FORM 10-K405

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

For the fiscal year ended December 31, 1998

Commission File Number 2-92702    (1985-1 Program)
                       2-92702-01 (1985-2 Program)

                        DYCO 1985 OIL AND GAS PROGRAMS
                          (TWO LIMITED PARTNERSHIPS)
            (Exact name of registrant as specified in its charter)

                                          41-1498087 (1985-1 Program)
           Minnesota                      41-1498086 (1985-2 Program)
(State or other jurisdiction of          (I.R.S. Employer
incorporation or organization)         Identification Number)

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

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

Securities registered pursuant to Section 12(b) of the Act:  None.

Securities registered pursuant to Section 12(g) of the Act:
      Units of limited partnership interest

      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 the
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference in Part III of this Form 10-K405 or any  amendment to
this Form 10-K405. [X]

      The units of  limited  partnership  are not  publicly  traded,  therefore,
registrant cannot compute the aggregate market value of the voting units held by
non-affiliates of the registrant.

      DOCUMENTS INCORPORATED BY REFERENCE:  None.




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<PAGE>








                                 FORM 10-K405

                        DYCO 1985 OIL AND GAS PROGRAMS
                     (Two Minnesota limited partnerships)


                               TABLE OF CONTENTS
PART I.......................................................................3
      ITEM 1.     BUSINESS...................................................3
      ITEM 2.     PROPERTIES.................................................7
      ITEM 3.     LEGAL PROCEEDINGS.........................................13
      ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS.......14
PART II.....................................................................14
      ITEM 5.     MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP UNITS AND 
                  RELATED LIMITED PARTNER MATTERS...........................14
      ITEM 6.     SELECTED FINANCIAL DATA...................................16
      ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                  CONDITION AND RESULTS OF OPERATIONS.......................18
      ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES
                  ABOUT MARKET RISK.........................................28
      ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...............29
      ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 
                  ACCOUNTING AND FINANCIAL DISCLOSURE.......................52
PART III....................................................................52
      ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........52
      ITEM 11.    EXECUTIVE COMPENSATION....................................53
      ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
                  MANAGEMENT................................................58
      ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............58
PART IV.....................................................................60
      ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON 
                  FORM 8-K..................................................60
SIGNATURES..................................................................63




                                      -2-
<PAGE>



                                     PART I

ITEM 1.     BUSINESS

      General

      The Dyco Oil and Gas  Program  1985-1  Limited  Partnership  (the  "1985-1
Program") and Dyco Oil and Gas Program 1985-2 Limited  Partnership  (the "1985-2
Program")  (collectively,  the  "Programs") are Minnesota  limited  partnerships
engaged in the  production of oil and gas. The 1985-1 Program and 1985-2 Program
commenced  operations on April 1, 1985 and August 26, 1985,  respectively,  with
the  primary   financial   objective  of  investing   their  limited   partners'
subscriptions in the drilling of oil and gas prospects and then  distributing to
their  limited  partners all  available  cash flow from the  Program's  on-going
production operations. Dyco Petroleum Corporation ("Dyco") serves as the General
Partner of the  Programs.  See "Item 2.  Properties"  for a  description  of the
Programs' reserves and properties.

      The limited partnership  agreements for each of the Programs (the "Program
Agreements")  provide that limited  partners  are  allocated  99% of all Program
costs and revenues and Dyco, as General Partner,  is allocated 1% of all Program
costs and revenues.  Included in such costs is each Program's  reimbursement  to
Dyco of the Program's proportionate share of Dyco's geological, engineering, and
general and administrative expenses.

      Dyco  currently  serves as General  Partner  of 31  limited  partnerships,
including the Program.  Dyco is a wholly-owned  subsidiary of Samson  Investment
Company.  Samson  Investment  Company  and its various  corporate  subsidiaries,
including Dyco, (collectively, "Samson") are primarily engaged in the production
and  development of and exploration for oil and gas reserves and the acquisition
and  operation  of  producing  properties.  At January 31,  1999,  Samson  owned
interests in approximately  10,500 oil and gas wells located in 19 states of the
United States and the countries of Canada, Venezuela, and Russia. At January 31,
1999,Samson operated  approximately 2,900 oil and gas wells located in 15 states
of the United States, as well as Canada, Venezuela, and Russia.

      As limited  partnerships,  the Programs  have no officers,  directors,  or
employees. They rely instead on the personnel of Dyco and Samson. As of March 1,
1999,  Samson employed  approximately  900 persons.  No employees are covered by
collective bargaining agreements, and management believes that Samson provides a
sound employee relations  environment.  For information  regarding the executive
officers  of  Dyco,  see  "Item  10.  Directors  and  Executive  Officers of the
Registrant."

     Dyco's and the Programs'  principal  place of business is located at Samson
Plaza, Two West Second Street, Tulsa, Oklahoma




                                      -3-
<PAGE>




74103, and their telephone number is (918) 583-1791 or (800) 283-1791.

      Funding

      Although the Program  Agreements  permit the Programs to incur borrowings,
each  Program's  operations  and  expenses  are  currently  funded  out of  each
Program's  revenues  from oil and gas sales.  Dyco may,  but is not required to,
advance  funds to each of the Programs for the same  purposes for which  Program
borrowings are authorized.

      Principal Products Produced and Services Rendered

      The Programs' sole business is the  development  and production of oil and
gas  with a  concentration  on  gas.  The  Programs  do not  hold  any  patents,
trademarks,  licenses,  or  concessions  and are not a party  to any  government
contracts.  The  Programs  have no backlog of orders and do not  participate  in
research and development activities. The Programs are not presently encountering
shortages of oilfield tubular goods, compressors,  production material, or other
equipment.


      Oil, Gas, and Environmental Control Regulations

      Regulation  of Production  Operations -- The  production of oil and gas is
subject to  extensive  federal and state laws and  regulations  governing a wide
variety of matters, including the drilling and spacing of wells, allowable rates
of  production,  prevention  of  waste  and  pollution,  and  protection  of the
environment.  In  addition  to the direct  costs  borne in  complying  with such
regulations,  operations and revenues may be impacted to the extent that certain
regulations limit oil and gas production to below economic levels.

      Regulation  of Sales and  Transportation  of Oil and Gas -- Sales of crude
oil and condensate are made by the Programs at market prices and are not subject
to price controls. The sale of gas may be subject to both federal and state laws
and  regulations.  The provisions of these laws and  regulations are complex and
affect all who  produce,  resell,  transport,  or purchase  gas,  including  the
Programs.  Although virtually all of the Programs' gas production is not subject
to  price  regulation,   other  regulations   affect  the  availability  of  gas
transportation services and the ability of gas consumers to continue to purchase
or use gas at current levels. Accordingly,  such regulations may have a material
effect  on the  Programs'  operations  and  projections  of  future  oil and gas
production and revenues.

      Future  Legislation --  Legislation  affecting the oil and gas industry is
under  constant  review  for  amendment  or  expansion.  Because  such  laws and
regulations are frequently amended or



                                      -4-
<PAGE>



reinterpreted,   management  is  unable  to  predict  what   additional   energy
legislation  may be  proposed  or  enacted  or the  future  cost and  impact  of
complying with existing or future regulations.

      Regulation of the  Environment -- The Programs'  operations are subject to
numerous laws and  regulations  governing  the  discharge of materials  into the
environment or otherwise relating to environmental  protection.  Compliance with
such  laws  and  regulations,   together  with  any  penalties   resulting  from
noncompliance,  may increase the cost of the Programs'  operations or may affect
the  Programs'  ability  to  timely  complete  existing  or  future  activities.
Management  anticipates  that various local,  state,  and federal  environmental
control agencies will have an increasing impact on oil and gas operations.


      Significant Customers

      Purchases  of gas by El Paso  Energy  Marketing  Company  ("El  Paso") and
Sanguine, Ltd. accounted for approximately 79.2% and 11.3%, respectively, of the
1985-1  Program's oil and gas revenues  during the year ended December 31, 1998.
Purchases  of gas by El Paso  accounted  for  approximately  54.6% of the 1985-2
Program's oil and gas revenues  during the year ended  December 31, 1998. In the
event of  interruption  of  purchases  by  these  significant  customers  or the
cessation or material change in availability  of open-access  transportation  by
the Programs' pipeline  transporters,  the Programs may encounter  difficulty in
marketing  their  gas and in  maintaining  historic  sales  levels.  Alternative
purchasers or transporters may not be readily available.

      The Programs'  principal  customers for crude oil  production are refiners
and other companies which have pipeline facilities near the producing properties
of the Programs.  Purchases of oil by Mobil Oil Corporation and Koch Oil Company
accounted  for  approximately  12.6%  and  11.4%,  respectively,  of the  1985-2
Program's oil and gas revenues  during the year ended  December 31, 1998. In the
event pipeline  facilities are not conveniently  available to production  areas,
crude oil is usually trucked by purchasers to storage facilities.


      Competition and Marketing

      The  domestic  oil and gas  industry is highly  competitive,  with a large
number of companies and  individuals  engaged in the exploration and development
of oil and gas properties. The ability of the Programs to produce and market oil
and gas profitably depends on a number of factors that are beyond the control of
the Programs.  These factors include worldwide political instability (especially
in oil-producing regions), United Nations export embargoes, the supply and price
of foreign  imports of oil and gas, the level of consumer  product demand (which
can be heavily



                                      -5-
<PAGE>



influenced by weather patterns), government regulations and taxes, the price and
availability of alternative  fuels,  the overall economic  environment,  and the
availability  and  capacity of  transportation  and  processing  facilities.  In
addition,  on March 12,  1999  several  major oil  producing  nations  agreed to
curtail oil exports in an effort to increase worldwide oil prices. The effect of
these  factors  on future  oil and gas  industry  trends  cannot  be  accurately
predicted or anticipated.

      The most important variable affecting the Programs' revenues is the prices
received for the sale of oil and gas.  Predicting future prices is not possible.
Concerning past trends,  average yearly wellhead gas prices in the United States
have been volatile for a number of years.  For the past ten years,  such average
prices have generally been in the $1.40 to $2.40 per Mcf range.

      Substantially  all of the  Programs'  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. In addition,  such spot market sales are generally  short-term in nature
and are dependent  upon the  obtaining of  transportation  services  provided by
pipelines.  Spot prices for the Programs' gas decreased from approximately $2.32
per Mcf at December  31,  1997 to  approximately  $1.93 per Mcf at December  31,
1998.  Such prices  were on an MMBTU  basis and differ from the prices  actually
received by the  Partnerships  due to  transportation  and marketing  costs, BTU
adjustments, and regional price and quality differences.  Continued very low oil
prices as discussed below may cause downward  pressure on gas prices due to some
users of gas converting to oil as a cheaper fuel alternative.

      For the past ten years,  average  oil prices  have  generally  been in the
$16.00 to $24.00 per barrel range.  Due to global  consumption and supply trends
over the last year as well as at least a  short-term  slowdown  in Asian  energy
demand,  oil prices  over the past year have  reached  historically  low levels,
dropping to as low as  approximately  $9.00 per barrel.  It is not known whether
this  trend  will  continue.   Prices  for  the  Programs'  oil  decreased  from
approximately  $16.25 per barrel at December 31, 1997 to approximately $9.50 per
barrel at December 31, 1998.

      As of February  28, 1999 oil and gas prices were  approximately  $9.50 per
barrel and $1.55 per Mcf, respectively.  Future prices for both oil and gas will
likely  be  different  from  (and may be lower  than)  the  prices  in effect on
December 31, 1998 and February 28, 1999.  As of the date of this Annual  Report,
oil prices have increased  slightly over the February 28, 1999 price,  primarily
due to the March 1999  announcement that several oil producing nations intend to
curtail oil exports.  Management is unable to predict whether future oil and gas
prices will (i) stabilize, (ii) increase, or (iii) decrease.



                                      -6-
<PAGE>



      Insurance Coverage

      The Programs are subject to all of the risks  inherent in the  exploration
for and production of oil and gas,  including  blowouts,  pollution,  fires, and
other casualties.  The Programs maintain  insurance coverage as is customary for
entities  of a  similar  size  engaged  in  operations  similar  to  that of the
Programs, but losses can occur from uninsurable risks or in amounts in excess of
existing  insurance  coverage.  The  occurrence  of an event  which is not fully
covered  by  insurance  could have a material  adverse  effect on the  Programs'
financial condition and results of operations.


ITEM 2.     PROPERTIES

      Well Statistics

      The  following  table sets forth the  numbers of gross and net  productive
wells of the Programs as of December 31, 1998.

                              Well Statistics(1)

                            As of December 31, 1998

                                               1985-1     1985-2
                                               Program    Program
                                               -------    -------

           Gross productive wells(2):
              Oil                                  -          3
              Gas                                 14          8
                                                  --         --
                Total                             14         11

           Net productive wells(3):
              Oil                                  -       1.12
              Gas                               1.73        .87
                                                ----       ----
                Total                           1.73       1.99
----------

(1)   The designation of a well as an oil well or gas well is made by Dyco based
      on the relative amount of oil and gas reserves for the well. Regardless of
      a well's oil or gas designation,  it may produce oil, gas, or both oil and
      gas.
(2)   As used  throughout  this Annual  Report on Form 10-K  ("Annual  Report"),
      "Gross  Well" refers to a well in which a working  interest is owned.  The
      number  of gross  wells is the  total  number  of wells in which a working
      interest is owned.
(3)   As used throughout this Annual Report, "Net Well" refers to the sum of the
      fractional working interests owned in gross



                                      -7-
<PAGE>



      wells. For example,  a 15% working interest in a well represents one Gross
      Well, but 0.15 Net Well.


      Drilling Activities

      The Programs  participated  in no drilling  activities  for the year ended
December 31, 1998


      Oil and Gas Production, Revenue, and Price History

      The following table sets forth certain historical  information  concerning
the oil  (including  condensates)  and  gas  production,  net of all  royalties,
overriding royalties, and other third party interests, of the Programs, revenues
attributable to such production, and certain price and cost information.


                                      -8-
<PAGE>



                               Net Production Data

                                               Year Ended December 31,
                                      -----------------------------------------
                                         1998           1997              1996
                                      ----------      --------          --------
1985-1 Program:
--------------
   Production:
     Oil (Bbls)(1)                         283             422(2)           211
     Gas (Mcf)(3)                      165,027         200,882          191,163

   Oil and gas sales:
     Oil                              $  3,700       ($ 24,012)(2)     $  4,842
     Gas                               313,020         458,588          403,984
                                       -------         -------          -------
        Total                         $316,720        $434,576         $408,826
                                       =======         =======          =======

   Total direct operating expenses(4) $108,815        $ 93,649         $ 93,342
                                       =======         =======          =======

   Direct operating expenses as a
     percentage of oil and gas sales     34.4%           21.5%            22.8%

   Average sales price:
     Per barrel of oil                  $13.07          $19.69(2)        $22.95
     Per Mcf of gas                       1.90            2.28             2.11

   Direct operating expenses per
     equivalent Mcf of gas(5)           $  .65          $  .46           $  .49







                                      -9-
<PAGE>



                                                Year Ended December 31,
                                      -----------------------------------------
                                         1998            1997            1996
                                      ----------       ---------       --------
1985-2 Program:
--------------
   Production:
     Oil (Bbls)(1)                       2,397           2,963(6)         3,971
     Gas (Mcf)(3)                       48,746          59,797           68,927

   Oil and gas sales:
     Oil                              $ 30,679        $ 44,854(6)      $ 81,549
     Gas                                95,421         143,029          148,643
                                       -------         -------          -------
        Total                         $126,100        $187,883         $230,192
                                       =======         =======          =======

   Total direct operating expenses(4) $ 65,880        $ 47,231         $ 77,992
                                       =======         =======          =======
   Direct operating expenses as a
     percentage of oil and gas sales     52.2%           25.1%            33.9%

   Average sales price:
     Per barrel of oil                  $12.80          $18.87(6)        $20.54
     Per Mcf of gas                       1.96            2.39             2.16

   Direct operating expenses per
     equivalent Mcf of gas(5)           $ 1.04          $  .61           $  .84

-------------

(1)   As used throughout this Annual Report, "Bbls" refers to barrels of 42 U.S.
      gallons and  represents  the basic unit for  measuring  the  production of
      crude oil and condensate oil.
(2)   In  1997,  the  1985-1  Program  recognized  oil  sales  related  to  1997
      production  totaling  $8,308.  Such oil sales  were  offset by a refund of
      $32,320 made by the 1985-1  Program in 1997 to the  operators of two wells
      related to an  overpayment  for oil sales the 1985-1  Program  received in
      1995.  The oil volumes and average price per barrel listed above are based
      on actual production and sales in 1997.
(3)   As used  throughout  this Annual  Report,  "Mcf" refers to volume of 1,000
      cubic feet under  prescribed  conditions of pressure and  temperature  and
      represents the basic unit for measuring the production of gas.
(4)   Includes lease operating expenses and production taxes.
(5)   Oil production is converted to gas  equivalents at the rate of six Mcf per
      barrel, representing the estimated relative energy content of gas and oil,
      which rate is not  necessarily  indicative of the  relationship of oil and
      gas prices.  The  respective  prices of oil and gas are affected by market
      and other factors in addition to relative energy content.



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<PAGE>



(6)   In  1997,  the  1985-2  Program  recognized  oil  sales  related  to  1997
      production  totaling  $55,908.  Such oil sales were  offset by a refund of
      $11,054  made by the 1985-2  Program in 1997 to the  operator  of one well
      related to an  overpayment  for oil sales the 1985-2  Program  received in
      1995.  The oil volumes and average price per barrel listed above are based
      on actual production and sales in 1997.


      Proved Reserves and Net Present Value

      The following table sets forth the Programs'  estimated proved oil and gas
reserves and net present value  therefrom as of December 31, 1998.  The schedule
of  quantities of proved oil and gas reserves was prepared by Dyco in accordance
with the rules prescribed by the Securities and Exchange Commission (the "SEC").
As used  throughout  this  Annual  Report,  "proved  reserves"  refers  to those
estimated  quantities of crude oil, gas, and gas liquids  which  geological  and
engineering  data  demonstrate  with  reasonable  certainty to be recoverable in
future  years from known oil and gas  reservoirs  under  existing  economic  and
operating conditions.

      Net present  value  represents  estimated  future gross cash flow from the
production and sale of proved reserves,  net of estimated oil and gas production
costs (including  production  taxes, ad valorem taxes, and operating  expenses),
and estimated future development costs, discounted at 10% per annum. Net present
value  attributable to the Programs' proved reserves was calculated on the basis
of current costs and prices at December 31, 1998. Such prices were not escalated
except in  certain  circumstances  where  escalations  were  fixed  and  readily
determinable in accordance with applicable contract provisions.  The prices used
by Dyco in  calculating  the net present  value  attributable  to the  Programs'
proved  reserves  do not  necessarily  reflect  market  prices  for  oil and gas
production  subsequent to December 31, 1998. Year-end prices have generally been
higher than prices during the rest of the year.  There can be no assurance  that
the prices used in  calculating  the net present value of the  Programs'  proved
reserves at December 31, 1998 will actually be realized for such production.

      The process of  estimating  oil and gas  reserves  is  complex,  requiring
significant  subjective  decisions in the  evaluation  of available  geological,
engineering,  and  economic  data  for  each  reservoir.  The  data  for a given
reservoir may change substantially over time as a result of, among other things,
additional development activity, production history, and viability of production
under varying economic conditions;  consequently, it is reasonably possible that
material  revisions to existing reserve  estimates may occur in the near future.
Although  every  reasonable  effort has been made to ensure  that these  reserve
estimates represent the most accurate assessment  possible,  the significance of
the subjective decisions required



                                      -11-
<PAGE>



and  variances in available  data for various  reservoirs  make these  estimates
generally  less  precise  than other  estimates  presented  in  connection  with
financial statement disclosures.


                              Proved Reserves and
                              Net Present Values
                             From Proved Reserves

                            As of December 31, 1998

           1985-1 Program:
           --------------

              Estimated proved reserves:
                Gas (Mcf)                                 716,034
                Oil and liquids (Bbls)                      1,970

              Net present value
                (discounted at 10% per annum)            $525,685

           1985-2 Program:
           --------------

              Estimated proved reserves:
                Gas (Mcf)                                 264,024
                Oil and liquids (Bbls)                      7,743

              Net present value
                (discounted at 10% per annum)            $231,281


      No estimates of the proved  reserves of the Programs  comparable  to those
included  herein have been included in reports to any federal  agency other than
the SEC.  Additional  information  relating to the Programs'  proved reserves is
contained in Note 4 to the Programs' financial statements, included in Item 8 of
this Annual Report.


      Significant Properties

                                 1985-1 Program
                                 --------------

      As of December 31, 1998, the 1985-1 Program's  properties  consisted of 14
gross (1.73 net) productive  wells.  The 1985-1 Program also owned a non-working
interest in two additional  wells.  Affiliates of the 1985-1  Program  operate 6
(38%) of its total wells.  All of the 1985-1  Program's  reserves are located in
the  Anadarko  Basin of western  Oklahoma and the Texas  panhandle,  which is an
established oil and gas producing basin.



                                      -12-
<PAGE>



                                 1985-2 Program
                                 ---------------

      As of December 31, 1998, the 1985-2 Program's  properties  consisted of 11
gross (1.99 net) productive  wells.  The 1985-2 Program also owned a non-working
interest in two additional  wells.  Affiliates of the 1985-2  Program  operate 6
(46%) of its total wells.  All of the 1985-2  Program's  properties  are located
onshore  in the  continental  United  States.  Substantially  all of the  1985-2
Program's reserves are located in the Anadarko Basin.

      As of December 31, 1998, the 1985-2  Program's  properties in the Anadarko
Basin  consisted of 11 gross (1.99 net) wells.  The 1985-2  Program also owned a
non-working interest in one additional well in the Anadarko Basin. Affiliates of
the 1985-2  Program  operate 5 (42%) of its wells.  As of December 31, 1998, the
1985-2  Program had  estimated  total proved  reserves in the Anadarko  Basin of
approximately  262,474 Mcf of gas and approximately  7,743 barrels of crude oil,
with a present value  (discounted at 10% per annum) of estimated future net cash
flow of approximately $230,795.


      Title to Oil and Gas Properties

      Management believes that the Programs have satisfactory title to their oil
and  gas  properties.  Record  title  to  substantially  all  of  the  Programs'
properties is held by Dyco as nominee.

      Title  to the  Programs'  properties  is  subject  to  customary  royalty,
overriding  royalty,   carried,   working,   and  other  similar  interests  and
contractual  arrangements  customary in the oil and gas  industry,  to liens for
current taxes not yet due, and to other  encumbrances.  Management believes that
such burdens do not materially detract from the value of such properties or from
the Programs'  interest  therein or materially  interfere  with their use in the
operation of the Programs' business.


ITEM 3.     LEGAL PROCEEDINGS

      To the knowledge of the management of Dyco and the Programs, neither Dyco,
the Programs,  nor the Programs'  properties are subject to any litigation,  the
results  of which  would  have a  material  effect  on the  Programs'  or Dyco's
financial condition or operations.



                                      -13-
<PAGE>




ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF LIMITED PARTNERS

      There were no  matters  submitted  to a vote of the  limited  partners  of
either Program during 1998.


                                    PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP UNITS AND  
            RELATED LIMITED PARTNER MATTERS

      The Programs do not have an established  trading market for their units of
limited  partnership  interest  ("Units").  Pursuant to the terms of the Program
Agreements,  Dyco,  as  General  Partner,  is  obligated  to  annually  issue  a
repurchase  offer which is based on the  estimated  future net revenues from the
Programs'  reserves  and is  calculated  pursuant  to the  terms of the  Program
Agreements.  Such repurchase  offer is recalculated  monthly in order to reflect
cash  distributions  made to the limited partners and extraordinary  events. The
following table sets forth, for the periods  indicated,  Dyco's repurchase offer
per Unit and the amount of the  Programs'  cash  distributions  per Unit for the
same period.  For purposes of this Annual Report,  a Unit  represents an initial
subscription of $5,000 to a Program.

                                1985-1 PROGRAM
                                --------------

                                             Repurchase         Cash
                                                Price       Distributions
                                             ----------     -------------
           1997:
              First Quarter                     $102             $35
              Second Quarter                      67              25
              Third Quarter                      144               -
              Fourth Quarter                     119              25

           1998:
              First Quarter                     $ 94             $25
              Second Quarter                      69               -
              Third Quarter                      123               -
              Fourth Quarter                     123              25

           1999:
              First Quarter                     $ 98             $ -






                                      -14-
<PAGE>



                                1985-2 PROGRAM
                                --------------

                                             Repurchase         Cash
                                                Price       Distributions
                                             ----------     -------------
           1997:
              First Quarter                     $92              $25
              Second Quarter                     67                -
              Third Quarter                      56                -
              Fourth Quarter                     56                -

           1998:
              First Quarter                     $56              $ -
              Second Quarter                     56               20
              Third Quarter                      64                -
              Fourth Quarter                     64                -

           1999:
              First Quarter                     $64              $ -

-----------

      As of March 1, 1999,  the 1985-1 Program had 4,100 Units  outstanding  and
approximately  1,600 Limited  Partners of record.  The 1985-2  Program had 4,330
Units outstanding and approximately 1,500 Limited Partners of record.



                                      -15-
<PAGE>



ITEM 6.     SELECTED FINANCIAL DATA

                             Selected Financial Data

     The following table presents selected financial data for the Programs. This
data  should  be  read in  conjunction  with  the  financial  statements  of the
Programs,  and the respective notes thereto,  included  elsewhere in this Annual
Report. See "Item 8. Financial Statements and Supplementary Data."
<TABLE>
<CAPTION>

                                                           1985-1 Program
                                                           --------------
                                                            December 31,
                                      --------------------------------------------------------
                                        1998        1997        1996        1995        1994
                                      --------    --------    --------    --------    --------
<S>                                   <C>         <C>         <C>         <C>         <C>     
Summary of Operations:
   Oil and gas sales                  $316,720    $434,576    $408,826    $414,166    $444,580
   Total revenues                      319,820     438,162     411,171     416,689     446,882

   Lease operating expenses             86,362      58,594      63,559     130,367     117,846
   Production taxes                     22,453      35,055      29,783      38,928      39,704
   General and administrative
     expenses                           53,554      57,406      55,169      55,314      51,307
   Depreciation, depletion, and
     amortization of oil and gas
     properties                         25,912      34,859      27,369      57,994     119,316
   Impairment provision                   -           -           -         45,262        -

   Net income                          131,539     252,248     235,291      88,824     118,709
     per Unit                            31.77       60.91       56.82       21.45       28.67
   Cash distributions                  207,050     351,985     186,345     124,230     289,870
     per Unit                               50          85          45          30          70

Summary Balance Sheet Data:
   Total assets                        210,519     283,653     375,408     329,229     344,462
   Partners' capital                   164,542     240,053     339,790     290,844     326,250

</TABLE>





                                      -16-
<PAGE>



<TABLE>
<CAPTION>



                                                            1985-2 Program
                                                            --------------

                                                             December 31,
                                     ----------------------------------------------------------
                                       1998         1997         1996        1995       1994
                                     --------     --------     --------    --------    --------
<S>                                  <C>          <C>          <C>         <C>         <C>     
Summary of Operations
   Oil and gas sales                 $126,100     $187,883     $230,192    $249,234    $391,867
   Total revenues                     143,847      189,554      232,494     250,411     393,943

   Lease operating expenses            56,430       33,442       61,178     108,975     177,582
   Production taxes                     9,450       13,789       16,814      21,572      26,561
   General and administrative
     expenses                          51,504       55,613       53,296      53,755      49,022
   Depreciation, depletion, and
     amortization of oil and gas
     properties                         8,457       11,610        9,911      23,571     109,543

   Net income                          18,006       75,100       91,295      42,538      31,235
     per Unit                            4.12        17.17        20.87        9.73        7.14
   Cash distributions                  87,480      109,350      153,090        -        218,700
     per Unit                              20           25           35        -             50

Summary Balance Sheet Data:
   Total assets                       134,196      201,447      244,561     306,398     254,024
   Partners' capital                  121,740      191,214      225,464     287,259     244,721

</TABLE>


                                      -17-
<PAGE>



ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
            AND RESULTS OF OPERATIONS

      Use of Forward-Looking Statements and Estimates

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

      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, or otherwise indicated.


      General Discussion

      The following  general  discussion  should be read in conjunction with the
analysis of results of operations  provided below.  The most important  variable
affecting the Programs'  revenues is the prices received for the sale of oil and
gas. Predicting future prices is not possible.  Concerning past trends,  average
yearly  wellhead gas prices in the United States have been volatile for a number
of years. For the past ten years, such average prices have generally been in the
$1.40 to $2.40 per Mcf range.

      Substantially  all of the  Programs'  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. In addition,  such spot market sales are generally  short-term in nature
and are dependent  upon the  obtaining of  transportation  services  provided by
pipelines. Spot prices for the Programs' gas decreased from




                                      -18-
<PAGE>




approximately  $2.32 per Mcf at December 31, 1997 to approximately $1.93 per Mcf
at  December  31,  1998.  Such prices were on an MMBTU basis and differ from the
prices actually received by the Partnerships due to transportation and marketing
costs, BTU adjustments,  and regional price and quality  differences.  Continued
very low oil prices as discussed below may cause downward pressure on gas prices
due to some users of gas converting to oil as a cheaper fuel alternative.

      For the past ten years,  average  oil prices  have  generally  been in the
$16.00 to $24.00 per barrel range.  Due to global  consumption and supply trends
over the last year as well as at least a  short-term  slowdown  in Asian  energy
demand,  oil prices  over the past year have  reached  historically  low levels,
dropping to as low as  approximately  $9.00 per barrel.  It is not known whether
this  trend  will  continue.   Prices  for  the  Programs'  oil  decreased  from
approximately  $16.25 per barrel at December 31, 1997 to approximately $9.50 per
barrel at December 31, 1998.

      As of February  28, 1999 oil and gas prices were  approximately  $9.50 per
barrel and $1.55 per Mcf, respectively.  Future prices for both oil and gas will
likely  be  different  from  (and may be lower  than)  the  prices  in effect on
December 31, 1998 and February 28, 1999.  As of the date of this Annual  Report,
oil prices have increased  slightly over the February 28, 1999 price,  primarily
due to the March 1999  announcement that several oil producing nations intend to
curtail oil exports.  Management is unable to predict whether future oil and gas
prices will (i) stabilize, (ii) increase, or (iii) decrease.


      Results of Operations

                                1985-1 Program
                                --------------

                     Year Ended December 31, 1998 Compared
                        to Year Ended December 31, 1997
                     -------------------------------------

      Total oil and gas sales decreased  $117,856 (27.1%) in 1998 as compared to
1997.  Of this  decrease,  approximately  $82,000  was  related to a decrease in
volumes of gas sold and  approximately  $64,000 was related to a decrease in the
average price of gas sold.  These decreases were partially offset by an increase
of  approximately  $32,000  related to a refund to the  purchaser  by the 1985-1
Program  in  1997 of a  prior  oil  overpayment.  Volumes  of oil  and gas  sold
decreased 139 barrels and 35,855 Mcf, respectively, in 1998 as compared to 1997.
The decrease in the volumes of gas sold resulted  primarily  from positive prior
period  volume  adjustments  made by the  purchasers  on four wells during 1997.
Average  oil and gas  prices  decreased  to $13.07 per barrel and $1.90 per Mcf,
respectively, in 1998 from $19.69 per barrel



                                      -19-
<PAGE>



and $2.28, respectively, per Mcf in 1997.

      Oil and gas production  expenses  (including lease operating  expenses and
production  taxes)  increased  $15,166 (16.2%) in 1998 as compared to 1997. This
increase resulted primarily from credits received during 1997 from the operators
on two sold wells for prior period lease operating  expenses.  This increase was
partially  offset by a decrease in production taxes associated with the decrease
in oil and gas  sales.  As a  percentage  of oil and gas sales,  these  expenses
increased to 34.4% in 1998 from 21.5% in 1997  primarily due to the decreases in
the  average  prices of oil and gas sold and the dollar  increase in oil and gas
production expenses.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
decreased  $8,947  (25.7%) in 1998 as compared to 1997.  This decrease  resulted
primarily from the decreases in volumes of oil and gas sold and upward revisions
in the  estimates of remaining  oil and gas reserves at December 31, 1998.  As a
percentage of oil and gas sales, these expenses remained  relatively constant at
8.2% in 1998 and 8.0% in 1997.  Any increase in this  percentage  related to the
decreases in the average prices of oil and gas sold was substantially  offset by
a decrease related to the 1998 upward reserve revisions.

      General and  administrative  expenses  decreased  $3,852 (6.7%) in 1998 as
compared to 1997. As a percentage of oil and gas sales, these expenses increased
to 16.9% in 1998 from 13.2% in 1997,  primarily  due to the  decrease in oil and
gas sales.


                     Year Ended December 31, 1997 Compared
                        to Year Ended December 31, 1996
                     -------------------------------------

      Total oil and gas sales  increased  $25,750  (6.3%) in 1997 as compared to
1996. Of this increase, approximately $5,000 and $21,000, respectively,  related
to increases in volumes of oil and gas sold and approximately $34,000 related to
an increase in the average price of gas sold,  which  increases  were  partially
offset by a refund of prior oil sales of approximately  $32,000.  Volumes of oil
and gas sold  increased  211  barrels  and 9,719 Mcf,  respectively,  in 1997 as
compared to 1996. Average oil prices decreased to $19.69 per barrel in 1997 from
$22.95 per barrel in 1996. Average gas prices increased to $2.28 per Mcf in 1997
from $2.11 per Mcf in 1996.

      Oil and gas production  expenses  (including lease operating  expenses and
production taxes) remained  relatively constant in 1997 as compared to 1996. Any
increase in  production  taxes  related to the increase in oil and gas sales was
substantially  offset by a decrease in lease  operating  expenses which resulted
primarily from a workover on one well in 1996. As a percentage



                                      -20-
<PAGE>



of oil and gas sales,  these  expenses  decreased to 21.5% in 1997 from 22.8% in
1996. This percentage  decrease was primarily due to the increase in the average
price of gas sold in 1997.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
increased  $7,490  (27.4%)  in 1997 as  compared  to  1996.  This  increase  was
primarily a result of decreases in the oil and gas prices used in the  valuation
of reserves  at December  31,  1997 as  compared  to  December  31,  1996.  As a
percentage  of oil and gas sales,  this  expense  increased to 8.0% in 1997 from
6.7% in 1996. This percentage  increase was primarily due to the dollar increase
in depreciation, depletion, and amortization.

      General and  administrative  expenses  increased  $2,237 (4.1%) in 1997 as
compared to 1996.  As a percentage of oil and gas sales,  this expense  remained
relatively constant at 13.2% in 1997 as compared to 13.5% in 1996.


                                1985-2 Program
                                --------------

                     Year Ended December 31, 1998 Compared
                        to Year Ended December 31, 1997
                     -------------------------------------

      Total oil and gas sales  decreased  $61,783 (32.9%) in 1998 as compared to
1997. Of this decrease,  approximately $11,000 and $26,000,  respectively,  were
related to  decreases in volumes of oil and gas sold and  approximately  $15,000
and $21,000,  respectively,  were related to decreases in the average  prices of
oil and gas sold.  These  decreases  were  partially  offset by an  increase  of
approximately  $11,000  related to a refund by the  1985-2  Program in 1997 of a
prior oil  overpayment.  Volumes of oil and gas sold  decreased  566 barrels and
11,051 Mcf,  respectively,  in 1998 as compared to 1997. The decrease in volumes
of oil sold resulted primarily from the curtailment of oil sales on one well due
to low oil prices.  The decrease in volumes of gas sold resulted  primarily from
(i) the sale of two wells  during  1998,  (ii) the 1985-2  Program  receiving  a
decreased  percentage  of  sales  on one  well  during  1998  due to the  1985-2
Program's  overproduced gas balancing  position in that well, and (iii) positive
prior period volume adjustments made by purchasers on several wells during 1997.
Average  oil and gas  prices  decreased  to $12.80 per barrel and $1.96 per Mcf,
respectively, in 1998 from $18.87 per barrel and $2.39 per Mcf, respectively, in
1997.

      As discussed in "Liquidity and Capital Resources" below, during the fourth
quarter of 1998 the  1985-2  Program  sold for  $15,938  two wells  which had no
reserves  that could be  economically  recovered.  The proceeds from these sales
would have reduced the net book value of the oil and gas properties by 30%,



                                      -21-
<PAGE>



significantly  altering the 1985-2 Program's  capitalized  cost/proved  reserves
relationship. Accordingly, capitalized costs were not reduced and a gain on sale
of oil and gas  properties  of $15,938 was  recognized.  No such sales  occurred
during 1997.

      Oil and gas production  expenses  (including lease operating  expenses and
production  taxes)  increased  $18,649 (39.5%) in 1998 as compared to 1997. This
percentage  increase  resulted  primarily from credits received during 1997 from
the operator on one sold well for prior period lease  operating  expenses.  As a
percentage of oil and gas sales,  these expenses increased to 52.2% in 1998 from
25.1% in 1997. This percentage increase was primarily due to the dollar increase
in oil and gas  production  expenses and the decreases in the average  prices of
oil and gas sold.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
decreased  $3,153  (27.2%) in 1998 as compared to 1997.  This decrease  resulted
primarily  from the decreases in volumes of oil and gas sold. As a percentage of
oil and gas sales, this expense increased to 6.7% in 1998 from 6.2% in 1997.

      General and  administrative  expenses  decreased  $4,109 (7.4%) in 1998 as
compared to 1997. As a percentage of oil and gas sales, these expenses increased
to 40.8% in 1998 from 29.6% in 1997. This percentage  increase was primarily due
to the decrease in oil and gas sales.


                     Year Ended December 31, 1997 Compared
                        to Year Ended December 31, 1996
                     -------------------------------------

      Total oil and gas sales  decreased  $42,309 (18.4%) in 1997 as compared to
1996. Of this decrease, approximately $21,000 and $20,000, respectively, related
to decreases in volumes of oil and gas sold,  approximately  $5,000 related to a
decrease in the average price of oil sold, and approximately  $11,000 related to
a refund  of prior  oil  sales,  which  decreases  were  partially  offset by an
increase of approximately $14,000 related to an increase in the average price of
gas sold.  Volumes of oil and gas sold  decreased  1,008  barrels and 9,130 Mcf,
respectively,  in 1997 as compared to 1996.  The decreases in volumes of oil and
gas sold resulted  primarily from (i) normal  declines in  production,  (ii) the
shutting in of one well by the operator  during a portion of 1997, and (iii) the
sale of another well in 1996.  Average oil prices decreased to $18.87 per barrel
in 1997 from $20.54 per barrel in 1996.  Average gas prices  increased  to $2.39
per Mcf in 1997 from $2.16 per Mcf in 1996.

      Oil and gas production expenses  (including  lease operating  expenses and
production  taxes)  decreased  $30,761 (39.4%) in 1997 as compared to 1996. This
decrease resulted primarily from (i)



                                      -22-
<PAGE>



the  decrease in volumes of oil and gas sold,  (ii) a credit  received  from the
operator  of one well  during  1997,  (iii) the  shutting-in  of one well by the
operator  during a portion of 1997,  and (iv) the sale of one well in 1996. As a
percentage of oil and gas sales,  these expenses decreased to 25.1% in 1997 from
33.9% in 1996. This percentage decrease was primarily due to the dollar decrease
in oil and gas production  expenses and the increase in the average price of gas
sold in 1997 as compared to 1996.

      Depreciation,  depletion,  and  amortization  of oil  and  gas  properties
increased  $1,699  (17.1%)  in 1997 as  compared  to  1996.  This  increase  was
primarily a result of decreases in the oil and gas prices used in the  valuation
of reserves  at December  31,  1997 as  compared  to  December  31,  1996.  As a
percentage of oil and gas sales,  these expenses  increased to 6.2% in 1997 from
4.3% in 1996. This percentage  increase was primarily due to the dollar increase
in depreciation, depletion, and amortization.

      General  and  administrative  expenses  increased $2,317 (4.3%) in 1997 as
compared to 1996. As a percentage of oil and gas sales, these expenses increased
to 29.6% in 1997 from 23.2% in 1996. This percentage  increase was primarily due
to the decrease in oil and gas sales.


      Liquidity and Capital Resources

      Net  proceeds  from  operations  less  necessary   operating  capital  are
distributed to the limited  partners on a quarterly  basis.  See "Item 5. Market
for the  Registrant's  Limited  Partnership  Units and Related  Limited  Partner
Matters."  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 reserves, thereby resulting in
a positive  economic impact.  Assuming 1998 production  levels for future years,
the 1985-1 and 1985-2 Programs'  proved reserve  quantities at December 31, 1998
would have remaining lives of approximately 4.3 and 5.4 years, respectively, for
gas reserves and 7.0 and 3.2 years,  respectively,  for oil  reserves.  However,
since  the  Programs'  reserve  estimates  are  based on oil and gas  prices  at
December 31, 1998,  it is possible  that a  significant  decrease in oil and gas
prices from  December  31, 1998  levels  will  reduce  such  reserves  and their
corresponding life-span.

      The Programs'  available capital from the limited partners'  subscriptions
has been spent on oil and gas drilling activities and there should be no further
material capital resource commitments in the future.  Occasional expenditures by
the Programs for well completions or workovers, however, may reduce or eliminate
cash available for a particular  quarterly cash distribution.  The Programs have
no debt commitments. Cash for



                                      -23-
<PAGE>



operational purposes will be provided by current oil and gas production.

      The 1985-2  Program's  Statement of Cash Flows for the year ended December
31, 1998 includes  proceeds from the sale of oil and gas properties during 1998.
It is  possible  that the 1985-2  Program's  repurchase  values and future  cash
distributions  could  be  reduced  as a  result  of  the  disposition  of  these
properties.  On the other  hand,  the  General  Partner  believes  there will be
beneficial  operating  efficiencies  related to the 1985-2  Program's  remaining
properties. This is primarily due to the fact that the properties sold generally
bore a higher  ratio of  operating  expenses as  compared  to reserves  that the
1985-2 Program's remaining properties.

      There  can be no assurance as to the amount of the  Programs'  future cash
distributions.   The  Programs'  ability  to  make  cash  distributions  depends
primarily  upon the level of  available  cash flow  generated  by the  Programs'
operating  activities,  which will be affected (either positively or negatively)
by many factors  beyond the control of the Programs,  including the price of and
demand for oil and gas and other market and economic conditions.  Even if prices
and costs remain  stable,  the amount of cash available for  distributions  will
decline  over  time (as the  volume  of  production  from  producing  properties
declines) since the Programs are not replacing  production through  acquisitions
of producing properties and drilling.


      Inflation and Changing Prices

      Prices  obtained for oil and gas production  depend upon numerous factors,
including the extent of domestic and foreign production, foreign imports of oil,
market  demand,  domestic  and  foreign  economic  conditions  in  general,  and
governmental  regulations  and tax laws.  The general  level of inflation in the
economy did not have a material effect on the operations of the Program in 1998.
Oil and gas prices have  fluctuated  during recent years and generally  have not
followed  the same pattern as  inflation.  See "Item 2.  Properties  Oil and Gas
Production, Revenue, and Price History."


      Year 2000 Computer Issues

                                   In General

      The  Year 2000 Issue ("Y2K") refers to the inability of computer and other
information  technology  systems to properly process date and time  information,
stemming from the earlier  programming  practice of using two digits rather than
four to  represent  the  year in a date.  For  example,  computer  programs  and
imbedded chips that are date sensitive may recognize a date using



                                      -24-
<PAGE>



(00) as the year 1900 rather than the year 2000. The  consequence of Y2K is that
computer  and  imbedded  processing  systems  may be at risk of  malfunctioning,
particularly during the transition from 1999 to 2000.

      The effects of Y2K are exacerbated by the  interdependence of computer and
telecommunication systems throughout the world. This interdependence also exists
among the Programs, Samson, and their vendors, customers, and business partners,
as well as with  regulators.  The potential risks associated with Y2K for an oil
and gas  production  company  fall into  three  general  areas:  (i)  financial,
leasehold and  administrative  computer systems,  (ii) imbedded systems in field
process control units, and (iii) third party exposures. As discussed below, Dyco
does not believe that these risks will be material to the Programs' operations.

      The Programs' business is producing oil and gas. The day-to-day production
of the  Programs'  oil and gas is not  dependent on computers or equipment  with
imbedded chips. As further  discussed  below,  management  anticipates  that the
Programs' daily business activities will not be materially affected by Y2K.

      The  Programs  rely  on  Samson  to  provide  all of its  operational  and
administrative  services  on  either a  direct  or  indirect  basis.  Samson  is
addressing  each of the three  Y2K areas  discussed  above  through a  readiness
process that seeks to:

      1.    increase the awareness of the issue among key employees;
      2.    identify areas of potential risk;
      3.    assess  the relative  impact of these risks and Samson's  ability to
            manage them; and
      4.    remediate these risks on a priority basis wherever possible.

      Samson  Investment  Company's Chief  Financial  Officer is responsible for
communicating  to its  Board  of  Directors  Y2K  actions  and for the  ultimate
implementation of its Y2K plan. He has delegated to Samson Investment  Company's
Senior  Vice   President-Technology   and   Administrative   Services  principal
responsibility for ensuring Y2K compliance within Samson.

      Samson  has  been  planning  for  the  impact  of Y2K  on its  information
technology  systems  since  1993.  As of March 1,  1999,  Samson is in the final
stages of implementation of a Y2K plan, as summarized below:


                      Financial and Administrative Systems

      1.  Awareness. Samson has alerted its officers, managers  and  supervisors
of Y2K issues and asked  them  to  have  their  employees   participate  in  the
identification of potential Y2K



                                      -25-
<PAGE>



risks which might otherwise go unnoticed by higher level employees and officers.
As a result, awareness of the issue is considered high.

      2.  Risk   Identification.   Samson's  most   significant   financial  and
administrative  systems  exposure is the Y2K status of the  accounting  and land
administration  system used to collect and manage data for  internal  management
decision making and for external  revenue and accounts payable  purposes.  Other
concerns include network hardware and software,  desktop computing  hardware and
software, telecommunications, and office space readiness.


      3.  Risk Assessment.  The failure to identify  and correct a material  Y2K
problem  could  result in  inaccurate  or  untimely  financial  information  for
management  decision-making  or  cash  flow  and  payment  purposes,   including
maintaining oil and gas leases.

      4.  Remediation.  Since 1993, Samson has been upgrading its accounting and
land  administration  software.  Substantially all of the Y2K upgrades have been
completed,  with the remainder  scheduled to be completed during the 2nd quarter
of 1999.  In  addition,  in 1997 and 1998 Samson  replaced  or applied  software
patches to substantially  all of its network and desktop  software  applications
and believes them to be generally Y2K compliant.  Additional patches or software
upgrades  will be applied no later than May 15, 1999 to complete  this  process.
The costs of all such risk  assessments  and  remediation are not expected to be
material to the Programs.

      5. Contingency  Planning.  Notwithstanding the foregoing,  should there be
significant  unanticipated  disruptions in Samson's financial and administrative
systems,  all of the accounting processes that are currently automated will need
to be performed  manually.  Samson will  consider in the second half of 1999 its
options with  respect to  contingency  arrangements  for  temporary  staffing to
accommodate such situations.


                                Imbedded Systems

      1.  Awareness.  Samson's  Y2K  program  has  involved  all levels of field
personnel  from  production  foremen and higher.  Employees at all levels of the
organization  have been asked to participate in the  identification of potential
Y2K risks,  which might  otherwise go unnoticed  by higher level  employees  and
officers of Samson, and as a result, awareness of the issue is considered high.

      2.  Risk Identification.  Samson has inventoried all possible exposures to
imbedded chips and systems.  Such  exposures can be classified as either (i) oil
and  gas  production  and processing equipment or  (ii) office machines such  as
faxes,



                                      -26-
<PAGE>



copiers, phones, etc.

      With respect to oil and gas production and processing  equipment,  neither
Samson nor the Programs operate offshore wells,  significant  processing plants,
or wells  with  older  electronic  monitoring  systems.  As a  result,  Samson's
inventory  identified  less than 10 applications  using imbedded  chips.  All of
these are in the  process  of being  tested by the  respective  vendors  and are
expected to be Y2K compliant or replaced no later than May 30, 1999. Oil and gas
production  related to such  equipment  is very minor with respect to the entire
Samson group, and, in fact, the Programs'  production may not use such equipment
at all.

      Office  machines are currently  being tested by Samson and vendors.  It is
expected that such machines will be made compliant or replaced no later than May
15, 1999.


      3.  Risk Assessment and Remediation. The failure to identify and correct a
material Y2K problem in an imbedded system could result in outcomes ranging from
errors in data reporting to  curtailments  or shutdowns in production.  As noted
above,  Samson has identified less than 10 imbedded system applications that may
have a Y2K problem.  None of these  applications  are believed to be material to
Samson or the  Programs.  Once  identified,  assessed  and  prioritized,  Samson
intends to test and upgrade  imbedded  components  and systems in field  process
control units deemed to pose the greatest risk of significant non-compliance and
capable of  testing.  Samson  believes  that  sufficient  manual  processes  are
available  to  minimize  any such  field  level  risk and that  there will be no
material impact on the Programs with respect to these applications.

      4.  Contingency Planning. Should material production disruptions occur  as
a result of Y2K  failures in field operations, Samson will  utilize its existing
field  personnel  in an attempt to avoid any material  impact on operating  cash
flow.  Samson is not able to  quantify  any  potential  exposure in the event of
systems failure or inadequate manual alternatives.


                              Third Party Exposures

      1.  Awareness. Samson has advised  management to consider Y2K implications
with its outside vendors, customers, and business partners.  Management has been
asked to participate in the  identification  of potential  third party Y2K risks
and, as a result, awareness of the issue is considered high.

      2.  Risk  Identification.  Samson's  most  significant  third  party   Y2K
exposure is its dependence on third parties for the receipt of revenues from oil
and gas sales. However, virtually



                                      -27-
<PAGE>



all of these purchasers are very large and  sophisticated  companies.  Other Y2K
concerns   include  the   availability  of  electric  power  to  Samson's  field
operations,  the integrity of  telecommunication  systems,  and the readiness of
commercial banks to execute electronic fund transfers.

      3. Risk  Assessment.  Because of the high  awareness of the Y2K problem in
the U.S.,  Samson has not  undertaken  and does not plan to  undertake  a formal
company  wide plan to make  inquiries  of third  parties  on the  subject of Y2K
readiness.  If it did so,  Samson has no ability  to require  responses  to such
inquiries  or to  independently  verify  their  accuracy.  Samson has,  however,
received oral  assurances  from its  significant  oil and gas  purchasers of Y2K
compliance.  If significant  disruptions  from major  purchasers  were to occur,
however,  there could be a material and adverse impact on the Programs'  results
of operations, liquidity, and financial conditions.

      It is  important  to note that  third  party oil and gas  purchasers  have
significant  incentives  to avoid  disruptions  arising from a Y2K failure.  For
example, most of these parties are under contractual obligations to purchase oil
and gas or  disperse  revenues  to Samson.  The  failure to do so will result in
contractual  and  statutory  penalties.  Therefore,  Dyco  believes  that  it is
unlikely that there will be material  third party  non-compliance  with purchase
and remittance obligations as a result of Y2K issues.

      4.   Remediation.   Where  Samson   perceives   significant  risk  of  Y2K
non-compliance that may have a material impact on it, and where the relationship
between  Samson and a vendor,  customer,  or  business  partner  permits,  joint
testing may be undertaken during 1999 to further identify these risks.

      5. Contingency  Planning.  In the unlikely event that material  production
disruptions  occur as a result of Y2K failures of third  parties,  the Programs'
operating cash flow could be impacted.  This  contingency  will be factored into
deliberations on the level of quarterly cash  distributions  paid out during any
such period of cash flow disruption.


ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
            RISK.

      The Programs do not hold any market risk sensitive instruments.





                                      -28-
<PAGE>



ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                       REPORT OF INDEPENDENT ACCOUNTANTS



TO THE PARTNERS

DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP


      In our opinion, the accompanying balance sheets and the related statements
of operations,  changes in partners'  capital and cash flows present fairly,  in
all material  respects,  the financial  position of the Dyco Oil and Gas Program
1985-1 Limited  Partnership,  a Minnesota limited  partnership,  at December 31,
1998 and 1997,  and the results of its operations and its cash flows for each of
the three years in the period  ended  December  31,  1998,  in  conformity  with
generally accepted  accounting  principles.  These financial  statements are the
responsibility of the Program's management;  our responsibility is to express an
opinion on these  financial  statements  based on our audits.  We conducted  our
audits of these  financial  statements in  accordance  with  generally  accepted
auditing  standards  which  require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.



                                    PricewaterhouseCoopers LLP










Tulsa, Oklahoma
March 18, 1999



                                      -29-
<PAGE>



                           DYCO OIL AND GAS PROGRAM
                          1985-1 LIMITED PARTNERSHIP
                                Balance Sheets
                          December 31, 1998 and 1997

                                    ASSETS
                                    ------
                                                           1998        1997
                                                         --------    --------
CURRENT ASSETS:
   Cash and cash equivalents                             $ 31,245    $ 43,585
   Accrued oil and gas sales                               41,516      83,721
                                                          -------     -------

     Total current assets                                $ 72,761    $127,306

NET OIL AND GAS PROPERTIES, utilizing the
   full cost method                                       117,026     141,913

DEFERRED CHARGE                                            20,732      14,434
                                                          -------     -------

                                                         $210,519    $283,653
                                                          =======     =======

                       LIABILITIES AND PARTNERS' CAPITAL
                       ---------------------------------

CURRENT LIABILITIES:
   Accounts payable                                      $  6,793    $  6,485
   Gas imbalance payable                                      -        13,160
                                                          -------     -------
     Total current liabilities                           $  6,793    $ 19,645

ACCRUED LIABILITY                                        $ 39,184    $ 23,955

PARTNERS' CAPITAL:
   General Partner, 41 general partner
     units                                               $  1,645    $  2,400
   Limited Partners, issued and
     outstanding 4,100 Units                              162,897     237,653
                                                          -------     -------

     Total Partners' capital                             $164,542    $240,053
                                                          -------     -------

                                                         $210,519    $283,653
                                                          =======     =======



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




                                      -30-
<PAGE>




                           DYCO OIL AND GAS PROGRAM
                          1985-1 LIMITED PARTNERSHIP
                           Statements of Operations
             For the Years Ended December 31, 1998, 1997, and 1996


                                               1998        1997        1996
                                             --------    --------    --------

REVENUES:
   Oil and gas sales                         $316,720    $434,576    $408,826
   Interest                                     3,100       3,586       2,345
                                              -------     -------     -------

                                             $319,820    $438,162    $411,171

COSTS AND EXPENSES:
   Lease operating                           $ 86,362    $ 58,594    $ 63,559
   Production taxes                            22,453      35,055      29,783
   Depreciation, depletion, and
     amortization of oil and gas
     properties                                25,912      34,859      27,369
   General and administrative                  53,554      57,406      55,169
                                              -------     -------     -------

                                             $188,281    $185,914    $175,880
                                              -------     -------     -------

NET INCOME                                   $131,539    $252,248    $235,291
                                              =======     =======     =======

GENERAL PARTNER (1%) - NET INCOME            $  1,315    $  2,522    $  2,353
                                              =======     =======     =======

LIMITED PARTNERS (99%) - NET INCOME          $130,224    $249,726    $232,938
                                              =======     =======     =======

NET INCOME per Unit                          $  31.77    $  60.91    $  56.82
                                              =======     =======     =======

UNITS OUTSTANDING                               4,141       4,141       4,141
                                              =======     =======     =======


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




                                      -31-
<PAGE>




                            DYCO OIL AND GAS PROGRAM
                           1985-1 LIMITED PARTNERSHIP
                   Statements of Changes in Partners' Capital
             For the Years Ended December 31, 1998, 1997, and 1996


                                         General      Limited
                                         Partner     Partners        Total
                                        --------    ----------    ----------


Balances at Dec. 31, 1995                $2,908      $287,936      $290,844
   Cash distributions                   ( 1,863)    ( 184,482)    ( 186,345)
   Net income                             2,353       232,938       235,291
                                          -----       -------       -------

Balances at Dec. 31, 1996                $3,398      $336,392      $339,790
   Cash distributions                   ( 3,520)    ( 348,465)    ( 351,985)
   Net income                             2,522       249,726       252,248
                                          -----       -------       -------

Balances at Dec. 31, 1997                $2,400      $237,653      $240,053
   Cash distributions                   ( 2,070)    ( 204,980)    ( 207,050)
   Net income                             1,315       130,224       131,539
                                          -----       -------       -------

Balances at Dec. 31, 1998                $1,645      $162,897      $164,542
                                          =====       =======       =======


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




                                      -32-
<PAGE>




                            DYCO OIL AND GAS PROGRAM
                           1985-1 LIMITED PARTNERSHIP
                            Statements of Cash Flows
              For the Years Ended December 31, 1998, 1997, and 1996

                                              1998          1997         1996
                                           ----------    ----------   ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                               $131,539      $252,248     $235,291
   Adjustments to reconcile net
     income to net cash provided by
     operating activities:
     Depreciation, depletion, and
        amortization of oil and gas
        properties                            25,912        34,859       27,369
     (Increase) decrease in accrued
        oil and gas sales                     42,205        11,737    (  33,236)
     (Increase) decrease in deferred
        charge                             (   6,298)        1,085    (  10,778)
     Increase (decrease) in accounts
        payable                                  308           569    (   4,037)
     Increase (decrease) in gas imbalance
        payable                            (  13,160)       13,160         -
     Increase (decrease) in accrued
        liability                             15,229     (   5,747)       1,270
                                             -------       -------      -------
   Net cash provided by operating
     activities                             $195,735      $307,911     $215,879
                                             -------       -------      -------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from the sale of oil
     and gas properties                     $    492      $    935     $    907
   Additions to oil and gas properties     (   1,517)         -       (   2,213)
                                             -------       -------      -------
   Net cash provided (used) by
     investing activities                  ($  1,025)     $    935    ($  1,306)
                                             -------       -------      -------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash Distributions                      ($207,050)    ($351,985)   ($186,345)
                                             -------       -------      -------
   Net cash used by financing activities   ($207,050)    ($351,985)   ($186,345)
                                             -------       -------      -------

NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                  ($ 12,340)    ($ 43,139)    $ 28,228

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                        43,585        86,724       58,496
                                             -------       -------      -------
CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                            $ 31,245      $ 43,585     $ 86,724
                                             =======       =======      =======

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




                                      -33-
<PAGE>




               DYCO OIL AND GAS PROGRAM 1985-1 LIMITED PARTNERSHIP
                          Notes to Financial Statements
              For the Years Ended December 31, 1998, 1997, and 1996


1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Organization and Nature of Operations

            The  Dyco  Oil and  Gas  Program  1985-1  Limited  Partnership  (the
      "Program"), a Minnesota limited partnership, commenced operations on April
      1, 1985. Dyco Petroleum Corporation ("Dyco") is the General Partner of the
      Program.  Affiliates of Dyco owned 1,394 (34.0%) of the Program's Units at
      December 31, 1998.

            The Program's sole business is the development and production of oil
      and gas with a concentration  on gas.  Substantially  all of the Program's
      gas reserves are being sold  regionally  in the "spot  market." Due to the
      highly  competitive  nature of the spot market,  prices on the spot market
      are  subject  to wide  seasonal  and  regional  pricing  fluctuations.  In
      addition,  such spot market sales are  generally  short-term in nature and
      are dependent upon the obtaining of  transportation  services  provided by
      pipelines.  The prices  received for the Program's oil and gas are subject
      to influences such as global consumption and supply trends.


      Cash and Cash Equivalents

            The Program considers all highly liquid  investments with a maturity
      of three  months  or less  when  purchased  to be cash  equivalents.  Cash
      equivalents  are not  insured,  which  cause the  Program to be subject to
      risk.


      Credit Risk

            Accrued  oil and gas sales  which are due from a variety  of oil and
      gas purchasers subject the Program to a concentration of credit risk. Some
      of these purchasers are discussed in Note 3 - Major Customers.


      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.  Capitalized  costs are depleted on the gross revenue  method
      using estimates of proved reserves. The full cost



                                      -34-
<PAGE>



      amortization  rates per  equivalent  Mcf of gas produced  during the years
      ended  December  31,  1998,  1997,  and 1996 were $ .16, $0.17, and $0.14,
      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  Commission ("SEC")) the excess
      is charged to expense in the year 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.


      Deferred Charge

            The Deferred Charge at December 31, 1998 and 1997  represents  costs
      deferred for lease  operating  expenses  incurred in  connection  with the
      Program's  underproduced  gas  imbalance  positions.   The  rate  used  in
      calculating  the deferred  charge is the average of the annual  production
      costs per Mcf. At December 31, 1998,  cumulative  total gas sales  volumes
      for  underproduced  wells were less than the Program's  pro-rata  share of
      total gas production from these wells by 45,465 Mcf,  resulting in prepaid
      lease  operating  expenses of $20,732.  At December 31,  1997,  cumulative
      total  gas  sales  volumes  for  underproduced  wells  were  less than the
      Program's  pro-rata  share of total gas  production  from  these  wells by
      42,204 Mcf, resulting in prepaid lease operating expenses of $14,434.


      Accrued Liability

            The  Accrued  Liability  at December  31,  1998 and 1997  represents
      charges accrued for lease operating  expenses  incurred in connection with
      the  Program's  overproduced  gas  imbalance  positions.  The rate used in
      calculating the accrued  liability is the average of the annual production
      costs per Mcf. At December 31, 1998,  cumulative  total gas sales  volumes
      for overproduced  wells exceeded the Program's pro-rata share of total gas
      production  from these wells by 85,930  Mcf,  resulting  in accrued  lease
      operating expenses of $39,184. At December 31, 1997,  cumulative total gas
      sales volumes for overproduced wells exceeded the Program's pro-rata share
      of total gas  production  from these  wells by 70,045  Mcf,  resulting  in
      accrued lease operating expenses of $23,955.



                                      -35-
<PAGE>



      Oil and Gas Sales and Gas Imbalance Payable

            The Program's oil and condensate  production is sold,  title passed,
      and revenue  recognized  at or near the Program's  wells under  short-term
      purchase  contracts at prevailing  prices in accordance with  arrangements
      which are  customary in the oil industry.  Sales of gas  applicable to the
      Program's  interest in producing oil and gas leases are recorded as income
      when the gas is metered  and title  transferred  pursuant to the gas sales
      contracts  covering the Program's  interest in gas  reserves.  During such
      times as the  Program's  sales of gas exceed its pro rata  ownership  in a
      well,  such sales are recorded as income  unless total sales from the well
      have  exceeded  the  Program's  share  of  estimated  total  gas  reserves
      underlying  the  property  at which  time  such  excess is  recorded  as a
      liability. The rates per Mcf used to calculate this liability are based on
      the  average  gas  prices  received  for  the  volumes  at  the  time  the
      overproduction  occurred.  At December 31,  1998,  no such  liability  was
      recorded.  At December 31, 1997,  total sales exceeded the Program's share
      of estimated  total gas reserves on one well by $13,160 (8,773 Mcf).  This
      amount was  recorded  as gas  imbalance  payable at  December  31, 1997 in
      accordance with the sales method.


      Use of Estimates in Financial Statements

            The preparation of financial statements in conformity with generally
      accepted  accounting  principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure  of  contingent  assets  and  liabilities  at the  date  of the
      financial  statements  and the  reported  amounts of revenues and expenses
      during the  reporting  period.  Actual  results  could  differ  from those
      estimates.  Further,  the deferred charge, the gas imbalance payable,  and
      the accrued  liability all involve estimates which could materially differ
      from the actual amounts ultimately  realized or incurred in the near term.
      Oil and gas reserves (see Note 4) also involve significant estimates which
      could materially differ from the actual amounts ultimately realized.


      Income Taxes

            Income or loss for income tax purposes is  includable  in the income
      tax returns of the partners. Accordingly, no recognition has been given to
      income taxes in the accompanying financial statements.




                                      -36-
<PAGE>



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 years ended December 31, 1998, 1997, and
      1996, such expenses totaled $53,554,  $57,406, and $55,169,  respectively,
      of which $42,840 was paid each year 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,  together with
      any  compressor  rentals,  consulting,  or other services  provided.  Such
      charges are  comparable to third party charges in the area where the wells
      are located and are the same as charged to other working  interest  owners
      in the wells.

3.    MAJOR CUSTOMERS

            The following purchasers  individually  accounted for 10% or more of
      the  combined  oil and gas  revenues  of the  Program  for the years ended
      December 31, 1998, 1997, and 1996:

        Purchaser                            1998    1997     1996
        ---------                            -----   -----    -----

        El Paso Energy
           Marketing Company                 79.2%   74.1%    74.9%
        Sanguine, Ltd.                       11.3%   15.5%    17.9%


            In the  event of  interruption  of  purchases  by these  significant
      customers  or  the  cessation  or  material   change  in  availability  of
      open-access  transportation by the Program's  pipeline  transporters,  the
      Program may encounter  difficulty in marketing its gas and in  maintaining
      historic sales levels.  Alternative  purchasers or transporters may not be
      readily available.


4.    SUPPLEMENTAL OIL AND GAS INFORMATION

            The  following  supplemental  information  regarding the oil and gas
      activities  of  the  Program  is  presented  pursuant  to  the  disclosure
      requirements promulgated by the SEC.




                                      -37-
<PAGE>



      Capitalized Costs

            The  Program's  capitalized  costs  and  accumulated   depreciation,
      depletion,  amortization, and valuation allowance at December 31, 1998 and
      1997 were as follows:

                                                      December 31,
                                             -------------------------------
                                                 1998              1997
                                             -------------     -------------

      Proved properties                       $20,981,447       $20,980,422

      Less accumulated depreciation,
         depletion, amortization, and
         valuation allowance                 ( 20,864,421)     ( 20,838,509)
                                               ----------        ----------

      Net oil and gas properties              $   117,026       $   141,913
                                               ==========        ==========


      Costs Incurred

            The  Program  incurred  no  oil  and  gas  property  acquisition  or
      exploration  costs  during 1998,  1997,  and 1996.  Costs  incurred by the
      Program in connection with its oil and gas property development activities
      during 1998, 1997, and 1996 were as follows:

                                                  December 31,
                                          -----------------------------
                                           1998       1997       1996
                                          ------     ------     -------

      Development costs                   $1,517     $  -       $2,213
                                           =====      =====      =====





                                      -38-
<PAGE>



Quantities of Proved Oil and Gas Reserves - Unaudited

      Set forth below is a summary of the changes in the net  quantities  of the
Program's  proved oil and gas  reserves  for the years ended  December 31, 1998,
1997, and 1996. Proved reserves were estimated by petroleum  engineers  employed
by affiliates of Dyco.  All of the Program's  reserves are located in the United
States and there are no proved undeveloped  reserves.  The following information
includes certain gas balancing adjustments which cause the gas volumes to differ
from the reserve information prepared by Dyco.
<TABLE>
<CAPTION>

                                    1998                      1997                      1996          
                             --------------------     ---------------------      ---------------------
                                Oil         Gas          Oil         Gas          Oil         Gas     
                              (Bbls)       (Mcf)       (Bbls)       (Mcf)        (Bbls)       (Mcf)   
                             --------   ---------     ---------   ---------      ---------   ---------
<S>                          <C>        <C>           <C>         <C>           <C>         <C>       
Proved reserves,                                                                                      
   beginning of year          1,525      771,783       1,975       732,477       35,788      597,729  
                                                                                                      
Revisions of previous                                                                                 
   estimates                    728      109,278      (   28)      240,188      (   444)     242,711  
                                                                                                      
Sales of reserves(1)(2)         -            -          -             -         (33,982)    ( 18,334) 
                                                                                                      
Purchases of reserves(1)        -            -          -             -             824      101,534  
                                                                                                      
Production                   (  283)    (165,027)     (  422)     (200,882)     (   211)    (191,163) 
                              -----      -------       -----       -------       ------      -------  
                                                                                                      
Proved reserves,                                                                                      
   end of year                1,970      716,034       1,525       771,783        1,975      732,477  
                              =====      =======       =====       =======       ======      =======  
                                                                                                      
Proved developed reserves:                                                                            
   Beginning of year          1,525      771,783       1,975       732,477       35,788      597,729  
                              -----      -------       -----       -------       ------      -------  
   End of year                1,970      716,034       1,525       771,783        1,975      732,477  
                              =====      =======       =====       =======       ======      =======  
                                                                                                                     
                                                                                              
-----------------
(1) These  purchases and sales were non-cash  exchanges of oil and gas reserves.
(2) A  significant  portion of these  reserves  were  behind pipe and would have
    required significant capital expenditures in order to produce the reserves.
</TABLE>



                                      -39-
<PAGE>



            The process of estimating oil and gas reserves is complex, requiring
      significant   subjective   decisions  in  the   evaluation   of  available
      geological,  engineering,  and economic data for each reservoir.  The data
      for a given reservoir may change  substantially  over time as a result of,
      among other things,  additional development activity,  production history,
      and  viability  of   production   under   varying   economic   conditions;
      consequently,  it  is  reasonably  possible  that  material  revisions  to
      existing  reserve  estimates may occur in the near future.  Although every
      reasonable  effort  has been made to  ensure  that the  reserve  estimates
      reported  herein  represent the most  accurate  assessment  possible,  the
      significance  of  the  subjective  decisions  required  and  variances  in
      available data for various reservoirs make these estimates  generally less
      precise  than other  estimates  presented  in  connection  with  financial
      statement disclosures.  The Program's reserves were determined at December
      31,  1998  using oil and gas prices of $9.50 per barrel and $2.03 per Mcf,
      respectively.



                                      -40-
<PAGE>



                       REPORT OF INDEPENDENT ACCOUNTANTS



TO THE PARTNERS

DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP

      In our opinion, the accompanying balance sheets and the related statements
of operations,  changes in partners'  capital and cash flows present fairly,  in
all material  respects,  the financial  position of the Dyco Oil and Gas Program
1985-2 Limited  Partnership,  a Minnesota limited  partnership,  at December 31,
1998 and 1997,  and the results of its operations and its cash flows for each of
the three years in the period  ended  December  31,  1998,  in  conformity  with
generally accepted  accounting  principles.  These financial  statements are the
responsibility of the Program's management;  our responsibility is to express an
opinion on these  financial  statements  based on our audits.  We conducted  our
audits of these  financial  statements in  accordance  with  generally  accepted
auditing  standards  which  require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.



                                    PricewaterhouseCoopers LLP












Tulsa, Oklahoma
March 18, 1999





                                      -41-
<PAGE>



                           DYCO OIL AND GAS PROGRAM
                          1985-2 LIMITED PARTNERSHIP
                                Balance Sheets
                          December 31, 1998 and 1997

                                    ASSETS
                                    ------
                                                           1998        1997
                                                         --------    --------
CURRENT ASSETS:
   Cash and cash equivalents                             $ 26,412    $ 68,271
   Accrued oil and gas sales                               13,786      31,074
                                                          -------     -------
     Total current assets                                $ 40,198    $ 99,345

NET OIL AND GAS PROPERTIES, utilizing the
   full cost method                                        39,823      53,942

DEFERRED CHARGE                                            54,175      48,160
                                                          -------     -------

                                                         $134,196    $201,447
                                                          =======     =======

                       LIABILITIES AND PARTNERS' CAPITAL
                       ---------------------------------

CURRENT LIABILITIES:
   Accounts payable                                      $  4,238    $  2,718
                                                          -------     -------

     Total current liabilities                           $  4,238    $  2,718

ACCRUED LIABILITY                                        $  8,218    $  7,515

PARTNERS' CAPITAL:
   General Partner, 44 general partner
     units                                               $  1,217    $  1,912
   Limited Partners, issued and
     outstanding, 4,330 Units                             120,523     189,302
                                                          -------     -------

     Total Partners' capital                             $121,740    $191,214
                                                          -------     -------
                                                         $134,196    $201,447
                                                          =======     =======


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



                                      -42-
<PAGE>



                           DYCO OIL AND GAS PROGRAM
                          1985-2 LIMITED PARTNERSHIP
                           Statements of Operations
             For the Years Ended December 31, 1998, 1997, and 1996


                                             1998        1997         1996
                                          ---------    ---------    --------

REVENUES:
   Oil and gas sales                      $126,100     $187,883     $230,192
   Interest                                  1,809        1,671        2,302
   Gain on sale of
     oil and gas properties                 15,938         -            -
                                           -------      -------      -------

                                          $143,847     $189,554     $232,494

COSTS AND EXPENSES:
   Lease operating                        $ 56,430     $ 33,442     $ 61,178
   Production taxes                          9,450       13,789       16,814
   Depreciation, depletion, and
     amortization of oil and gas
     properties                              8,457       11,610        9,911
   General and administrative               51,504       55,613       53,296
                                           -------      -------      -------

                                          $125,841     $114,454     $141,199
                                           -------      -------      -------

NET INCOME                                $ 18,006     $ 75,100     $ 91,295
                                           =======      =======      =======

GENERAL PARTNER (1%) - NET
   INCOME                                 $    180     $    751     $    913
                                           =======      =======      =======

LIMITED PARTNERS (99%) - NET
   INCOME                                 $ 17,826     $ 74,349     $ 90,382
                                           =======      =======      =======

NET INCOME per Unit                       $   4.12     $  17.17     $  20.87
                                           =======      =======      =======

UNITS OUTSTANDING                            4,374        4,374        4,374
                                           =======      =======      =======


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




                                      -43-
<PAGE>




                         DYCO OIL AND GAS PROGRAM 1985-2
                               LIMITED PARTNERSHIP
                   Statements of Changes in Partners' Capital
             For the Years Ended December 31, 1998, 1997, and 1996


                                         General      Limited
                                         Partner     Partners        Total
                                        --------    ----------    ----------

Balances at Dec. 31, 1995                $2,872      $284,387      $287,259
   Cash distributions                   ( 1,531)    ( 151,559)    ( 153,090)
   Net income                               913        90,382        91,295
                                          -----       -------       -------

Balances at Dec. 31, 1996                $2,254      $223,210      $225,464
   Cash distributions                   ( 1,093)    ( 108,257)    ( 109,350)
   Net income                               751        74,349        75,100
                                          -----       -------       -------

Balances at Dec. 31, 1997                $1,912      $189,302      $191,214
   Cash distributions                   (   875)    (  86,605)    (  87,480)
   Net income                               180        17,826        18,006
                                          -----       -------       -------

Balances at Dec. 31, 1998                $1,217      $120,523      $121,740
                                          =====       =======       =======


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




                                      -44-
<PAGE>




                            DYCO OIL AND GAS PROGRAM
                           1985-2 LIMITED PARTNERSHIP
                            Statements of Cash Flows
              For the Years Ended December 31, 1998, 1997, and 1996

                                             1998          1997         1996
                                          ----------    ----------   ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                              $18,006       $ 75,100     $ 91,295
   Adjustments to reconcile net
     income to net cash provided
     by operating activities:
     Depreciation, depletion, and
        amortization of oil and gas
        properties                           8,457         11,610        9,911
     Gain on sale of oil and
        gas properties                    ( 15,938)          -            -
     (Increase) decrease in accrued
        oil and gas sales                   17,288         15,471    (   5,056)
     Increase in deferred charge          (  6,015)     (   8,633)   (  11,190)
     Increase (decrease) in
        accounts payable                     1,520      (   3,480)   (   2,827)
     Increase (decrease) in
        accrued liability                      703      (   5,384)       2,785
                                            ------        -------      -------
   Net cash provided by operating
     activities                            $24,021       $ 84,684     $ 84,918
                                            ------        -------      -------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from the sale of oil
     and gas properties                    $21,600       $  6,664     $  7,329
   Additions to oil and gas
     properties                               -              -       (   7,396)
                                            ------        -------      -------
   Net cash provided (used) by
     investing activities                  $21,600       $  6,664    ($     67)
                                            ------        -------      -------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Cash distributions                     ($87,480)     ($109,350)   ($153,090)
                                            ------        -------      -------
   Net cash used by financing
     activities                           ($87,480)     ($109,350)   ($153,090)
                                            ------        -------      -------
NET DECREASE IN CASH
   AND CASH EQUIVALENTS                   ($41,859)     ($ 18,002)   ($ 68,239)

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                      68,271         86,273      154,512
                                            ------        -------      -------
CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                           $26,412       $ 68,271     $ 86,273
                                            ======        =======      =======
                     The accompanying notes are an integral
                       part of these financial statements.



                                      -45-
<PAGE>




               DYCO OIL AND GAS PROGRAM 1985-2 LIMITED PARTNERSHIP
                          Notes to Financial Statements
              For the Years Ended December 31, 1998, 1997, and 1996



1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Organization and Nature of Operations

            The  Dyco  Oil and  Gas  Program  1985-2  Limited  Partnership  (the
      "Program"),  a Minnesota  limited  partnership,  commenced  operations  on
      August 26,  1985.  Dyco  Petroleum  Corporation  ("Dyco")  is the  General
      Partner of the  Program.  Affiliates  of Dyco owned  1,562  (36.1%) of the
      Program's Units at December 31, 1998.

            The Program's sole business is the development and production of oil
      and gas with a concentration  on gas.  Substantially  all of the Program's
      gas reserves are being sold  regionally  in the "spot  market." Due to the
      highly  competitive  nature of the spot market,  prices on the spot market
      are  subject  to wide  seasonal  and  regional  pricing  fluctuations.  In
      addition,  such spot market sales are  generally  short-term in nature and
      are dependent upon the obtaining of  transportation  services  provided by
      pipelines.  The prices  received for the Program's oil and gas are subject
      to influences such as global consumption and supply trends.


      Cash and Cash Equivalents

            The Program considers all highly liquid  investments with a maturity
      of three  months  or less  when  purchased  to be cash  equivalents.  Cash
      equivalents  are not  insured,  which  cause the  Program to be subject to
      risk.


      Credit Risk

            Accrued  oil and gas sales  which are due from a variety  of oil and
      gas purchasers subject the Program to a concentration of credit risk. Some
      of these purchasers are discussed in Note 3 - Major Customers.


      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. Capitalized costs are depleted on the gross revenue method



                                      -46-
<PAGE>



      using estimates of proved reserves.  The full cost amortization  rates per
      equivalent  Mcf of gas produced  during the years ended December 31, 1998,
      1997, and 1996 were $ .13, $0.15, and $0.11,  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  Commission("SEC"))  the excess is charged to
      expense  in  the  year  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.  During the fourth quarter of 1998, the Program sold
      for $15,938 two wells  which had no  reserves  that could be  economically
      recovered.  The proceeds  from these sales would have reduced the net book
      value of the oil and gas  properties  by 30%,  significantly  altering the
      Program's  capitalized  cost/proved  reserves  relationship.  Accordingly,
      capitalized  costs  were  not  reduced  and a gain  on sale of oil and gas
      properties of $15,938 was recognized.


      Deferred Charge

            The Deferred Charge at December 31, 1998 and 1997  represents  costs
      deferred for lease  operating  expenses  incurred in  connection  with the
      Program's  underproduced  gas  imbalance  positions.   The  rate  used  in
      calculating  the deferred  charge is the average of the annual  production
      costs per Mcf. At December 31, 1998,  cumulative  total gas sales  volumes
      for  underproduced  wells were less than the Program's  pro-rata  share of
      total gas production from these wells by 78,973 Mcf,  resulting in prepaid
      lease  operating  expenses of $54,175.  At December 31,  1997,  cumulative
      total  gas  sales  volumes  for  underproduced  wells  were  less than the
      Program's  pro-rata  share of total gas  production  from  these  wells by
      80,603 Mcf, resulting in prepaid lease operating expenses of $48,160.

      Accrued Liability

            The  Accrued  Liability  at December  31,  1998 and 1997  represents
      charges accrued for lease operating  expenses  incurred in connection with
      the  Program's  overproduced  gas  imbalance  positions.  The rate used in
      calculating the accrued  liability is the average of the annual production
      costs per Mcf. At December 31, 1998,  cumulative  total gas sales  volumes
      for overproduced wells exceeded the Program's pro-rata share



                                      -47-
<PAGE>



      of total gas  production  from these  wells by 11,980  Mcf,  resulting  in
      accrued  lease  operating  expenses  of  $8,218.  At  December  31,  1997,
      cumulative  total gas sales volumes for  overproduced  wells  exceeded the
      Program's  pro-rata  share of total gas  production  from  these  wells by
      12,577 Mcf, resulting in accrued lease operating expenses of $7,515.


      Oil and Gas Sales

            The Program's oil and condensate  production is sold,  title passed,
      and revenue  recognized  at or near the Program's  wells under  short-term
      purchase  contracts at prevailing  prices in accordance with  arrangements
      which are  customary in the oil industry.  Sales of gas  applicable to the
      Program's  interest in producing oil and gas leases are recorded as income
      when the gas is metered and title  transferred to the gas sales  contracts
      covering the Program's interest in gas reserves.  During such times as the
      Program's sales of gas exceed its pro rata ownership in a well, such sales
      are recorded as income  unless total sales from the well have exceeded the
      Program's share of estimated total gas reserves underlying the property at
      which time such excess is recorded as a  liability.  At December  31, 1998
      and 1997, no such liability was recorded.


      Use of Estimates in Financial Statements

            The preparation of financial statements in conformity with generally
      accepted  accounting  principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure  of  contingent  assets  and  liabilities  at the  date  of the
      financial  statements  and the  reported  amounts of revenues and expenses
      during the  reporting  period.  Actual  results  could  differ  from those
      estimates.  Further, the deferred charge and the accrued liability involve
      estimates which could materially differ from the actual amounts ultimately
      realized or incurred in the near term.  Oil and gas reserves  (see Note 4)
      also involve significant  estimates which could materially differ from the
      actual amounts ultimately realized.


      Income Taxes

            Income or loss for income tax purposes is  includable  in the income
      tax returns of the partners. Accordingly, no recognition has been given to
      income taxes in the accompanying financial statements.




                                      -48-
<PAGE>



2.    TRANSACTIONS WITH RELATED PARTIES

            Under  the  terms of the  Program  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 years ended December 31, 1998, 1997, and 1996,
      such expenses  totaled $51,504,  $55,613,  and $53,296,  respectively,  of
      which $40,272 was paid each year 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,  together with
      any  compressor  rentals,  consulting,  or other services  provided.  Such
      charges are  comparable to third party charges in the area where the wells
      are located and are the same as charged to other working  interest  owners
      in the wells.

3.    MAJOR CUSTOMERS

            The following purchasers  individually  accounted for 10% or more of
      the  combined  oil and gas  revenues  of the  Program  for the years ended
      December 31, 1998, 1997, and 1996:

           Purchaser                     1998     1997    1996
           ---------                     -----    -----   -----
           El Paso Energy
             Marketing Company           54.6%    52.7%   36.8%
           Sanguine, Ltd.                  -        - %   12.0%
           Mobil Oil Corporation         12.6%    15.0%   15.9%
           Koch Oil Company              11.4%    14.1%   14.8%

            In the  event of  interruption  of  purchases  by these  significant
      customers  or  the  cessation  or  material   change  in  availability  of
      open-access  transportation by the Program's  pipeline  transporters,  the
      Program may encounter  difficulty in marketing its gas and in  maintaining
      historic sales levels.  Alternative  purchasers or transporters may not be
      readily available.


4.    SUPPLEMENTAL OIL AND GAS INFORMATION

            The  following  supplemental  information  regarding the oil and gas
      activities  of  the  Program  is  presented  pursuant  to  the  disclosure
      requirements promulgated by the SEC.



                                      -49-
<PAGE>



      Capitalized Costs

            The  Program's  capitalized  costs  and  accumulated   depreciation,
      depletion,  amortization, and valuation allowance at December 31, 1998 and
      1997 were as follows:

                                                      December 31,
                                             -------------------------------
                                                 1998              1997
                                             -------------     -------------

     Proved properties                        $22,431,129       $22,436,791

     Less accumulated depreciation,
       depletion, amortization, and
       valuation allowance                   ( 22,391,306)     ( 22,382,849)
                                               ----------        ----------

     Net oil and gas properties               $    39,823       $    53,942
                                               ==========        ==========


      Costs Incurred

            The  Program  incurred  no  oil  and  gas  property  acquisition  or
      exploration  costs  during 1998,  1997,  and 1996.  Costs  incurred by the
      Program in connection with its oil and gas property development activities
      during 1998, 1997, and 1996 were as follows:

                                                      December 31,
                                             ------------------------------
                                              1998        1997        1996
                                              ----        ----        -----
        Development costs                    $  -        $   -       $7,396
                                              ====        ====        =====



                                      -50-
<PAGE>



Quantities of Proved Oil and Gas Reserves - Unaudited

            Set forth below is a summary of the changes in the net quantities of
      the Program's proved oil and gas reserves for the years ended December 31,
      1998,  1997,  and  1996.  Proved  reserves  were  estimated  by  petroleum
      engineers  employed by affiliates of Dyco.  All of the Program's  reserves
      are  located in the United  States.  The  following  information  includes
      certain gas  balancing  adjustments  which cause the gas volumes to differ
      from the reserve information prepared by Dyco.
<TABLE>
<CAPTION>

                                     1998                         1997                     1996
                              ---------------------       ---------------------    ---------------------
                                 Oil         Gas             Oil         Gas          Oil         Gas
                               (Bbls)       (Mcf)          (Bbls)       (Mcf)        (Bbls)      (Mcf)
                              --------    ---------       --------    ---------    --------    ---------
<S>                           <C>         <C>             <C>         <C>          <C>         <C>    
Proved reserves,
   beginning of year           10,595      307,346         18,235      338,081      19,285      353,387

Revisions of previous
   estimates                  (   455)       5,803        ( 4,677)      29,062      10,204       46,689

Sales of reserves(1)(2)          -        (    379)          -            -        ( 7,380)    (  5,145)

Purchases of reserves(1)         -            -              -            -             97       12,077

Production                    ( 2,397)    ( 48,746)       ( 2,963)    ( 59,797)    ( 3,971)    ( 68,927)
                               ------      -------         ------      -------      ------      -------

Proved reserves,
   end of year                  7,743      264,024         10,595      307,346      18,235      338,081
                               ======      =======         ======      =======      ======      =======

Proved developed reserves:
   Beginning of year           10,595      307,346         18,235      338,081      19,285      353,387
                               ------      -------         ------      -------      ------      -------
   End of year                  7,743      264,024         10,595      307,346      18,235      338,081
                               ======      =======         ======      =======      ======      =======
--------------------

(1)  The purchases and sales during 1996 were non-cash  exchanges of oil and gas
     reserves.
(2)  A significant  portion of the reserves sold were behind pipe and would have
     required significant capital expenditures in order to produce the reserves.
</TABLE>




                                      -51-
<PAGE>




            The process of estimating oil and gas reserves is complex, requiring
       significant   subjective   decisions  in  the   evaluation  of  available
       geological,  engineering,  and economic data for each reservoir. The data
       for a given reservoir may change  substantially over time as a result of,
       among other things, additional development activity,  production history,
       and  viability  of  production   under   varying   economic   conditions;
       consequently,  it is  reasonably  possible  that  material  revisions  to
       existing reserve  estimates may occur in the near future.  Although every
       reasonable  effort  has been made to ensure  that the  reserve  estimates
       reported  herein  represent the most accurate  assessment  possible,  the
       significance  of the  subjective  decisions  required  and  variances  in
       available data for various reservoirs make these estimates generally less
       precise than other  estimates  presented  in  connection  with  financial
       statement disclosures. The Program's reserves were determined at December
       31,  1998 using oil and gas prices of $9.50 per barrel and $2.03 per Mcf,
       respectively.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING  
         AND  FINANCIAL DISCLOSURE

      None.



                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The Programs are limited  partnerships  and have no directors or executive
officers.  The following  individuals  are  directors and executive  officers of
Dyco, the General Partner.  The business address of such directors and executive
officers is Two West Second Street, Tulsa, Oklahoma 74103.

            NAME            AGE          POSITION WITH DYCO
      ----------------      ---   --------------------------------
      Dennis R. Neill        47   President and Director

      Patrick M. Hall        40   Chief Financial Officer

      Judy K. Fox            48   Secretary

      The  director   will  hold  office  until  the  next  annual   meeting  of
shareholders  of Dyco  and  until  his  successor  has  been  duly  elected  and
qualified.  All  executive  officers  serve at the  discretion  of the  Board of
Directors.

      Dennis R. Neill joined Samson in 1981, was named Senior Vice President and
Director of Dyco on June 18, 1991, and was named




                                      -52-
<PAGE>




President of Dyco on June 30, 1996.  Prior to joining Samson,  he was associated
with a Tulsa law firm, Conner and Winters,  where his principal  practice was in
the securities area. He received a Bachelor of Arts degree in political  science
from Oklahoma State  University and a Juris Doctorate degree from the University
of Texas.  Mr. Neill also serves as Senior Vice  President of Samson  Investment
Company and as President and Director of Samson Properties Incorporated,  Samson
Hydrocarbons Company, Berry Gas Company, Circle L Drilling Company, Compression,
Inc., and Geodyne Resources, Inc. and its subsidiaries.

      Patrick M. Hall joined Samson in 1983,  was named a Vice President of Dyco
on June 18,  1991,  and was named  Chief  Financial  Officer of Dyco on June 30,
1996. Prior to joining Samson he was a senior  accountant with Peat Marwick Main
& Co. in Tulsa.  He holds a  Bachelor  of  Science  degree  in  accounting  from
Oklahoma State  University and is a Certified Public  Accountant.  Mr. Hall also
serves as Senior Vice President - Controller of Samson Investment Company.

      Judy K. Fox joined Samson in 1990 and was named  Secretary of Dyco on June
30, 1996.  Prior to joining Samson,  she served as Gas Contract  Manager for Ely
Energy  Company.  Ms.  Fox is also  Secretary  of Berry  Gas  Company,  Circle L
Drilling  Company,  Compression,   Inc.,  Samson  Hydrocarbons  Company,  Samson
Properties Incorporated, and Geodyne Resources, Inc.
and its subsidiaries.


      Section 16(a) Beneficial Ownership Reporting Compliance

      To the best  knowledge of the  Programs and Dyco,  there were no officers,
directors,  or ten  percent  owners who were  delinquent  filers  during 1998 of
reports required under Section 16(a) of the Securities and Exchange Act of 1934.


ITEM 11.    EXECUTIVE COMPENSATION

      The Programs are limited partnerships and, therefore,  have no officers or
directors.  The following  table  summarizes the amounts paid by the Programs as
compensation and  reimbursements  to Dyco and its affiliates for the three years
ended December 31, 1998:








                                      -53-
<PAGE>



             Compensation/Reimbursement to Dyco and its affiliates
                      Three Years Ended December 31, 1998

Type of Compensation/Reimbursement(1)                     Expense
-------------------------------------           -----------------------------
                                                 1998       1997       1996
                                                -------    -------    -------
1985-1 Program
--------------

   Compensation:
     Operations                                   (2)        (2)        (2)

   Reimbursements:
     General and Administrative,
       Geological, and Engineering
       Expenses and Direct
       Expenses(3)                              $42,840    $42,840    $42,840

1985-2 Program
--------------

   Compensation:
     Operations                                   (2)        (2)        (2)

   Reimbursements:
     General and Administrative,
       Geological, and Engineering
       Expenses and Direct
       Expenses(3)                              $40,272    $40,272    $40,272

----------

(1)   The  authority  for  all of such  compensation  and  reimbursement  is the
      Program Agreements. With respect to the Operations activities noted in the
      table, management believes that such compensation is equal to or less than
      that  charged by  unaffiliated  persons in the same  geographic  areas and
      under the same conditions.
(2)   Affiliates of the Programs  serve as operator of a significant  portion of
      the  Programs'  wells.  Dyco,  as  General  Partner,  contracts  with such
      affiliates  for  services  as  operator of the wells.  As  operator,  such
      affiliates are  compensated at rates provided in the operating  agreements
      in effect and charged to all parties to such agreement.  The dollar amount
      of such compensation paid by the Programs to such affiliates is impossible
      to quantify as of the date of this Annual Report.
(3)   The  Programs  reimburse  Dyco  and  its  affiliates  for  reasonable  and
      necessary general and administrative, geological, and engineering expenses
      and direct  expenses  incurred in  connection  with their  management  and
      operation of the Programs. The directors,  officers, and employees of Dyco
      and



                                      -54-
<PAGE>



      its affiliates receive no direct  remuneration from the Programs for their
      services to the Programs.  See "Salary  Reimbursement  Table"  below.  The
      allocable general and administrative, geological, and engineering expenses
      are apportioned on a reasonable  basis between the Programs'  business and
      all other oil and gas  activities  of Dyco and its  affiliates,  including
      Dyco's  management  and  operation  of  affiliated  oil  and  gas  limited
      partnerships.  The  allocation  to the  Programs of these costs is made by
      Dyco as General Partner.


      As noted in the  Compensation/Reimbursement  Table above,  the  directors,
officers,  and  employees  of  Dyco  and  their  affiliates  receive  no  direct
remuneration from the Programs for their services.  However,  to the extent such
services represent direct  involvement with the Programs,  as opposed to general
corporate  functions,  such persons' salaries are allocated to and reimbursed by
the  Programs.  Such  allocation to the  Programs'  general and  administrative,
geological, and engineering expenses of the salaries of directors, officers, and
employees of Dyco and its affiliates is based on internal records  maintained by
Dyco and its affiliates,  and represents investor relations,  legal, accounting,
data  processing,  management,  gas  marketing,  and  other  functions  directly
attributable  to the Programs'  operations.  The following  table  indicates the
approximate   amount  of  general  and  administrative   expense   reimbursement
attributable to the salaries of the directors,  officers,  and employees of Dyco
and its affiliates for the three years ended December 31, 1998:



                                      -55-
<PAGE>
<TABLE>
<CAPTION>



                                                  Salary Reimbursement
                                           Three Years Ended December 31, 1998
                                                     1985-1 Program
                                                     --------------

                                                                         Long Term Compensation                   
                                                                     ------------------------------               
                                      Annual Compensation                   Awards          Payouts               
                               ---------------------------------     ---------------------  -------               
                                                                                                                
                                                                                   Securi-                        
                                                         Other                       ties                All      
    Name                                                 Annual      Restricted     Under-              Other     
    and                                                  Compen-       Stock        lying     LTIP      Compen-   
 Principal                     Salary         Bonus      sation       Award(s)     Options/  Payouts    sation    
  Position            Year       ($)           ($)         ($)          ($)        SARs(#)     ($)        ($)     
---------------       ----     -------       -------     -------     ----------    --------  -------    -------   
<S>                   <C>     <C>           <C>         <C>         <C>            <C>       <C>        <C>      
                      
C. Philip
Tholen,
President,
Chief Executive
Officer(1)(2)         1996      -           -           -           -               -        -          -
                                                                                                                
Dennis R. Neill,      1996      -           -           -           -               -        -          -
President(2)(3)       1997      -           -           -           -               -        -          -
                      1998      -           -           -           -               -        -          -
                                                                                                                
All Executive                                                                                                   
Officers,                                                                                                       
Directors,                                                                                                      
and Employees                                                                                                   
as a group(4)         1996    $25,061       -           -           -               -        -          -
                      1997    $25,593       -           -           -               -        -          -
                      1998    $25,353       -           -           -               -        -          -
----------                                                                                   
(1)   Mr. Tholen served as President and Chief  Executive  Officer of Dyco until
      June 30, 1996.
(2)   The general and  administrative  expenses paid by the 1985-1 Program and  attributable
      to salary reimbursements do not include any salary or other compensation  attributable
      to Mr. Tholen or Mr. Neill.
(3)   Mr. Neill became President of Dyco on June 30, 1996.
(4)   No  officer  or  director  of Dyco or its  affiliates  provides  full-time
      services  to the  1985-1  Program  and no  individual's  salary  or  other
      compensation  reimbursement  from the  1985-1  Program  equals or  exceeds
      $100,000 per annum.
</TABLE>



                                      -56-
<PAGE>


<TABLE>
<CAPTION>

                                                     1985-2 Program
                                                     --------------

                                                                         Long Term Compensation                   
                                                                     ------------------------------               
                                      Annual Compensation                   Awards          Payouts               
                               ---------------------------------     ---------------------  -------               
                                                                                                                
                                                                                   Securi-                        
                                                         Other                       ties                All      
    Name                                                 Annual      Restricted     Under-              Other     
    and                                                  Compen-       Stock        lying     LTIP      Compen-   
 Principal                     Salary         Bonus      sation       Award(s)     Options/  Payouts    sation    
  Position            Year       ($)           ($)         ($)          ($)        SARs(#)     ($)        ($)     
---------------       ----     -------       -------     -------     ----------    --------  -------    -------   
<S>                   <C>     <C>               <C>         <C>         <C>          <C>       <C>        <C>      
                                                                            
C. Philip                                                                   
Tholen,                                                                     
President,                                                                  
Chief Executive                                                             
Officer(1)(2)         1996      -               -           -           -            -         -          -      
                                                                                                             
Dennis R. Neill,      1996      -               -           -           -            -         -          -      
President(2)(3)       1997      -               -           -           -            -         -          -      
                      1998      -               -           -           -            -         -          -      
                                                                                                             
All Executive                                                                                                
Officers,                                                                                                    
Directors,                                                                                                   
and Employees                                                                                                
as a group(4)         1996    $23,559           -           -           -            -         -          -      
                      1997    $24,058           -           -           -            -         -          -      
                      1998    $23,833           -           -           -            -         -          -      
----------                                                                                                   
(1)   Mr. Tholen served as President and Chief  Executive  Officer of Dyco until                          
      June 30, 1996.
(2)   The general and  administrative  expenses paid by the 1985-2 Program and  attributable
      to  salary   reimbursements   do  not  include   any  salary  or  other   compensation
      attributable to Mr. Tholen or Mr. Neill.
(3)   Mr. Neill became President of Dyco on June 30, 1996.
(4)   No  officer  or  director  of Dyco or its  affiliates  provides  full-time
      services  to the  1985-2  Program  and no  individual's  salary  or  other
      compensation  reimbursement  from the  1985-2  Program  equals or  exceeds
      $100,000 per annum.

</TABLE>



                                      -57-
<PAGE>




      Samson  maintains  necessary  inventories of new and used field equipment.
Samson may have provided some of this  equipment for wells in which the Programs
have an  interest.  This  equipment  was provided at prices or rates equal to or
less than those normally  charged in the same or comparable  geographic  area by
unaffiliated  persons or companies  dealing at arm's  length.  The  operators of
these  wells  bill the  Programs  for a portion  of such  costs  based  upon the
Programs' interest in the well.


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table provides information as to the beneficial ownership of
the Programs' Units as of March 1, 1999 by each beneficial owner of more than 5%
of  the  issued  and  outstanding  Units  and by the  directors,  officers,  and
affiliates  of Dyco.  The address of each of such persons is Samson  Plaza,  Two
West Second Street, Tulsa, Oklahoma 74103.


                                                     Number of Units
                                                      Beneficially
                                                     Owned (Percent
              Beneficial Owner                       of Outstanding)
      ---------------------------------             -----------------

      1985-1 Program:
      --------------

        Samson Resources Company                    1,394     (34.0%)

        All directors, officers, and
           affiliates of Dyco as a group
           and Dyco (5 persons)                     1,394     (34.0%)

      1985-2 Program:
      --------------

        Samson Resources Company                    1,570     (36.3%)

        All directors, officers, and
           affiliates of Dyco as a group
           and Dyco (5 persons)                     1,570     (36.3%)


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Certain affiliates of Dyco engage in oil and gas activities  independently
of the Programs  which  result in  conflicts of interest  that cannot be totally
eliminated.  The allocation of acquisition  and drilling  opportunities  and the
nature of the compensation



                                      -58-
<PAGE>



arrangements  between the Programs  and such  affiliates  also create  potential
conflicts of interest.  An  affiliate of Dyco owns a  significant  amount of the
Programs'  Units and  therefore  has an identity of interest  with other limited
partners with respect to the operations of the Programs.

      In order to attempt to assure  limited  liability for limited  partners as
well as an orderly conduct of business,  management of the Programs is exercised
solely by Dyco. The Program Agreements grant Dyco broad discretionary  authority
with  respect  to  the  Programs'   participation  in  drilling   prospects  and
expenditure and control of funds,  including  borrowings.  These  provisions are
similar to those contained in prospectuses and partnership  agreements for other
public oil and gas  partnerships.  Broad discretion as to general  management of
the Programs  involves  circumstances  where Dyco has  conflicts of interest and
where it must allocate costs and expenses, or opportunities,  among the Programs
and other competing interests.

      Dyco does not devote all of its time, efforts,  and personnel  exclusively
to the  Programs.  Furthermore,  the  Programs  do not have any  employees,  but
instead  rely on the  personnel of Samson.  The  Programs  thus compete with the
Samson  Companies  (including  other  oil and gas  programs)  for the  time  and
resources  of such  personnel.  Samson  devotes  such time and  personnel to the
management  of the  Programs as are  indicated by the  circumstances  and as are
consistent with Dyco's fiduciary duties.

      Affiliates  of the Program  are solely  responsible  for the  negotiation,
administration,  and  enforcement of oil and gas sales  agreements  covering the
Programs'  leasehold  interests.  Because  affiliates of the Program who provide
services to the  Program  have  fiduciary  or other  duties to other  members of
Samson,  contract  amendments and  negotiating  positions taken by them in their
effort to enforce  contracts with purchasers may not  necessarily  represent the
positions  that a Program would take if it were to administer  its own contracts
without involvement with other members of Samson. On the other hand,  management
believes that the Programs'  negotiating strength and contractual positions have
been enhanced by virtue of its affiliation with Samson.

      Samson  Resources  Company,  an  affiliate  of  Dyco,  ("Resources")  owns
approximately  34% and 36%,  respectively,  of the 1985-1  and 1985-2  Programs'
outstanding  Units as of March 1, 1999. The Program  Agreements permit Resources
to  independently  vote its Units.  Resources'  significant  Unit ownership will
therefore likely determine the outcome of any matter submitted for a vote of the
Limited Partners.




                                      -59-
<PAGE>



                                    PART IV


ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


      (a)   Financial Statements, Financial Statement Schedules, and Exhibits.

            (1)   Financial  Statements:  The following financial statements for
                  the  Programs  as of  December  31,  1998 and 1997 and for the
                  years ended  December  31, 1998,  1997,  and 1996 are filed as
                  part of this report:

                        Reports of Independent Accountants
                        Balance Sheets
                        Statements of Operations
                        Statements of Changes in Partners' Capital
                        Statements of Cash Flows
                        Notes to Financial Statements

            (2)   Financial Statement Schedules:

                        None.

            (3)   Exhibits:

                  4.1   Drilling  Agreement dated April 1, 1985 for Dyco Oil and
                        Gas  Program  1985-1  by and  between  Dyco  Oil and Gas
                        Program 1985-1, Dyco Petroleum Corporation,  and Jaye F.
                        Dyer filed as Exhibit 4.1 to Annual  Report on Form 10-K
                        for the year ended  December  31,  1991 on April 8, 1992
                        and is hereby incorporated by reference.

                  4.2   Program  Agreement  dated April 1, 1985 for Dyco Oil and
                        Gas  Program   1985-1  by  and  between  Dyco  Petroleum
                        Corporation and the Participants filed as Exhibit 4.2 to
                        Annual  Report on Form 10-K for the year ended  December
                        31, 1991 on April 8, 1992 and is hereby  incorporated by
                        reference.

                  4.3   Amendment  to  Program  Agreement  for  Dyco Oil and Gas
                        Program  1985-1 dated  February 9, 1989 filed as Exhibit
                        4.3 to  Annual  Report  on Form 10K for the  year  ended
                        December  31,  1991  on  April  8,  1992  and is  hereby
                        incorporated by reference.



                                      -60-
<PAGE>




                  4.4   Certificate of Limited Partnership, as amended, for Dyco
                        Oil and Gas Program 1985-1 Limited  Partnership filed as
                        Exhibit  4.4 to Annual  Report on Form 10-K for the year
                        ended  December  31, 1991 on April 8, 1992 and is hereby
                        incorporated by reference.

                  4.5   Drilling  Agreement  dated  August 26, 1985 for Dyco Oil
                        and Gas Program  1985-2 by and between  Dyco Oil and Gas
                        Program 1985-2, Dyco Petroleum Corporation,  and Jaye F.
                        Dyer filed as Exhibit 4.5 to Annual  Report on Form 10-K
                        for the year ended  December  31,  1991 on April 8, 1992
                        and is hereby incorporated by reference.

                  4.6   Program Agreement dated August 26, 1985 for Dyco Oil and
                        Gas  Program   1985-2  by  and  between  Dyco  Petroleum
                        Corporation and the Participants filed as Exhibit 4.6 to
                        Annual  Report on Form 10-K for the year ended  December
                        31, 1991 on April 8, 1992 and is hereby  incorporated by
                        reference.

                  4.7   Amendment  to  Program  Agreement  for  Dyco Oil and Gas
                        Program  1985-2 dated  February 9, 1989 filed as Exhibit
                        4.7 to Annual  Report  on Form  10-K for the year  ended
                        December  31,  1991  on  April  8,  1992  and is  hereby
                        incorporated by reference.

                  4.8   Certificate of Limited Partnership, as amended, for Dyco
                        Oil and Gas Program 1985-2 Limited  Partnership filed as
                        Exhibit  4.8 to Annual  Report on Form 10-K for the year
                        ended  December  31, 1991 on April 8, 1992 and is hereby
                        incorporated by reference.

                *27.1   Financial  Data Schedule  containing  summary  financial
                        information  extracted from the Dyco Oil and Gas Program
                        1985-1 Limited Partnership's  financial statements as of
                        December  31, 1998 and for the year ended  December  31,
                        1998.

                *27.2   Financial  Data Schedule  containing  summary  financial
                        information  extracted from the Dyco Oil and Gas Program
                        1985-2 Limited Partnership's  financial statements as of
                        December  31, 1998 and for the year ended  December  31,
                        1998.



                                      -61-
<PAGE>






                  All other Exhibits are omitted as inapplicable.


                  -----------------
                  *  Filed herewith.


      (b) Reports on Form 8-K filed during the fourth quarter of 1998:

                  None.




                                      -62-
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly organized.

                                    DYCO OIL AND GAS PROGRAM 1985-1
                                    LIMITED PARTNERSHIP

                                    By:   DYCO PETROLEUM CORPORATION
                                          General Partner

                                           March 26, 1999


                                    By:   /s/Dennis R. Neill
                                          ------------------------------
                                          Dennis R. Neill
                                          President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities on the dates indicated.

By:   /s/Dennis R. Neill      President and                  March 26, 1999
      -------------------     Director (Principal
         Dennis R. Neill      Executive Officer)

      /s/Patrick M. Hall      Chief Financial                March 26, 1999
      -------------------     Officer (Principal
         Patrick M. Hall      Financial and
                              Accounting Officer)

      /s/Judy K. Fox          Secretary                      March 26, 1999
      -------------------
         Judy K. Fox



                                      -63-
<PAGE>



                                  SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly organized.

                                    DYCO OIL AND GAS PROGRAM 1985-2
                                    LIMITED PARTNERSHIP

                                    By:   DYCO PETROLEUM CORPORATION
                                          General Partner

                                           March 26, 1999


                                    By:   /s/Dennis R. Neill
                                          ------------------------------
                                          Dennis R. Neill
                                          President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities on the dates indicated.

By:   /s/Dennis R. Neill      President and                  March 26, 1999
      -------------------     Director (Principal
         Dennis R. Neill      Executive Officer)

      /s/Patrick M. Hall      Chief Financial                March 26, 1999
      -------------------     Officer (Principal
         Patrick M. Hall      Financial and
                              Accounting Officer)

      /s/Judy K. Fox          Secretary                      March 26, 1999
      -------------------
         Judy K. Fox




                                      -64-
<PAGE>



                               INDEX TO EXHIBITS


Exhibit
Number      Description
-------     -----------

4.1         Drilling  Agreement dated April 1, 1985 for Dyco Oil and Gas Program
            1985-1  by and  between  Dyco  Oil  and  Gas  Program  1985-1,  Dyco
            Petroleum  Corporation,  and Jaye F. Dyer  filed as  Exhibit  4.1 to
            Annual  Report on Form 10-K for the year ended  December 31, 1991 on
            April 8, 1992 and is hereby incorporated by reference.

4.2         Program  Agreement  dated April 1, 1985 for Dyco Oil and Gas Program
            1985-1  by  and  between   Dyco   Petroleum   Corporation   and  the
            Participants  filed as Exhibit 4.2 to Annual Report on Form 10-K for
            the year  ended  December  31,  1991 on April 8,  1992 and is hereby
            incorporated by reference.

4.3         Amendment to Program  Agreement for Dyco Oil and Gas Program  1985-1
            dated February 9, 1989 filed as Exhibit 4.3 to Annual Report on Form
            10-K for the year ended  December  31,  1991 on April 8, 1992 and is
            hereby incorporated by reference.

4.4         Certificate of Limited Partnership, as amended, for Dyco Oil and Gas
            Program  1985-1 Limited  Partnership  filed as Exhibit 4.4 to Annual
            Report on Form 10-K for the year ended December 31, 1991 on April 8,
            1992 and is hereby incorporated by reference.

4.5         Drilling  Agreement  dated  August  26,  1985  for  Dyco Oil and Gas
            Program 1985-2 by and between Dyco Oil and Gas Program 1985-2,  Dyco
            Petroleum  Corporation,  and Jaye F. Dyer  filed as  Exhibit  4.5 to
            Annual  Report on Form 10-K for the year ended  December 31, 1991 on
            April 8, 1992 and is hereby incorporated by reference.

4.6         Program Agreement dated August 26, 1985 for Dyco Oil and Gas Program
            1985-2  by  and  between   Dyco   Petroleum   Corporation   and  the
            Participants  filed as Exhibit 4.6 to Annual Report on Form 10-K for
            the year  ended  December  31,  1991 on April 8,  1992 and is hereby
            incorporated by reference.

4.7         Amendment to Program  Agreement for Dyco Oil and Gas Program  1985-2
            Limited  Partnership  dated February 9, 1989 filed as Exhibit 4.7 to
            Annual  Report on Form 10-K for the year ended  December 31, 1991 on
            April 8, 1992 and is hereby incorporated by reference.



                                      -65-
<PAGE>



4.8         Certificate of Limited Partnership, as amended, for Dyco Oil and Gas
            Program  1985-2 Limited  Partnership  filed as Exhibit 4.8 to Annual
            Report on Form 10-K for the year ended December 31, 1991 on April 8,
            1992 and is hereby incorporated by reference.

*27.1       Financial Data Schedule  containing  summary  financial  information
            extracted   from  the  Dyco  Oil  and  Gas  Program  1985-1  Limited
            Partnership's  financial  statements as of December 31, 1998 and for
            the year ended December 31, 1998.

*27.2       Financial Data Schedule  containing  summary  financial  information
            extracted   from  the  Dyco  Oil  and  Gas  Program  1985-2  Limited
            Partnership's  financial  statements as of December 31, 1998 and for
            the year ended December 31, 1998.


------------------
*  Filed herewith.