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 March 31, 1997
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 & 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 13.
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, 1996 which are found in the Registrant's Form 10-K Report
for 1996 filed with the Securities and Exchange Commission. The December 31,
1996 balance sheet included herein has been taken from the Registrant's 1996
Form 10-K Report. Operating results for the three month period ended
March 31, 1997 are not necessarily indicative of the results that may be
expected for the full year.
Southwest Oil & Gas Income Fund X-A, L.P.
Balance Sheets
March 31, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 11,437 8,919
Receivable from Managing General Partner 30,441 85,367
Other receivable - 14,850
--------- ---------
Total current assets 41,878 109,136
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 3,937,509 3,940,445
Less accumulated depreciation,
depletion and amortization 3,480,000 3,470,000
--------- ---------
Net oil and gas properties 457,509 470,445
--------- ---------
$ 499,387 579,581
========= =========
Liabilities and Partners' Equity
Current liabilities:
Distributions payable $ 676 950
Accounts payable 5,950 -
--------- ---------
Total current liabilities 6,626 950
--------- ---------
Partners' equity:
General partners (12,435) (4,848)
Limited partners 505,196 583,479
--------- ---------
Total partners' equity 492,761 578,631
--------- ---------
$ 499,387 579,581
========= =========
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Revenues
Oil and gas $ 142,622 237,738
Interest 212 261
Miscellaneous income 1,650 -
------- -------
144,484 237,999
------- -------
Expenses
Production 105,605 176,314
General and administrative 27,749 28,129
Depreciation, depletion and amortization 10,000 32,000
------- -------
143,354 236,443
------- -------
Net income $ 1,130 1,556
======= =======
Net income (loss) allocated to:
Managing General Partner $ 1,002 3,020
======= =======
General partner $ 111 336
======= =======
Limited partners $ 17 (1,800)
======= =======
Per limited partner unit $ - (.17)
======= =======
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Cash received from sales of oil and gas $ 204,130 221,356
Cash paid to suppliers (117,486) (218,682)
Interest received 212 261
-------- --------
Net cash provided by operating activities 86,856 2,935
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (2,042) (2,737)
Sale of oil and gas properties 4,978 -
-------- --------
Net cash provided by (used in) investing
activities 2,936 (2,737)
-------- --------
Cash flows used in financing activities:
Distributions to partners (87,274) (11,256)
-------- --------
Net increase (decrease) in cash and cash
equivalents 2,518 (11,058)
Beginning of period 8,919 41,056
-------- --------
End of period $ 11,437 29,998
======== ========
(continued)
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 1,130 1,556
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 10,000 32,000
(Increase) decrease in receivables 59,858 (16,382)
Increase (decrease) in payables 15,868 (14,239)
------ -------
Net cash provided by operating activities $ 86,856 2,935
====== =======
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.
Based on current conditions, management anticipates participating in a
farmout agreement and performing workovers during the next two years to
enhance production. The Partnership may undergo an increase later in 1997
and possibly in 1998. Thereafter, the Partnership could possibly experience
a normal decline of 8% to 10% per year.
Results of Operations
A. General Comparison of the Quarters Ended March 31, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1997 and 1996:
Three Months
Ended Percentage
March 31, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.56 17.05 15%
Average price per mcf of gas $ 2.51 1.36 85%
Oil production in barrels 6,200 12,800 (52%)
Gas production in mcf 8,500 14,200 (40%)
Gross oil and gas revenue $ 142,622 237,738 (40%)
Net oil and gas revenue $ 37,017 61,424 (40%)
Partnership distributions $ 87,000 11,000 691%
Limited partner distributions $ 78,300 9,900 691%
Per unit distribution to limited
partners $ 7.47 .94 691%
Number of limited partner units 10,484 10,484
Revenues
The Partnership's oil and gas revenues decreased to $142,622 from $237,738
for the quarters ended March 31, 1997 and 1996, respectively, a decrease of
40%. The principal factors affecting the comparison of the quarters ended
March 31, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1997 as compared to the
quarter ended March 31, 1996 by 15%, or $2.51 per barrel, resulting in an
increase of approximately $32,100 in revenues. Oil sales represented 85%
of total oil and gas sales during the quarter ended March 31, 1997 as
compared to 92% during the quarter ended March 31, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 85%, or $1.15 per mcf, resulting in an increase
of approximately $16,300 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $48,400. 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 6,600 barrels or 52% during the
quarter ended March 31, 1997 as compared to the quarter ended March 31,
1996, resulting in a decrease of approximately $129,100 in revenues.
Gas production decreased approximately 5,700 mcf or 40% during the same
period, resulting in a decrease of approximately $14,300 in revenues.
The total decrease in revenues due to the change in production is
approximately $143,400. The decrease is primarily attributable to eleven
months of revenue, on one lease, being held in suspense during litigation
between a third party operator, the lease's pumper and the Managing
General Partner. Upon conclusion of the litigation, all revenues,
approximately 5,900 barrels of oil, was released during the first quarter
of 1996. Also during the first quarter of 1996, approximately 7,100 mcf
of gas from two leases, which represented twelve months of production,
was received. Excluding the effects of the lump sum settlements of oil
and gas production, oil production decreased approximately 500 barrels or
11% and gas production increased approximately 1,400 mcf of gas or 20%.
The Partnership was carried into a project on the Ballard Grayburg San
Andres Unit to drill five infill producers. An evaluation, prepared by
an independent certified petroleum engineer, of the proposed infill
drilling to determine a fair arrangement for the Partnership to
participate has resulted in a farm-out agreement with Southwest
Royalties, Inc., the Managing General Partner, to pay all the
Partnership's costs in the proposed drilling in return for a working
interest equal to 90% of the Partnership's combined working interest in
the Ballard Grayburg San Andres Unit, effective January 1, 1997. As a
result, The Partnership had been receiving approximately 450 barrels of
oil and will now receive approximately 40 barrels of oil from the Ballard
Grayburg San Andres Unit.
Costs and Expenses
Total costs and expenses decreased to $143,354 from $236,443 for the quarters
ended March 31, 1997 and 1996, respectively, a decrease of 39%. The decrease
is the result of lower lease operating costs, general and administrative
expense and depletion expense.
1. Lease operating costs and production taxes were 40% lower, or
approximately $70,700 less during the quarter ended March 31, 1997 as
compared to the quarter ended March 31, 1996. The decrease is primarily
attributable to the litigation costs of approximately $56,000 incurred
during the first quarter of 1996 and the farm-out agreement, which
lowered the Partnership's working interest, on the Ballard Grayburg San
Andres Unit.
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 $400 during the quarter ended March 31, 1997 as compared
to the quarter ended March 31, 1996.
3. Depletion expense decreased to $10,000 for the quarter ended March 31,
1997 from $32,000 for the same period in 1996. This represents a
decrease of 69%. 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. Contributing factors to
the decline of depletion expense between the comparative periods were a
decrease in oil and gas revenue and the increase in the price of oil used
to determine the Partnership's reserves for January 1, 1997 as compared
to 1996.
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, other than the ones noted above, nor does it anticipate any such
change.
Cash flows provided by operating activities were approximately $86,900 in the
quarter ended March 31, 1997 as compared to approximately $2,900 in the
quarter ended March 31, 1996. The primary source of the 1997 cash flow from
operating activities was profitable operations.
Cash flows provided by or (used in) investing activities were approximately
$2,900 in the quarter ended March 31, 1997 as compared to approximately
$(2,700) in the quarter ended March 31, 1996. The principle source of the
1997 cash flow from investing activities was the sale of oil and gas
properties, partially offset by the additions to oil and gas properties.
Cash flows used in financing activities were approximately $87,300 in the
quarter ended March 31, 1997 as compared to approximately $11,300 in the
quarter ended March 31, 1996. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 1997 were $87,000 of
which $78,300 was distributed to the limited partners and $8,700 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1997 was $7.47. Total distributions during the
quarter ended March 31, 1996 were $11,000 of which $9,900 was distributed to
the limited partners and $1,100 to the general partners. The per unit
distribution to limited partners during the quarter ended March 31, 1996 was
$.94.
The sources for the 1997 distributions of $87,000 were oil and gas operations
of approximately $86,900 and the sale of oil and gas properties of
approximately $5,000, offset by the additions to oil and gas properties of
approximately $2,000, resulting in excess cash for contingencies or
subsequent distributions. The source for the 1996 distributions of $11,000
was oil and gas operations of approximately $2,900, offset by the additions
to oil and gas properties of approximately $2,700, with the balance from
available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$2,575,906 have been made to the partners. As of March 31, 1997, $2,368,785
or $225.94 per limited partner unit has been distributed to the limited
partners, representing a 45% return of the capital contributed.
As of March 31, 1997, the Partnership had approximately $35,300 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) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
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 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: May 15, 1997