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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, 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 0-18997
SOUTHWEST ROYALTIES INSTITUTIONAL 1990-91 INCOME PROGRAM
Southwest Royalties Institutional Income Fund X-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2310852
(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 note 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
nine month periods ended September 30, 1997 are not necessarily indicative
of the results that may be expected for the full year.
Southwest Royalties Institutional Income Fund X-A, L.P.
Balance Sheets
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 9,683 6,736
Receivable from Managing General Partner 51,886 99,877
Other receivable - 14,850
- --------- ---------
Total current assets 61,569 121,463
--------- ---------
Oil and gas properties - using the
full cost method of accounting 4,384,642 4,387,142
Less accumulated depreciation,
depletion and amortization 3,827,000 3,789,000
--------- ---------
Net oil and gas properties 557,642 598,142
--------- ---------
$ 619,211 719,605
========= =========
Liabilities and Partners' Equity
Current liability - Distribution payable $ 234 142
--------- ---------
Partners' equity
General partners (5,556) 693
Limited partners 624,533 718,770
--------- ---------
Total partners' equity 618,977 719,463
--------- ---------
$ 619,211 719,605
========= =========
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues
Income from net profits
interests $ 55,603 76,023 190,940 262,487
Interest 160 278 522 887
Miscellaneous 6,003 - 7,653 -
------ ------ ------- -------
61,766 76,301 199,115 263,374
------ ------ ------- -------
Expenses
General and administrative 22,622 22,832 75,601 76,254
Depreciation, depletion and
amortization 12,000 27,000 38,000 94,000
------ ------ ------- -------
34,622 49,832 113,601 170,254
------ ------ ------- -------
Net income $ 27,144 26,469 85,514 93,120
====== ====== ======= =======
Net income allocated to:
Managing General Partner $ 3,523 4,812 11,116 16,841
====== ====== ======= =======
General Partner $ 391 535 1,235 1,871
====== ====== ======= =======
Limited Partners $ 23,230 21,122 73,163 74,408
====== ====== ======= =======
Per limited partner unit $ 2.05 1.87 6.47 6.58
====== ====== ======= =======
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities
Cash received from income from net
profits interests $ 261,434 201,952
Cash paid to suppliers (75,601) (76,254)
Interest received 522 887
------- -------
Net cash provided by operating activities 186,355 126,585
------- -------
Cash flows provided by investing activities
Cash received from sale of oil and gas
property interest 2,500 791
------- -------
Cash flows used in financing activities
Distributions to partners (185,908) (152,886)
------- -------
Net increase (decrease) in cash and cash
equivalents 2,947 (25,510)
Beginning of period 6,736 46,452
------- -------
End of period $ 9,683 20,942
======= =======
(continued)
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
1997 1996
Reconciliation of net income to net cash
provided by operating activities
Net income $ 85,514 93,120
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and amortization 38,000 94,000
(Increase) decrease in receivables 62,841 (60,535)
--------- -------
Net cash provided by operating activities $ 186,355 126,585
========= =======
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional 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 May 11, 1990 as part of a shelf
offering registered under the name Southwest Royalties Institutional 1990-
91 Income Program. Minimum capital requirements for the Partnership were
met on July 30, 1990, with the offering of limited partnership interests
concluding on November 30, 1990, with total limited partner contributions
of $5,658,000.
The Partnership was formed to acquire royalty and net profits 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 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 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 September 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended September 30, 1997 and 1996:
Three Months
Ended Percentage
September 30, Increase
1997 1996 (Decrease)
Average price per barrel of oil $ 17.42 20.97 (17%)
Average price per mcf of gas $ 2.36 2.09 13%
Oil production in barrels 6,800 8,500 (20%)
Gas production in mcf 11,900 12,000 (1%)
Income from net profits interests $ 55,603 76,023 (27%)
Partnership distributions $ 49,000 63,000 (22%)
Limited partner distributions $ 44,100 56,700 (22%)
Per unit distribution to limited partners $ 3.90 5.01 (22%)
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests decreased to $55,603
from $76,023 for the quarters ended September 30, 1997 and 1996,
respectively, a decrease of 27%. The principal factors affecting the
comparison of the quarters ended September 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 September 30, 1997 as compared to
the quarter ended September 30, 1996 by 17%, or $3.55 per barrel,
resulting in a decrease of approximately $30,200 in income from net
profits interests. Oil sales represented 81% of total oil and gas
sales during the quarter ended September 30, 1997 as compared to 88%
during the quarter ended September 30, 1996.
The average price for an mcf of gas received by the Partnership
increased during the same period by 13%, or $.27 per mcf, resulting in
an increase of approximately $3,200 in income from net profits
interests.
The net total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$27,000. 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 1,700 barrels or 20% during the
quarter ended September 30, 1997 as compared to the quarter ended
September 30, 1996, resulting in a decrease of approximately $29,600 in
income from net profits interests.
Gas production decreased approximately 100 mcf or 1% during the same
period, resulting in a decrease of approximately $200 in income from
net profits interests.
The total decrease in income from net profits interests due to the
change in production is approximately $29,800. 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.
3. Lease operating costs and production taxes were 28% lower, or
approximately $35,900 less during the quarter ended September 30, 1997
as compared to the quarter ended September 30, 1996. The decrease 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 $34,622 from $49,832 for the quarters
ended September 30, 1997 and 1996, respectively, a decrease of 31%. The
decrease is the result of lower general and administrative expense and
depletion expense.
1. General and administrative costs consists of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased 1%
or approximately $200 during the quarter ended September 30, 1997 as
compared to the quarter ended September 30, 1996.
2. Depletion expense decreased to $12,000 for the quarter ended September
30, 1997 from $27,000 for the same period in 1996. This represents a
decrease of 56%. 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. Two contributing
factors to the decline in depletion expense between the comparative
periods were the increase in the price of oil used to determine the
Partnership's reserves for January 1, 1997 as compared to 1996 and the
decline in gross oil and gas revenues.
B. General Comparison of the Nine Month Periods Ended September 30, 1997
and 1996
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 1997 and 1996:
Nine Months
Ended Percentage
September 30, Increase
1997 1996 (Decrease)
Average price per barrel of oil $ 18.24 19.02 (4%)
Average price per mcf of gas $ 2.54 2.33 9%
Oil production in barrels 21,500 31,700 (32%)
Gas production in mcf 36,900 38,200 (3%)
Income from net profits interests $ 190,940 262,487 (27%)
Partnership distributions $ 186,000 153,000 22%
Limited partner distributions $ 167,400 137,700 22%
Per unit distribution to limited partners $ 14.79 12.17 22%
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests decreased to $190,940
from $262,487 for the nine months ended September 30, 1997 and 1996,
respectively, a decrease of 27%. The principal factors affecting the
comparison of the nine months ended September 30, 1997 and 1996 are as
follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the nine months ended September 30, 1997 as compared
to the nine months ended September 30, 1996 by 4%, or $.78 per barrel,
resulting in a decrease of approximately $24,700 in income from net
profits interests. Oil sales represented 81% of total oil and gas
sales during the nine months ended September 30, 1997 as compared to
87% during the nine months ended September 30, 1996.
The average price for an mcf of gas received by the Partnership
increased during the same period by 9%, or $.21 per mcf, resulting in
an increase of approximately $8,000 in income from net profits
interests.
The net total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$16,700. 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 10,200 barrels or 32% during the
nine months ended September 30, 1997 as compared to the nine months
ended September 30, 1996, resulting in a decrease of approximately
$186,000 in income from net profits interests.
Gas production decreased approximately 1,300 mcf or 3% during the same
period, resulting in a decrease of approximately $3,300 in income from
net profits interests.
The total decrease in income from net profits interests due to the
change in production is approximately $189,300. 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, were
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.
3. Lease operating costs and production taxes were 31% lower, or
approximately $133,700 less during the nine months ended September 30,
1997 as compared to the nine months ended September 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.
Costs and Expenses
Total costs and expenses decreased to $113,601 from $170,254 for the nine
months ended September 30, 1997 and 1996, respectively, a decrease of 33%.
The decrease is the result of lower general and administrative expense and
depletion expense.
1. General and administrative costs consists of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased 1%
or approximately $700 during the nine months ended September 30, 1997
as compared to the nine months ended September 30, 1996.
2. Depletion expense decreased to $38,000 for the nine months ended
September 30, 1997 from $94,000 for the same period in 1996. This
represents a decrease of 60%. 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. Two
contributing factors to the decline in depletion expense between the
comparative periods were the increase in the price of oil used to
determine the Partnership's reserves for January 1, 1997 as compared to
1996 and the decline in gross oil and gas revenues.
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 $186,400 in
the nine months ended September 30, 1997 as compared to approximately
$126,600 in the nine months ended September 30, 1996. The primary source
of the 1997 cash flow from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $2,500 in
the nine months ended September 30, 1997 as compared to approximately $800
in the nine months ended September 30, 1996. The principle source of the
1997 cash flow from investing activities was the change in oil and gas
properties.
Cash flows used in financing activities were approximately $185,900 in the
nine months ended September 30, 1997 as compared to approximately $152,900
in the nine months ended September 30, 1996. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 1997 were
$186,000 of which $167,400 was distributed to the limited partners and
$18,600 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 1997 was $14.79. Total
distributions during the nine months ended September 30, 1996 were $153,000
of which $137,700 was distributed to the limited partners and $15,300 to
the general partners. The per unit distribution to limited partners during
the nine months ended September 30, 1996 was $12.17.
The sources for the 1997 distributions of $186,000 were oil and gas
operations of approximately $186,400 and the change in oil and gas
properties of approximately $2,500, resulting in excess cash for
contingencies or subsequent distributions. The sources for the 1996
distributions of $153,000 were oil and gas operations of approximately
$126,600, and the change in oil and gas properties of approximately $800,
with the balance from available cash on hand at the beginning of the
period.
Since inception of the Partnership, cumulative monthly cash distributions
of $2,939,122 have been made to the partners. As of September 30, 1997,
$2,693,561 or $238.03 per limited partner unit has been distributed to the
limited partners, representing a 48% return of the capital contributed.
As of September 30, 1997, the Partnership had approximately $61,300 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) 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 Royalties Institutional 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, 1997