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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, 2000
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 0-18996
SOUTHWEST OIL & GAS 1990-91 INCOME PROGRAM
Southwest Oil and Gas Income Fund X-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2310854
(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 16.
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 note thereto for
the year ended December 31, 1999 which are found in the Registrant's Form
10-K Report for 1999 filed with the Securities and Exchange Commission.
The December 31, 1999 balance sheet included herein has been taken from the
Registrant's 1999 Form 10-K Report. Operating results for the three and
nine month periods ended September 30, 2000 are not necessarily indicative
of the results that may be expected for the full year.
Southwest Oil and Gas Income Fund X-A, L.P.
Balance Sheets
September 30, December 31,
2000 1999
------------- ------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 10,758 1,204
Receivable from Managing General Partner 58,352 7,752
--------- ---------
Total current assets 69,110 8,956
--------- ---------
Oil and gas properties - using the
full cost method of accounting 3,811,704 3,803,199
Less accumulated depreciation
depletion and amortization 3,694,386 3,687,386
--------- ---------
Net oil and gas properties 117,318 115,813
--------- ---------
$ 186,428 124,769
========= =========
Liabilities and Partners' Equity
Current liabilities
Distribution payable $ 597 811
--------- ---------
Total current liabilities 597 811
--------- ---------
Partners' equity
General partners (19,061) (28,577)
Limited partners 204,892 152,535
--------- ---------
Total partners' equity 185,831 123,958
--------- ---------
$ 186,428 124,769
========= =========
Southwest Oil and Gas Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenues
Oil and gas $ 122,254 77,066 326,596 190,770
Interest 104 - 107 -
------- ------- ------- -------
122,358 77,066 326,703 190,770
------- ------- ------- -------
Expenses
Production 62,274 62,835 168,654 161,251
General and administrative 20,804 19,963 62,892 63,538
Depreciation, depletion and
amortization 3,000 - 7,000 6,500
------- ------- ------- -------
86,078 82,798 238,546 231,289
------- ------- ------- -------
Net income (loss) $ 36,280 (5,732) 88,157 (40,519)
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 3,535 (516) 8,564 (3,062)
======= ======= ======= =======
General Partner $ 393 (57) 952 (340)
======= ======= ======= =======
Limited Partners $ 32,352 (5,159) 78,641 (37,117)
======= ======= ======= =======
Per limited partner unit $ 3.09 (.49) 7.50 (3.54)
======= ======= ======= =======
Southwest Oil and Gas Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
2000 1999
---- ----
Cash flows from operating activities
Cash received from oil and gas sales $ 294,444 164,176
Cash paid to suppliers (249,994) (220,114)
Interest received 107 -
------- -------
Net cash provided by (used in) operating activities 44,557
(55,938)
------- -------
Cash flows from investing activities
Additions to oil and gas properties (8,505) (1,792)
Cash received from sale of oil and gas
property interest - 44,002
------- -------
Net cash (used in) provided by investing activities (8,505)
42,210
------- -------
Cash flows used in financing activities
Distributions to partners (26,498) 260
------- -------
Net increase (decrease) in cash and cash
equivalents 9,554 (13,468)
Beginning of period 1,204 14,672
------- -------
End of period $ 10,758 1,204
======= =======
(continued)
Southwest Oil and Gas Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
2000 1999
---- ----
Reconciliation of net income (loss) to net
cash provided by (used in) operating activities
Net income (loss) $ 88,157 (40,519)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities
Depreciation, depletion and amortization 7,000 6,500
Increase in receivables (32,152) (26,594)
(Decrease) increase in payables (18,448) 4,675
--------- ------
Net cash provided by (used in) operating activities $ 44,557
(55,938)
========= ======
Southwest Oil & Gas Income Fund X-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Oil and Gas Income Fund X-A, L.P. was organized under the
laws of the state of Delaware on January 29, 1990, for the purpose of
acquiring producing oil and gas properties and to produce and market
crude oil and natural gas produced from such properties for a term of
50 years, unless terminated at an earlier date as provided for in the
Partnership Agreement. The Partnership sells its oil and gas
production to a variety of purchasers with the prices it receives
being dependent upon the oil and gas economy. Southwest Royalties,
Inc. serves as the Managing General Partner and H. H. Wommack, III, as
the individual general partner. Revenues, costs, and expenses are
allocated as follows:
Limited General
Partners Partners
-------- --------
Interest income on capital contributions 100% -
Oil and gas sales 90% 10%
All other revenues 90% 10%
Organization and offering costs (1) 100% -
Syndication costs 100% -
Amortization of organization costs 100% -
Property acquisition costs 100% -
Gain/loss on property disposition 90% 10%
Operating and administrative costs (2) 90% 10%
Depreciation, depletion and amortization
of oil and as properties 100% -
All other costs 90% 10%
(1) All organization costs in excess of 3% of initial capital
contributions will be paid by the Managing General Partner and
will be treated as a capital contribution. The Partnership paid
the Managing General Partner an amount equal to 3% of initial
capital contributions for such organization costs.
(2) Administrative costs in any year which exceed 2% of capital
contributions shall be paid by the Managing General Partner and
will be treated as a capital contribution.
2. Summary of Significant Accounting Policies
The interim financial information as of September 30, 2000, and for
the three and nine months ended September 30, 2000, is unaudited.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this Form 10-Q
pursuant to the rules and regulations of the Securities and Exchange
Commission. However, in the opinion of management, these interim
financial statements include all the necessary adjustments to fairly
present the results of the interim periods and all such adjustments
are of a normal recurring nature. The interim consolidated financial
statements should be read in conjunction with the audited financial
statements for the year ended December 31, 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund X-A, L.P. was organized as a Delaware
limited partnership on January 29, 1990. The offering of such limited
partnership interests began on May 11, 1990 as part of a shelf offering
registered under the name Southwest Oil & Gas 1990-91 Income Program.
Minimum capital requirements for the Partnership were met on August 15,
1990, with the offering of limited partnership interests concluding on
November 30, 1990, with total limited partner contributions of $5,242,000.
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 will not be 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, lease
operating expenses, enhanced recovery projects, offset drilling activities
pursuant to farm-out 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 and general and administrative 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.
Management does not anticipate performing workovers during the next twelve
months. The Partnership could possibly experience a normal decline of 8%
to 10% per year.
Oil and Gas Properties
Oil and gas properties are accounted for at cost under the full-cost
method. Under this method, all productive and nonproductive costs incurred
in connection with the acquisition, exploration and development of oil and
gas reserves are capitalized. Gain or loss on the sale of oil and gas
properties is not recognized unless significant oil and gas reserves are
involved.
The Partnership's policy for depreciation, depletion and amortization of
oil and gas properties is computed under the units of revenue method.
Under the units of revenue method, depreciation, depletion and amortization
is computed on the basis of current gross revenues from production in
relation to future gross revenues, based on current prices, from estimated
production of proved oil and gas reserves.
Should the net capitalized costs exceed the estimated present value of oil
and gas reserves, discounted at 10%, such excess costs would be charged to
current expense. As of September 30, 2000, the net capitalized costs did
not exceed the estimated present value of oil and gas reserves.
Results of Operations
A. General Comparison of the Quarters Ended September 30, 2000 and 1999
The following table provides certain information regarding performance
factors for the quarters ended September 30, 2000 and 1999:
Three Months
Ended Percentage
September 30, Increase
2000 1999 (Decrease)
---- ---- ---------
Average price per barrel of oil $ 30.04 18.08 66%
Average price per mcf of gas $ 5.08 2.83 80%
Oil production in barrels 3,500 3,630 (4%)
Gas production in mcf 4,100 4,050 1%
Gross oil and gas revenue $ 122,254 77,066 59%
Net oil and gas revenue $ 59,980 14,231 321%
Partnership distributions $ 26,284 - 100%
Limited partner distributions $ 26,284 - 100%
Per unit distribution to limited partners $ 2.51 - 100%
Number of limited partner units 10,484 10,484
Revenues
The Partnership's oil and gas revenues increased to $122,254 from $77,066
for the quarters ended September 30, 2000 and 1999, respectively, an
increase of 59%. The principal factors affecting the comparison of the
quarters ended September 30, 2000 and 1999 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended September 30, 2000 as compared to
the quarter ended September 30, 1999 by 66%, or $11.96 per barrel,
resulting in an increase of approximately $43,400 in revenues. Oil
sales represented 83% of total oil and gas sales during the quarter
ended September 30, 2000 as compared to 85% during the quarter ended
September 30, 1999.
The average price for an mcf of gas received by the Partnership
increased during the same period by 80%, or $2.25 per mcf, resulting in
an increase of approximately $9,100 in revenues.
The total increase in revenues due to the change in prices received
from oil and gas production is approximately $52,500. 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 decreased approximately 130 barrels or 4% during the
quarter ended September 30, 2000 as compared to the quarter ended
September 30, 1999, resulting in a decrease of approximately $3,900 in
revenues.
Gas production increased approximately 50 mcf or 1% during the same
period, resulting in an increase of approximately $300 in revenues.
The total decrease in revenues due to the change in production is
approximately $3,600.
Costs and Expenses
Total costs and expenses increased to $86,078 from $82,798 for the quarters
ended September 30, 2000 and 1999, respectively, an increase of 4%. The
increase is the result of higher depletion expense, general and
administrative expense, partially offset by a decrease in lease operating
costs.
1. Lease operating costs and production taxes were 1% lower, or
approximately $600 less during the quarter ended September 30, 2000 as
compared to the quarter ended September 30, 1999.
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 increased 4%
or approximately $800 during the quarter ended September 30, 2000 as
compared to the quarter ended September 30, 1999.
3. Depletion expense of $3,000 was recorded for the quarter ended
September 30, 2000. There was no depletion expense recorded for the
quarter ended September 30, 1999. This represents a increase of 100%.
Depletion is calculated using the units of 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. The increase in
depletion expense is due to an accrual adjustment, which was made
during the quarter ended September 30, 1999 to adjust for the over
accrual of depletion in the first two quarters of 1999. The rapid rise
in prices during the first three quarters of 1999 from $14/bbl to
$23/bbl and from $1.71/mcf to $2.38/mcf caused an adjustment to be
necessary during the third quarter of 1999.
B. General Comparison of the Nine Month Periods Ended September 30, 2000
and 1999
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 2000 and 1999:
Nine Months
Ended Percentage
September 30, Increase
2000 1999 (Decrease)
---- ---- ---------
Average price per barrel of oil $ 27.93 14.51 92%
Average price per mcf of gas $ 3.90 2.11 85%
Oil production in barrels 10,100 11,340 (11%)
Gas production in mcf 11,400 12,420 (8%)
Gross oil and gas revenue $ 326,596 190,770 71%
Net oil and gas revenue $ 157,942 29,519 435%
Partnership distributions $ 26,284 - 100%
Limited partner distributions $ 26,284 - 100%
Per unit distribution to limited partners $ 2.51 - 100%
Number of limited partner units 10,484 10,484
Revenues
The Partnership's oil and gas revenues increased to $326,596 from $190,770
for the nine months ended September 30, 2000 and 1999, respectively, an
increase of 71%. The principal factors affecting the comparison of the
nine months ended September 30, 2000 and 1999 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the nine months ended September 30, 2000 as compared
to the nine months ended September 30, 1999 by 92%, or $13.42 per
barrel, resulting in an increase of approximately $152,200 in revenues.
Oil sales represented 86% of total oil and gas sales during the nine
months ended September 30, 2000 and 86% during the nine months ended
September 30, 1999.
The average price for an mcf of gas received by the Partnership
increased during the same period by 85%, or $1.79 per mcf, resulting in
an increase of approximately $22,200 in revenues.
The total increase in revenues due to the change in prices received
from oil and gas production is approximately $174,400. 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 decreased approximately 1,240 barrels or 11% during the
nine months ended September 30, 2000 as compared to the nine months
ended September 30, 1999, resulting in a decrease of approximately
$34,600 in revenues.
Gas production decreased approximately 1,020 mcf or 8% during the same
period, resulting in a decrease of approximately $4,000 in revenues.
The total decrease in revenues due to the change in production is
approximately $38,600.
Costs and Expenses
Total costs and expenses increased to $238,546 from $231,289 for the nine
months ended September 30, 2000 and 1999, respectively, an increase of 3%.
The increase is the result of higher lease operating costs and depletion
expense, partially offset by a decrease in general and administrative
expense.
1. Lease operating costs and production taxes were 5% higher, or
approximately $7,400 more during the nine months ended September 30,
2000 as compared to the nine months ended September 30, 1999.
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 1%
or approximately $600 during the nine months ended September 30, 2000
as compared to the nine months ended September 30, 1999.
3. Depletion expense increased to $7,000 for the nine months ended
September 30, 2000 from $6,500 for the same period in 1999. This
represents an increase of 8%. Depletion is calculated using the units
of 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.
Liquidity and Capital Resources
The primary source of cash is from operations, the receipt of income from
interests in oil and gas properties. The Partnership knows of no material
change, nor does it anticipate any such change.
Cash flows provided by (used in) operating activities were approximately
$44,600 in the nine months ended September 30, 2000 as compared to
approximately $(55,900) in the nine months ended September 30, 1999. The
primary source of the 2000 cash flow from operating activities was oil and
gas operations.
Cash flows (used in) provided by investing activities were approximately
$(8,500) in the nine months ended September 30, 2000 as compared to
approximately $42,200 in the nine months ended September 30, 1999. The
principle use of the 2000 cash flow from investing activities was the
change in oil and gas properties.
Cash flows (used in) financing activities were approximately $(26,500) in
the nine months ended September 30, 2000 as compared to approximately $260
provided by in the nine months ended September 30, 1999.
Total distributions during the nine months ended September 30, 2000 were
$26,284 of which $26,284 was distributed to the limited partners. The per
unit distribution to limited partners during the nine months ended
September 30, 2000 was $2.51. There were no distributions during the nine
months ended September 30, 1999.
The source for the 2000 distributions of $26,284 was oil and gas operations
of approximately $44,600, partially offset by the change in oil and gas
properties of approximately $(8,500), resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $2,719,990 have been made to the partners. As of September 30, 2000,
$2,501,089 or $238.56 per limited partner unit has been distributed to the
limited partners, representing a 48% return of the capital contributed.
As of September 30, 2000, the Partnership had approximately $68,500 in
working capital. The Managing General Partner knows of no unusual
contractual commitments.
Liquidity - Managing General Partner
The Managing General Partner has a highly leveraged capital structure with
approximately, $33.8 million of cash interest and $5.9 million of principal
due within the next twelve months. The Managing General Partner is
currently in the process of renegotiating the terms of its various
obligations with its note holders and/or attempting to seek new lenders or
equity investors. Additionally, the Managing General Partner would
consider disposing of certain assets in order to meet its obligations.
There can be no assurance that the Managing General Partner's continuing
debt restructuring efforts will be successful or that the lenders will
agree to a course of action consistent with the Managing General Partners
requirements in restructuring the obligations. Even if such agreement is
reached, it may require approval of additional lenders, which is not
assured. Furthermore, there can be no assurance that the sales of assets
can be successfully accomplished on terms acceptable to the Managing
General Partner. Under current circumstances, the Managing General
Partner's ability to continue as a going concern depends upon its ability
to (1) successfully restructure its obligations or obtain additional
financing as may be required, (2) maintain compliance with all debt
covenants, (3) generate sufficient cash flow to meet its obligations on a
timely basis, and (4) achieve satisfactory levels of future earnings. If
the Managing General Partner is unsuccessful in its efforts, it may be
unable to meet its obligations making it necessary to undertake such other
actions as may be appropriate to preserve asset values.
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)Exhibits:
27 Financial Data Schedule
(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 and Gas Income Fund X-A,
L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
Managing General Partner
By: /s/ Bill E. Coggin
------------------------------
Bill E. Coggin, Vice President
and Chief Financial Officer
Date: November 15, 2000