        amortization of oil and gas
        properties                                34,388             17,897
      Increase in accrued oil and
        gas sales                              ( 113,395)         (  14,198)
      Increase (decrease) in accounts
        payable                                    2,784          (   2,531)
      Decrease in payable to General
        Partner                                ( 207,000)                 -
                                                --------           --------
   Net cash provided by operating
      activities                                $155,508           $ 90,049
                                                --------           --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from the sale of oil
      and gas properties                        $  5,074           $      -
   Additions to oil and gas
      properties                               (  59,967)         (   1,134)
                                                --------           --------
   Net cash used by investing
      activities                               ($ 54,893)         ($  1,134)
                                                --------           --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash distributions                           $      -          ($121,480)
                                                --------           --------
   Net cash used by financing
      activities                                $      -          ($121,480)
                                                --------           --------

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                             $100,615          ($ 32,565)

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                             4,991             61,066
                                                --------           --------
CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                $105,606           $ 28,501
                                                ========           ========

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


                                      -5-
<PAGE>



             DYCO OIL AND GAS PROGRAM 1981-2 LIMITED PARTNERSHIP
                   CONDENSED NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000
                                   (Unaudited)


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

      The balance sheet as of September 30, 2000,  statements of operations  for
      the  three  and  nine  months  ended  September  30,  2000 and  1999,  and
      statements of cash flows for the nine months ended  September 30, 2000 and
      1999  have been  prepared  by Dyco  Petroleum  Corporation  ("Dyco"),  the
      General Partner of the Dyco Oil and Gas Program 1981-2 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 September 30, 2000,  results of
      operations  for the three and nine  months  ended  September  30, 2000 and
      1999,  and changes in cash flows for the nine months ended  September  30,
      2000 and 1999 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, 1999. The results of operations for the period
      ended September 30, 2000 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.  During the nine months ended September 30, 2000, the Program
      paid  recompletion  costs of $59,967 on the Brown No. 1-14 well located in
      Beckham  County,  Oklahoma and the Cisco  Federal #3 well located in Grand
      County,  Utah in which the Program  owns  working  interests of 22.76% and
      22.00%,   respectively.   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



                                      -6-
<PAGE>



      Commission),  the excess is charged to expense in the period  during which
      such excess occurs. Sales and abandonments of 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 September 30, 2000 and 1999 the
      Program incurred such expenses totaling $14,328 and $13,857, respectively,
      of which $11,016 and $11,988, respectively,  were paid each period to Dyco
      and its  affiliates.  During the nine months ended  September 30, 2000 and
      1999 the Program  incurred  such  expenses  totaling  $46,725 and $50,008,
      respectively, of which $33,048 and $35,964,  respectively,  were 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.

      The payable to General  Partner at December  31,  1999  represents  a cash
      advance from Dyco.  This advance was  necessary to pay for the purchase of
      reserves  during 1999 on the Yowell No. 1-26 well in which the Program had
      produced significantly more than its share of gas.




                                      -7-
<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.


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.




                                      -8-
<PAGE>




      The Program's  available capital from  subscriptions has been spent on oil
      and gas drilling  activities.  The General Partner does not anticipate any
      further  material  capital  resource  commitments in the future.  However,
      during 1999 the Program  purchased gas reserves from Burlington  Resources
      on one well in which the Program had produced  significantly more than its
      share of gas. In addition, during the nine months ended June 30, 2000, the
      Program paid costs of $59,967 for a successful  recompletion  of the Brown
      No. 1-14 well  located in Beckham  County,  Oklahoma  and an  unsuccessful
      recompletion  attempt  of the Cisco  Federal  No. 3 well  located in Grand
      County,  Utah in which the Program  owns  working  interests of 22.76% and
      22.00%,   respectively.   Management   believes  that  cash  for  ordinary
      operational purposes will be provided by current oil and gas production.


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.

      Due to the volatility of oil and gas prices,  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. Recent gas prices have been  significantly  higher than
      the  Program's  historical  average.  This is  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.




                                      -9-
<PAGE>




      THREE MONTHS ENDED  SEPTEMBER  30, 2000 COMPARED TO THE THREE MONTHS ENDED
      SEPTEMBER 30, 1999.

                                            Three Months Ended September 30,
                                            --------------------------------
                                                    2000            1999
                                                  --------        --------
      Oil and gas sales                           $286,360        $105,972
      Oil and gas production expenses             $ 46,782        $ 28,338
      Barrels produced                                 826             146
      Mcf produced                                  61,796          44,780
      Average price/Bbl                           $  30.33        $  18.40
      Average price/Mcf                           $   4.23        $   2.31

      As shown in the table above,  total oil and gas sales  increased  $180,388
      (170.2%) for the three months ended  September 30, 2000 as compared to the
      three months ended  September  30, 1999. Of this  increase,  approximately
      $119,000  was related to an increase in the average  price of gas sold and
      approximately  $39,000  was related to an increase in volumes of gas sold.
      Volumes  of oil and  gas  sold  increased  680  barrels  and  17,016  Mcf,
      respectively, for the three months ended September 30, 2000 as compared to
      the three months ended September 30, 1999. The increases in volumes of oil
      and gas sold were primarily due to the successful recompletion of one well
      during the first quarter of 2000.  Average oil and gas prices increased to
      $30.33 per barrel and $4.23 per Mcf,  respectively,  for the three  months
      ended  September  30,  2000  from  $18.40  per  barrel  and $2.31 per Mcf,
      respectively, for the three months ended September 30, 1999.

      Oil and gas production  expenses  (including lease operating  expenses and
      production  taxes)  increased  $18,444  (65.1%) for the three months ended
      September  30, 2000 as compared to the three  months ended  September  30,
      1999.  This  increase was  primarily  due to (i) an increase in production
      taxes  associated  with  the  increase  in oil and gas  sales  and (ii) an
      increase  in  pipeline   compression  charges  on  the  well  successfully
      recompleted  during the first  quarter of 2000. As a percentage of oil and
      gas sales,  these  expenses  decreased to 16.3% for the three months ended
      September  30, 2000 from 26.7% for the three  months ended  September  30,
      1999. This  percentage  decrease was primarily due to the increases in the
      average prices of oil and gas sold.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
      increased $9,404 (187.4%) for the three months ended September 30, 2000 as
      compared to the three months ended  September 30, 1999.  This increase was
      primarily  due  to  (i)  the  decreased  dollar  amount  of  depreciation,
      depletion,  and  amortization  during  the  third  quarter  of 1999  which
      resulted from the significant increases in oil and gas prices



                                      -10-
<PAGE>



      used in the  valuation  of reserves at  September  30, 1999 as compared to
      June 30, 1999 and (ii) an increase in  depletable  oil and gas  properties
      due to the purchase of reserves  during the fourth  quarter of 1999 on one
      well and recompletion costs incurred on two wells during the first quarter
      of 2000. As a percentage of oil and gas sales,  this expense  increased to
      5.0% for the three months ended September 30, 2000 from 4.7% for the three
      months ended September 30, 1999.

      General and  administrative  expenses  increased $471 (3.4%) for the three
      months  ended  September  30, 2000 as compared to the three  months  ended
      September 30, 1999. As a percentage of oil and gas sales,  these  expenses
      decreased to 5.0% for the three months ended September 30, 2000 from 13.1%
      for the three months ended September 30, 1999.  This  percentage  decrease
      was primarily due to the increase in oil and gas sales.

      NINE MONTHS  ENDED  SEPTEMBER  30, 2000  COMPARED TO THE NINE MONTHS ENDED
      SEPTEMBER 30, 1999.

                                             Nine Months Ended September 30,
                                             -------------------------------
                                                    2000            1999
                                                  --------        --------
      Oil and gas sales                           $634,545        $243,097
      Oil and gas production expenses             $114,828        $ 89,176
      Barrels produced                               2,474             668
      Mcf produced                                 159,487         119,320
      Average price/Bbl                           $  27.92        $  13.04
      Average price/Mcf                           $   3.55        $   1.96

      As shown in the table above,  total oil and gas sales  increased  $391,448
      (161.0%) for the nine months ended  September  30, 2000 as compared to the
      nine months ended  September  30, 1999.  Of this  increase,  approximately
      $252,000  was related to an increase in the average  price of gas sold and
      approximately  $79,000  was related to an increase in volumes of gas sold.
      Volumes  of oil and gas sold  increased  1,806  barrels  and  40,167  Mcf,
      respectively,  for the nine months ended September 30, 2000 as compared to
      the nine months ended  September 30, 1999. The increases in volumes of oil
      and gas sold were primarily due to the successful recompletion of one well
      during the first quarter of 2000.  Average oil and gas prices increased to
      $27.92  per barrel and $3.55 per Mcf,  respectively,  for the nine  months
      ended  September  30,  2000  from  $13.04  per  barrel  and $1.96 per Mcf,
      respectively, for the nine months ended September 30, 1999.

      Oil and gas production  expenses  (including lease operating  expenses and
      production  taxes)  increased  $25,652  (28.8%) for the nine months  ended
      September  30, 2000 as compared to the nine  months  ended  September  30,
      1999.  This  increase was  primarily  due to (i) an increase in production
      taxes



                                      -11-
<PAGE>



      associated  with the increase in oil and gas sales and (ii) an increase in
      pipeline  compression charges on the well successfully  recompleted during
      the first quarter of 2000.  These increases were partially offset by legal
      fees incurred on one well during the nine months ended  September 30, 1999
      related  to a gas  balancing  and  collections  matter  initiated  by  the
      operator  of that  well.  As a  percentage  of oil and  gas  sales,  these
      expenses  decreased to 18.1% for the nine months ended  September 30, 2000
      from 36.7% for the nine months ended  September 30, 1999.  This percentage
      decrease was primarily  due to the increases in the average  prices of oil
      and gas sold.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
      increased  $16,491 (92.1%) for the nine months ended September 30, 2000 as
      compared to the nine months ended  September  30, 1999.  This increase was
      primarily  due to  increases  (i)  volumes  of oil and gas  sold  and (ii)
      depletable oil and gas  properties due to the purchase of reserves  during
      the fourth quarter of 1999 on one well and recompletion  costs incurred on
      two wells during the first quarter of 2000. As a percentage of oil and gas
      sales,  this expense decreased to 5.4% for the nine months ended September
      30, 2000 from 7.4% for the nine months  ended  September  30,  1999.  This
      percentage  decrease  was  primarily  due to the  increases in the average
      prices of oil and gas sold.

      General and  administrative  expenses decreased $3,283 (6.6%) for the nine
      months  ended  September  30, 2000 as  compared  to the nine months  ended
      September 30, 1999. As a percentage of oil and gas sales,  these  expenses
      decreased to 7.4% for the nine months ended  September 30, 2000 from 20.6%
      for the nine months ended September 30, 1999. This percentage decrease was
      primarily due to the increase in oil and gas sales.



                                      -12-
<PAGE>



ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
            RISK.

            The Program does not hold any market risk sensitive instruments.




                                      -13-
<PAGE>



                          PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

      27.1              Financial  Data Schedule  containing  summary  financial
                        information  extracted from the Dyco Oil and Gas Program
                        1981-2 Limited Partnership's  financial statements as of
                        September  30,  2000  and  for  the  nine  months  ended
                        September 30, 2000, filed herewith.

                        All other exhibits are omitted as inapplicable.

(b)   Reports on Form 8-K.

            None.





                                      -14-
<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 1981-2 LIMITED
                                    PARTNERSHIP

                                    (Registrant)

                                    BY:   DYCO PETROLEUM CORPORATION

                                          General Partner


Date:  November 8, 2000             By:         /s/Dennis R. Neill
                                       -------------------------------
                                              (Signature)
                                              Dennis R. Neill
                                              President


Date:  November 8, 2000             By:         /s/Patrick M. Hall
                                       -------------------------------
                                              (Signature)
                                              Patrick M. Hall
                                              Chief Financial Officer



                                      -15-
<PAGE>



                                INDEX TO EXHIBITS


NUMBER      DESCRIPTION
------      -----------

27.1        Financial Data Schedule  containing  summary  financial  information
            extracted   from  the  Dyco  Oil  and  Gas  Program  1981-2  Limited
            Partnership's  financial statements as of September 30, 2000 and for
            the nine months ended September 30, 2000, filed herewith.

            All other exhibits are omitted as inapplicable.



                                      -16-