| Summary of Significant Accounting Policies | 2. Summary of Significant
Accounting Policies 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. Significant estimates inherent in the
Registrant’s financial statements include the estimate of oil and gas reserves and future abandonment costs. Changes in oil
and gas prices and the changes in production estimates could have a significant effect on reserve estimates. The reserve estimates
directly impact the computation of depreciation, depletion, and amortization, asset retirement obligation, and the ceiling test
for the Registrant’s oil and gas properties. Full Cost Accounting The Partnership follows the full-cost method
of accounting for its oil and gas activities. Under the full-cost method, all productive and non-productive costs incurred in
the acquisition, exploration and development of oil and gas properties are capitalized. Depreciation, depletion and amortization
of oil and gas properties subject to amortization is computed on the units-of-production method based on the proved reserves underlying
the oil and gas properties. At December 31, 2018 and 2017 all capitalized costs were subject to amortization. Proceeds from the
sale or other disposition of properties are credited to the full cost pool. Gains and losses are not recognized unless such adjustments
would significantly alter the relationship between capitalized costs and the proved oil and gas reserves. Capitalized costs are
subject to a quarterly ceiling test that limits such costs to the aggregate of the present value of estimated future net cash
flows of proved reserves, computed using the 12-month unweighted average of first-day-of the-month oil and gas prices, discounted
at 10%, and the lower of cost or fair value of unproved properties. If unamortized costs capitalized exceed the ceiling, the excess
is charged to expense in the period the excess occurs. There were no cost ceiling write-downs during the years ended December
31, 2018 and 2017. Recent
Accounting Developments In February 2016, the FASB issued
ASU 2016-02, “Leases.” ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those
leases currently classified as operating leases and makes certain changes to the way lease expenses are accounted for. This update
is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December
15, 2020. This update should be applied using a modified retrospective approach, and early adoption is permitted. In January 2018,
the FASB issued ASU 2018-01, which permits an entity to elect an optional transition practical expedient to not evaluate land easements
that exist or expire before the Partnership’s adoption of Topic 842 and that were not previously accounted for as leases
under Topic 840. The Partnership is currently evaluating the new guidance to determine the impact it will have on its financial
statements. Cash The Partnership maintains all its cash
in one financial institution. At various times throughout the year, the cash amount may be in excess of the amount insured by the
Federal Deposit Insurance Corporation. Fair Value of Financial Instruments The FASB
has issued guidance on determining the estimated fair value for financial instruments. This disclosure states that the fair value
of financial instruments is determined at discrete points in time based on relevant market information. Such estimates involve
uncertainties and cannot be determined with precision. The estimated fair value of cash, accounts receivable and accounts payable approximates their carrying
value due to their short-term nature. Asset Retirement Obligations The Partnership has recognized an estimated
liability for future plugging and abandonment costs. A liability for the estimated fair value of the future plugging and abandonment
costs is recorded with a corresponding increase in the full cost pool at the time a new well is drilled. Depreciation expense associated
with estimated plugging and abandonment costs is recognized in accordance with the full cost methodology. The Partnership estimates a liability
for plugging and abandonment costs based on historical experience and estimated well life. The liability is discounted using the
credit-adjusted risk-free rate. Revisions to the liability could occur due to changes in well plugging and abandonment costs or
well useful lives, or if federal or state regulators enact new well restoration requirements. The Partnership recognizes accretion
expense in connection with the discounted liability over the remaining life of the well. A reconciliation of the Partnership’s
liability for well plugging and abandonment costs for the years ended December 31, 2018 and 2017 is as follows:
2018 2017
Balance, beginning of period $ 863,754 $ 834,771
Liabilities incurred 3,197 2,777
Liabilities reduced due to settlements and plugging and abandonments (2,290 ) (9,099 )
Accretion expense 36,796 35,305
Balance, end of period $ 901,457 $ 863,754 Oil and Gas Sales The Partnership has only non-operated
working interests in oil and gas wells and receives monthly net revenue checks from the operator of these oil and gas wells. It
recognizes revenue for oil and condensate when control transfers to the purchaser at a contractually specified delivery point at
or near the wellhead at prevailing prices in accordance with arrangements which are customary in the oil and gas industry. Sales
of gas applicable to the Partnership’s interest are recorded as revenue when the gas is metered and control is transferred
pursuant to the gas sales contracts covering the Partnership’s interest in gas reserves. Substantially all of the Partnership’s
accounts receivable result from oil and gas sales to third parties in the oil and gas industry. This concentration of customers
may impact the Partnership’s overall credit risk in that these entities may be similarly affected by changes in economic
and other conditions. Historically, the Partnership has not experienced significant credit losses on such receivables. No bad debt
expense was recorded in 2018 or 2017. The Partnership cannot ensure that such losses will not be realized in the future. In May 2014, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts
with Customers”, a comprehensive new revenue recognition standard. The Partnership has used the modified retrospective transition
method to apply the effects of adopting this ASU, effective January 1, 2018, and has evaluated the impact of the ASU on its accounting
policies, internal controls, and financial statements and related disclosures. The Partnership has reviewed its
partnership, joint operating and marketing agreements as they relate to its non-operated working interests and this ASU, which
includes provisions regarding revenues and expenses under a gross-versus-net presentation as it relates to principal vs agent relationship
and has evaluated the impact on the presentation of its revenues and expenses under this gross-versus-net presentation guidance.
Based on its review of how information about revenue has been presented for other purposes, including disclosures presented outside
the financial statements and information used by management for evaluating performance operations, the appropriate categories for
the disaggregation of revenue are oil and gas sales, as presented in the Partnership’s financial statements and related disclosures. Disaggregation of Revenue The Partnership has identified
two material revenue streams in its business: oil sales and natural gas sales. Revenue attributable to each of the Partnership’s
identified revenue streams is disaggregated in the Condensed Statements of Operations. Principal versus agent In the case of the non-operating agreements,
the operator is responsible for providing the goods due to its contractual obligations with the purchaser. Based on the joint
operating and marketing agreement arrangements between the Partnership and operator, the Partnership does not take title to the
product prior to the operator’s ultimate sale to a customer. The operator is responsible for fulfilling promises to provide
specified goods and remitting proceeds back to the Partnership for the Partnership’s proportionate share of the total product
sold. Mewbourne Oil Company (MOC), rather than the Partnership, is primarily responsible for fulfilling promises to provide specified
goods. MOC, as the operator, enters into the sales contract with the third-party customers and directs all activities from the
wellhead to the delivery point that make the commodity available to the customer; there is no agreement between the Partnership
and the customers. In the event a production delay occurs because of, for example, well-equipment failure, MOC is responsible
for correcting the issues preventing fulfillment of its promises to deliver product to its customers. Transaction price allocated
to remaining performance obligations For the Partnership’s product
sales, the Partnership has utilized the practical expedient in ASC 606 that states that it is not required to disclose the transaction
price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied
performance obligation. Under the operator’s sales contracts, each unit of product represents a separate performance obligation;
therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations
is not required. Contract
balances Under the Partnership’s
joint operating and marketing agreements, the Partnership is entitled to consideration as production occurs at the wellhead and
the value of such consideration is an estimate. Final amounts are only determined upon sale by the operator to the ultimate third-party
customer, and recorded in “Accounts receivable, affiliate” in its balance sheet. Based upon its assessments, the
ASU has no effect on the timing of the Partnership’s revenue recognition or its financial position. Income Taxes The Partnership is treated as a partnership
for income tax purposes and, as a result, income of the Partnership is reported on the tax returns of the partners and no recognition
is given to income taxes in the financial statements. The Partnership’s financial reporting basis of its net assets exceeded
the tax basis of its net assets by $4,901,558 and $5,095,013 at December 31, 2018 and 2017, respectively. The Partnership accounts for uncertainty
in income taxes in accordance with applicable accounting guidance and recognizes the effects of those positions only if they are
more likely than not of being sustained. As no liability had been recognized as of December 31, 2018 or 2017, the Partnership did
not accrue for any interest or penalties. Distributions Revenues which, in the sole judgment
of the managing general partner, are not required to meet the Registrant’s obligations will be distributed to the partners
at least quarterly in accordance with the Registrant’s Partnership Agreement. Distributions made to partners and state tax
payments for the benefit of investor partners during the years ended December 31, 2018 and 2017 were $1,765,249 and $1,399,986,
respectively. Since inception, the Partnership has made distributions of $68,612,377, inclusive of state tax payments. |
