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 June 30, 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 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, 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 and six month periods
ended June 30, 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
June 30, December 31,
1997 1996
----------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 6,561 8,919
Receivable from Managing General Partner 41,178 85,367
Other receivable - 14,850
--------- ---------
Total current assets 47,739 109,136
--------- ---------
Oil and gas properties - using the
full cost method of accounting 3,933,930 3,940,445
Less accumulated depreciation,
depletion and amortization 3,490,000 3,470,000
--------- ---------
Net oil and gas properties 443,930 470,445
--------- ---------
$ 491,669 579,581
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable 1,110 -
Distribution payable $ 920 950
--------- ---------
Total current liabilities 2,030 950
--------- ---------
Partners' equity:
General partners (11,747) (4,848)
Limited partners 501,386 583,479
--------- ---------
Total partners' equity 489,639 578,631
--------- ---------
$ 491,669 579,581
========= =========
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues
Oil and gas $ 143,762 191,517 286,384 429,255
Interest 81 254 293 515
Miscellaneous income - - 1,650 -
------- ------- ------- -------
143,843 191,771 288,327 429,770
------- ------- ------- -------
Expenses
Production 91,631 97,966 197,237 274,280
General and administrative 20,334 19,404 48,082 47,532
Depreciation, depletion and
amortization 10,000 27,000 20,000 59,000
------- ------- ------- -------
121,965 144,370 265,319 380,812
------- ------- ------- -------
Net income $ 21,878 47,401 23,008 48,958
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 2,869 6,696 3,871 9,716
======= ======= ======= =======
General Partner $ 319 744 430 1,080
======= ======= ======= =======
Limited partners $ 18,690 39,961 18,707 38,162
======= ======= ======= =======
Per limited partner unit $ 1.78 3.81 1.78 3.64
======= ======= ======= =======
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Cash received from sale of oil and gas $ 352,192 406,795
Cash paid to suppliers (249,328) (359,126)
Interest received 293 515
------- -------
Net cash provided by operating activities 103,157 48,184
------- -------
Cash flows from investing activities:
Additions to oil and gas properties (4,837) (9,359)
Sale of oil and gas properties 11,352 5
------- -------
Net cash provided by (used in)
investing activities 6,515 (9,354)
------- -------
Cash flows used in financing activities:
Distributions to partners (112,030) (51,051)
------- -------
Net decrease in cash and cash equivalents (2,358) (12,221)
Beginning of period 8,919 41,056
------- -------
End of period $ 6,561 28,835
======= =======
(continued)
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1997 1996
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 23,008 48,958
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 20,000 59,000
(Increase) decrease in receivables 64,158 (22,460)
Decrease in payables (4,009) (37,314)
------- -------
Net cash provided by operating activities $ 103,157 48,184
======= =======
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 June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1997 and 1996:
Three Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.47 20.01 (8%)
Average price per mcf of gas $ 2.36 2.59 (9%)
Oil production in barrels 6,800 8,700 (22%)
Gas production in mcf 7,700 7,000 10%
Gross oil and gas revenue $ 143,762 191,517 (25%)
Net oil and gas revenue $ 52,131 93,551 (44%)
Partnership distributions $ 25,000 40,000 (38%)
Limited partner distributions $ 22,500 36,000 (38%)
Per unit distribution to limited
partners $ 2.15 3.43 (38%)
Number of limited partner units 10,484 10,484
Revenues
The Partnership's oil and gas revenues decreased to $143,762 from $191,517
for the quarters ended June 30, 1997 and 1996, respectively, a decrease of
25%. The principal factors affecting the comparison of the quarters ended
June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended June 30, 1997 as compared to the
quarter ended June 30, 1996 by 8%, or $1.54 per barrel, resulting in a
decrease of approximately $13,400 in revenues. Oil sales represented 87%
of total oil and gas sales during the quarter ended June 30, 1997 as
compared to 91% during the quarter ended June 30, 1996.
The average price for an mcf of gas received by the Partnership decreased
during the same period by 9%, or $.23 per mcf, resulting in a decrease of
approximately $1,600 in revenues.
The total decrease in revenues due to the change in prices received from
oil and gas production is approximately $15,000. 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 decreased approximately 1,900 barrels or 22% during the
quarter ended June 30, 1997 as compared to the quarter ended June 30,
1996, resulting in a decrease of approximately $35,100 in revenues.
Gas production increased approximately 700 mcf or 10% during the same
period, resulting in an increase of approximately $1,700 in revenues.
The net total decrease in revenues due to the change in production is
approximately $33,400. The decrease in oil production is primarily
attributable to a farm-out agreement, which lowered the Partnership's
interest in the Ballard Grayburg San Andres Unit.
Costs and Expenses
Total costs and expenses decreased to $121,965 from $144,370 for the quarters
ended June 30, 1997 and 1996, respectively, a decrease of 16%. The decrease
is the result of lower lease operating costs and depletion expense, partially
offset by an increase in general and administrative expense.
1. Lease operating costs and production taxes were 6% lower, or
approximately $6,300 less during the quarter ended June 30, 1997 as
compared to the quarter ended June 30, 1996.
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 5%
or approximately $900 during the quarter ended June 30, 1997 as compared
to the quarter ended June 30, 1996.
3. Depletion expense decreased to $10,000 for the quarter ended June 30,
1997 from $27,000 for the same period in 1996. This represents a
decrease of 63%. 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.
B. General Comparison of the Six Month Periods Ended June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1997 and 1996:
Six Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.42 18.24 1%
Average price per mcf of gas $ 2.60 2.41 8%
Oil production in barrels 13,400 21,500 (38%)
Gas production in mcf 15,200 15,500 (2%)
Gross oil and gas revenue $ 286,384 429,255 (33%)
Net oil and gas revenue $ 89,147 154,975 (42%)
Partnership distributions $ 112,000 51,000 120%
Limited partner distributions $ 100,800 45,900 120%
Per unit distribution to limited
partners $ 9.61 4.38 120%
Number of limited partner units 10,484 10,484
Revenues
The Partnership's oil and gas revenues decreased to $286,384 from $429,255
for the six months ended June 30, 1997 and 1996, respectively, a decrease of
33%. The principal factors affecting the comparison of the six months ended
June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1997 as compared to the
six months ended June 30, 1996 by 1%, or $.18 per barrel, resulting in an
increase of approximately $3,900 in revenues. Oil sales represented 86%
of total oil and gas sales during the six months ended June 30, 1997 as
compared to 91% during the six months ended June 30, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 8%, or $.19 per mcf, resulting in an increase
of approximately $2,900 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $6,800. 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 8,100 barrels or 38% during the
six months ended June 30, 1997 as compared to the six months ended June
30, 1996, resulting in a decrease of approximately $149,200 in revenues.
Gas production decreased approximately 300 mcf or 2% during the same
period, resulting in a decrease of approximately $800 in revenues.
The total decrease in revenues due to the change in production is
approximately $150,000. 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 contributing to the decline is a farm-out agreement, which
lowered the Partnership's interest in the Ballard Grayburg San Andres
Unit.
Costs and Expenses
Total costs and expenses decreased to $265,319 from $380,812 for the six
months ended June 30, 1997 and 1996, respectively, a decrease of 30%. The
decrease is the result of lower lease operating cost and depletion expense,
partially offset by an increase in general and administrative expense.
1. Lease operating costs and production taxes were 28% lower, or
approximately $77,000 less during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996. The decrease is
primarily attributable to the litigation costs of approximately $56,000
incurred during the first quarter of 1996 and a farm-out agreement, which
lowered the Partnership's interest in 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 increased 1%
or approximately $600 during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996.
3. Depletion expense decreased to $20,000 for the six months ended June 30,
1997 from $59,000 for the same period in 1996. This represents a
decrease of 66%. 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, nor does it anticipate any such change.
Cash flows provided by operating activities were approximately $103,200 in
the six months ended June 30, 1997 as compared to approximately $48,200 in
the six months ended June 30, 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
$6,500 in the six months ended June 30, 1997 as compared to approximately
$(9,400) in the six months ended June 30, 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 $112,000 in the
six months ended June 30, 1997 as compared to approximately $51,100 in the
six months ended June 30, 1996. The only use in financing activities was the
distributions to partners.
Total distributions during the six months ended June 30, 1997 were $112,000
of which $100,800 was distributed to the limited partners and $11,200 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1997 was $9.61. Total distributions during the six
months ended June 30, 1996 were $51,000 of which $45,900 was distributed to
the limited partners and $5,100 to the general partners. The per unit
distribution to limited partners during the six months ended June 30, 1996
was $4.38.
The sources for the 1997 distributions of $112,000 were oil and gas
operations of approximately $103,200 and the net change in oil and gas
properties of approximately $6,500, with the balance from available cash on
hand at the beginning of the period. The source for the 1996 distributions
of $51,000 was oil and gas operations of approximately $48,200, partially
offset by the net change in oil and gas properties of approximately $9,400,
with the balance from available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$2,600,906 have been made to the partners. As of June 30, 1997, $2,391,284
or $228.09 per limited partner unit has been distributed to the limited
partners, representing a 46% return of the capital contributed.
As of June 30, 1997, the Partnership had approximately $45,700 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:
On June 12, 1997, the Partnership filed Form 8-K and on June
24, 1997, the Partnership filed Form 8-K Amended, with respect
to Item 4, Changes in Registrant's Certifying Accountant.
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: August 15, 1997