FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-17707
Southwest Oil & Gas Income Fund VIII-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2220097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
407 N. Big Spring, Suite 300
Midland, Texas 79701
(Address of principal executive offices)
(915) 686-9927
(Registrant's telephone number,
including area code)
Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
Yes X No
The total number of pages contained in this report is 14.
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited condensed financial statements included herein have been
prepared by the Registrant (herein also referred to as the "Partnership") in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
necessary for a fair presentation have been included and are of a normal
recurring nature. The financial statements should be read in conjunction
with the audited financial statements and the notes thereto for the year
ended December 31, 1994 which are found in the Registrant's Form 10-K Report
for 1994 filed with the Securities and Exchange Commission. The December 31,
1994 balance sheet included herein has been taken from the Registrant's 1994
Form 10-K Report. Operating results for the three and nine month periods
ended September 30, 1995 are not necessarily indicative of the results that
may be expected for the full year.
Southwest Oil & Gas Income Fund VIII-A, L.P.
Balance Sheets
September 30, December 31,
1995 1994
------------- ------------
(unaudited)
Assets
Current assets:
Cash $ 42,978 37,115
Receivable from Managing General Partner 137,952 120,250
--------- ---------
Total current assets 180,930 157,365
--------- ---------
Oil and gas properties - using the full
cost method of accounting 5,512,535 5,545,952
Less accumulated depreciation,
depletion and amortization 3,925,109 3,768,109
--------- ---------
Net oil and gas properties 1,587,426 1,777,843
--------- ---------
$ 1,768,356 1,935,208
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 30,647 2,768
Distributions payable 478 242
--------- ---------
Total current liabilities 31,125 3,010
--------- ---------
Partners' equity:
General partners 16,450 15,996
Limited partners 1,720,781 1,916,202
--------- ---------
Total partners' equity 1,737,231 1,932,198
--------- ---------
$ 1,768,356 1,935,208
========= =========
Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
---- ---- ---- ----
Revenues
Oil and gas revenue $ 330,993 329,085 1,142,639 955,699
Interest income from
operations 597 620 1,529 1,092
------- ------- --------- ---------
331,590 329,705 1,144,168 956,791
------- ------- --------- ---------
Expenses
Production 293,431 253,359 786,200 701,334
General and administrative 24,705 25,937 85,925 89,339
Depreciation, depletion and
amortization 47,000 87,000 157,000 250,000
------- ------- --------- ---------
365,136 366,296 1,029,125 1,040,673
------- ------- --------- ---------
Net income (loss) $ (33,546) (36,591) 115,043 (83,882)
======= ======= ========= =========
Net income (loss) allocated
to:
Managing General Partner $ 1,211 4,537 24,484 14,951
======= ======= ========= =========
General partner $ 135 504 2,720 1,661
======= ======= ========= =========
Limited partners $ (34,892) (41,632) 87,839 (100,494)
======= ======= ========= =========
Per limited partner unit $ (2.57) (3.06) 6.46 (7.39)
======= ======= ========= =========
Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
1995 1994
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 1,123,472 959,920
Cash paid to suppliers (842,781) (748,255)
Interest received 1,529 1,092
--------- -------
Net cash provided by operating
activities 282,220 212,757
--------- -------
Cash flows from investing activities:
Sale of oil and gas properties 74,337 -
Additions to oil and gas properties (40,920) (22,565)
--------- -------
Net cash provided by (used in)
investing activities 33,417 (22,565)
--------- -------
Cash used in financing activities:
Distributions to partners (309,774) (147,116)
--------- -------
Net increase in cash 5,863 43,076
Cash:
Beginning of period 37,115 15,668
--------- -------
End of period $ 42,978 58,744
========= =======
(continued)
Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
1995 1994
---- ----
Reconciliation of net income (loss)
to net cash provided by operating
activities:
Net income (loss) $ 115,043 (83,882)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion and amortization 157,000 250,000
(Increase) decrease in accounts receivable (19,167) 4,221
Increase in accounts payable 29,344 42,418
------- -------
Net cash provided by operating activities $ 282,220 212,757
======= =======
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund VIII-A, L.P. was organized as a Delaware
limited partnership on November 30, 1987. The offering of such limited
partnership interests began on March 31, 1988, minimum capital requirements
were met on July 6, 1988, and the offering concluded on March 31, 1989, with
total limited partner contributions of $6,798,000.
The Partnership was formed to acquire interests in producing oil and gas
properties, to produce and market crude oil and natural gas produced from
such properties, and to distribute the net proceeds from operations to the
limited and general partners. Net revenues from producing oil and gas
properties are not reinvested in other revenue producing assets except to the
extent that production facilities and wells are improved or reworked or where
methods are employed to improve or enable more efficient recovery of oil and
gas reserves.
Increases or decreases in Partnership revenues and, therefore, distributions
to partners will depend primarily on changes in the prices received for
production, changes in volumes of production sold, increases and decreases in
lease operating expenses, enhanced recovery projects, offset drilling
activities pursuant to farmout arrangements, sales of properties, and the
depletion of wells. Since wells deplete over time, production can generally
be expected to decline from year to year.
Well operating costs usually decrease with production declines; however,
these costs may not decrease proportionately. Net income available for
distribution to the partners is therefore expected to fluctuate in later
years based on these factors.
Results of Operations
A. General Comparison of the Quarters Ended September 30, 1995 and 1994
The following table provides certain information regarding performance
factors for the quarters ended September 30, 1995 and 1994:
Three Months
Ended Percentage
September 30, Increase
1995 1994 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 16.23 16.72 (3%)
Average price per mcf of gas $ 2.02 1.91 6%
Oil production in barrels 17,100 16,200 6%
Gas production in mcf 26,800 30,600 (12%)
Gross oil and gas revenue $ 330,993 329,085 1%
Net oil and gas revenue $ 37,562 75,726 (50%)
Partnership distributions $ 84,500 59,000 43%
Limited partner distributions $ 76,050 53,100 43%
Per unit distribution to limited partners $ 5.59 3.91 43%
Number of limited partner units 13,596 13,596
Revenues
The Partnership's oil and gas revenues increased to $330,993 from $329,085
for the quarters ended September 30, 1995 and 1994, respectively, an increase
of 1%. The principal factors affecting the comparison of the quarters ended
September 30, 1995 and 1994 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended September 30, 1995 as compared to the
quarter ended September 30, 1994 by 3%, or $.49 per barrel, resulting in
a decrease of approximately $7,900 in revenues. Oil sales represented
84% of total oil and gas sales during the quarter ended September 30,
1995 as compared to 82% during the quarter ended September 30, 1994.
The average price for an mcf of gas received by the Partnership increased
during the same period by 6%, or $.11 per mcf, resulting in an increase
of approximately $3,400 in revenues.
The net total decrease in revenues due to the change in prices received
from oil and gas production is approximately $4,500. The market price
for oil and gas has been extremely volatile over the past decade, and
management expects a certain amount of volatility to continue in the
foreseeable future.
2. Oil production increased approximately 900 barrels or 6% during the
quarter ended September 30, 1995 as compared to the quarter ended
September 30, 1994, resulting in an increase of approximately $14,600 in
revenues.
Gas production decreased approximately 3,800 mcf or 12% during the same
period, resulting in a decrease of approximately $7,700 in revenues.
The net total increase in revenues due to the change in production is
approximately $6,900.
Costs and Expenses
Total costs and expenses decreased to $365,136 from $366,296 for the quarters
ended September 30, 1995 and 1994, respectively, a decrease of less than 1%.
The decrease is the result of a decrease in general and administrative
expense and depletion, offset by an increase in lease operating costs.
1. Lease operating costs and production taxes were 16% higher, or
approximately $40,100 more during the quarter ended September 30, 1995 as
compared to the quarter ended September 30, 1994. The increase is a
result of workover costs incurred in 1995.
2. General and administrative costs consist of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased 5%
or approximately $1,200 during the quarter ended September 30, 1995 as
compared to the quarter ended September 30, 1994.
3. Depletion expense decreased to $47,000 for the quarter ended
September 30, 1995 from $87,000 for the same period in 1994. This
represents a decrease of 46%. Depletion is calculated using the gross
revenue method of amortization based on a percentage of current period
gross revenues to total future gross oil and gas revenues, as estimated
by the Partnership's independent petroleum consultants. Although oil and
gas revenues increased for the quarter ended September 30, 1995 as
compared to the quarter ended September 30, 1994, the decrease in
depletion expense is the result of the change in oil prices since 1994.
B. General Comparison of the Nine Month Periods Ended September 30, 1995 and
1994
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 1995 and 1994:
Nine Months
Ended Percentage
September 30, Increase
1995 1994 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 16.92 15.08 12%
Average price per mcf of gas $ 2.06 2.01 2%
Oil production in barrels 56,900 50,000 14%
Gas production in mcf 87,500 99,900 (12%)
Gross oil and gas revenue $ 1,142,639 955,699 20%
Net oil and gas revenue $ 356,439 254,365 40%
Partnership distributions $ 310,010 147,000 111%
Limited partner distributions $ 283,260 132,300 114%
Per unit distribution to limited partners $ 20.83 9.73 114%
Number of limited partner units 13,596 13,596
Revenues
The Partnership's oil and gas revenues increased to $1,142,639 from $955,699
for the nine months ended September 30, 1995 and 1994, respectively, an
increase of 20%. The principal factors affecting the comparison of the nine
months ended September 30, 1995 and 1994 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the nine months ended September 30, 1995 as compared to
the nine months ended September 30, 1994 by 12%, or $1.84 per barrel,
resulting in an increase of approximately $92,000 in revenues. Oil sales
represented 84% of total oil and gas sales during the nine months ended
September 30, 1995 as compared to 79% during the nine months ended
September 30, 1994.
The average price for an mcf of gas received by the Partnership increased
during the same period by 2%, or $.05 per mcf, resulting in an increase
of approximately $5,000 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $97,000. The market price for
oil and gas has been extremely volatile over the past decade, and
management expects a certain amount of volatility to continue in the
foreseeable future.
2. Oil production increased approximately 6,900 barrels or 14% during the
nine months ended September 30, 1995 as compared to the nine months ended
September 30, 1994, resulting in an increase of approximately $116,700 in
revenues.
Gas production decreased approximately 12,400 mcf or 12% during the same
period, resulting in a decrease of approximately $25,500 in revenues.
The net total increase in revenues due to the change in production is
approximately $91,200. The increase is a result of successful workovers.
Costs and Expenses
Total costs and expenses decreased to $1,029,125 from $1,040,673 for the nine
months ended September 30, 1995 and 1994, respectively, a decrease of 1%.
The decrease is the result of a decrease in general and administrative
expense and depletion, offset by an increase in lease operating costs.
1. Lease operating costs and production taxes were 12% higher, or
approximately $84,900 more during the nine months ended September 30,
1995 as compared to the nine months ended September 30, 1994. The
increase is a result of workover costs incurred in 1995.
2. General and administrative costs consist of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased 4%
or approximately $3,400 during the nine months ended September 30, 1995
as compared to the nine months ended September 30, 1994.
3. Depletion expense decreased to $157,000 for the nine months ended
September 30, 1995 from $250,000 for the same period in 1994. This
represents a decrease of 37%. Depletion is calculated using the gross
revenue method of amortization based on a percentage of current period
gross revenues to total future gross oil and gas revenues, as estimated
by the Partnership's independent petroleum consultants. Although oil and
gas revenues increased for the nine months ended September 30, 1995 as
compared to the nine months ended September 30, 1994, the decrease in
depletion expense is the result of the change in oil prices since 1994.
Liquidity and Capital Resources
The primary source of cash is from profitable operations. The Partnership
knows of no material change, nor does it anticipate any such change.
Cash flows provided by operating activities were approximately $282,200 in
the nine months ended September 30, 1995 as compared to approximately
$212,800 in the nine months ended September 30, 1994. Primary source of the
1995 cash flow from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $33,400 in the
nine months ended September 30, 1995 as compared to approximately $22,600 of
cash used in the nine months ended September 30, 1994.
Cash flows used in financing activities were approximately $309,800 in the
nine months ended September 30, 1995 as compared to approximately $147,100 in
the nine months ended September 30, 1994. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 1995 were
$310,010 of which $283,260 was distributed to the limited partners and
$26,750 was distributed to the general partners. The per unit distribution
to limited partners during the nine months ended September 30, 1995 was
$20.83. Total distributions during the nine months ended September 30, 1994
were $147,000, of which $132,300 was distributed to the limited partners and
$14,700 was distributed to the general partners. The per unit distribution
to limited partners during the nine months ended September 30, 1994 was
$9.73. The sources for the 1995 distributions of $310,010 were oil and gas
operations of approximately $282,200 and sale of oil and gas properties of
approximately $74,300, offset by additions to oil and gas properties of
approximately $40,900, resulting in excess cash for contingencies or
subsequent distributions. The source for the 1994 distributions of $147,000
was oil and gas operations of approximately 212,800, offset by additions to
oil and gas properties of approximately $22,600, resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$5,457,025 have been made to the partners. As of September 30, 1995,
$4,949,854 or $364.07 per limited partner unit has been distributed to the
limited partners, representing a 73% return of the capital contributed.
As of September 30, 1995, the Partnership had approximately $149,800 in
working capital. The Managing General Partner knows of no unusual
contractual commitments and believes the revenues generated from operations
are adequate to meet the needs of the Partnership.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHWEST OIL & GAS
INCOME FUND VIII-A, L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
Managing General Partner
Date: November 9, 1995 By: /s/ Bill E. Coggin
------------------------------
Bill E. Coggin, Vice President
and Chief Financial Officer