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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, 2001
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 0-19585
SOUTHWEST OIL & GAS 1990-91 INCOME PROGRAM
Southwest Oil and Gas Income Fund X-B, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2332176
(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, 2000, which are found in the Registrant's Form
10-K Report for 2000 filed with the Securities and Exchange Commission.
The December 31, 2000 balance sheet included herein has been taken from the
Registrant's 2000 Form 10-K Report. Operating results for the three and
nine month periods ended September 30, 2001 are not necessarily indicative
of the results that may be expected for the full year.
Southwest Oil and Gas Income Fund X-B, L.P.
Balance Sheets
September 30, December 31,
2001 2000
------------- ------------
(unaudited)
Assets
- ------
Current assets:
Cash and cash equivalents $ 21,768 92,659
Receivable from Managing General Partner 102,513 152,562
--------- ---------
Total current assets 124,281 245,221
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 4,478,321 4,443,303
Less accumulated depreciation,
depletion and amortization 4,135,706 4,084,706
--------- ---------
Net oil and gas properties 342,615 358,597
--------- ---------
$ 466,896 603,818
========= =========
Liabilities and Partners' Equity
- --------------------------------
Current liability - Distributions payable $ 150 58
--------- ---------
Partners' equity:
General partners 2,762 11,363
Limited partners 463,984 592,397
--------- ---------
Total partners' equity 466,746 603,760
--------- ---------
$ 466,896 603,818
========= =========
Southwest Oil and Gas Income Fund X-B, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Revenues
- --------
Oil and gas $ 196,752 301,676 723,233 827,746
Interest 455 1,210 2,574 2,725
------- ------- ------- ---------
197,207 302,886 725,807 830,471
------- ------- ------- ---------
Expenses
- --------
Production 148,359 147,281 426,853 437,052
General and administrative 19,149 19,330 57,968 58,267
Depreciation, depletion and
amortization 27,000 5,000 51,000 15,000
------- ------- ------- ---------
194,508 171,611 535,821 510,319
------- ------- ------- ---------
Net income $ 2,699 131,275 189,986 320,152
======= ======= ======= =========
Net income (loss) allocated to:
Managing General Partner $ 2,673 12,265 21,689 30,163
======= ======= ======= =========
General Partner $ 297 1,363 2,410 3,352
======= ======= ======= =========
Limited Partners $ (271) 117,647 165,887 286,637
======= ======= ======= =========
Per limited partner unit $ (.02) 10.80 15.23 26.32
======= ======= ======= =========
Southwest Oil and Gas Income Fund X-B, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
2001 2000
---- ----
Cash flows from operating activities
Cash received from oil and gas sales $ 785,323 772,116
Cash paid to suppliers (496,862) (452,649)
Interest received 2,574 2,725
--------- ---------
Net cash provided by operating activities 291,035 322,192
--------- ---------
Cash flows used in investing activities
Additions to oil and gas properties (35,018) (21,186)
--------- ---------
Cash flows used in financing activities
Distributions to partners (326,908) (255,023)
--------- ---------
Net (decrease) increase in cash and cash equivalents (70,891)
45,983
Beginning of period 92,659 35,345
--------- ---------
End of period $ 21,768 81,328
========= =========
Reconciliation of net income to net
cash provided by operating activities
Net income $ 189,986 320,152
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation, depletion and amortization 51,000 15,000
Decrease (increase) in receivables 62,090 (55,630)
(Decrease) increase in payables (12,041) 42,670
------- -------
Net cash provided by operating activities $ 291,035 322,192
======= =======
Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Oil & Gas Income Fund X-B, L.P. was organized under the laws
of the state of Delaware on November 27, 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% -
Amortization or 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 gas 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, 2001, and for
the three and nine months ended September 30, 2001, 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, 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund X-B, L.P. was organized as a Delaware
limited partnership on November 27, 1990. The offering of such limited
partnership interests began on December 1, 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 March 1, 1991,
with the offering of limited partnership interests concluding on September
30, 1991, with total limited partner contributions of $5,444,500.
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 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.
Management does not anticipate performing workovers during the next year.
The Partnership could possibly experience a steady decline of 10% to 12%.
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. For the quarter ended September 30, 2001, the net
capitalized cost did not exceed the estimated present value of oil and gas
reserves.
Results of Operations
A. General Comparison of the Quarters Ended September 30, 2001 and 2000
The following table provides certain information regarding performance
factors for the quarters ended September 30, 2001 and 2000:
Three Months
Ended Percentage
September 30, Increase
2001 2000 (Decrease)
---- ---- ---------
Average price per barrel of oil $ 22.81 29.61 (23%)
Average price per mcf of gas $ 2.51 4.65 (46%)
Oil production in barrels 7,800 8,400 (7%)
Gas production in mcf 12,800 12,600 2%
Gross oil and gas revenue $ 196,752 301,676 (35%)
Net oil and gas revenue $ 48,393 154,395 (69%)
Partnership distributions $ 75,000 100,000 (25%)
Limited partner distributions $ 67,500 90,000 (25%)
Per unit distribution to limited partners $ 6.20 8.27 (25%)
Number of limited partner units 10,889 10,889
Revenues
The Partnership's oil and gas revenues decreased to $196,752 from $301,676
for the quarters ended September 30, 2001 and 2000, respectively, a
decrease of 35%. The principal factors affecting the comparison of the
quarters ended September 30, 2001 and 2000 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended September 30, 2001 as compared to
the quarter ended September 30, 2000 by 23%, or $6.80 per barrel,
resulting in a decrease of approximately $53,000 in revenues. Oil
sales represented 85% of total oil and gas sales during the quarter
ended September 30, 2001 as compared to 81% during the quarter ended
September 30, 2000.
The average price for a mcf of gas received by the Partnership
decreased during the quarter ended September 30, 2001 as compared to
the quarter ended September 30, 2000 by 46%, or $2.14 per mcf,
resulting in a decrease of approximately $27,400 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $80,400. 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 600 barrels or 7% during the quarter
ended September 30, 2001 as compared to the quarter ended September 30,
2000, resulting in a decrease of approximately $17,800 in revenues.
Gas production increased approximately 200 mcf or 2% during the same
period, resulting in an increase of approximately $900 in revenues.
The net total decrease in revenues due to the change in production is
approximately $16,900.
Costs and Expenses
Total costs and expenses increased to $194,508 from $171,611 for the
quarters ended September 30, 2001 and 2000, respectively, an increase of
13%. The increase is the result of higher depletion expense and lease
operating costs, partially offset by a decrease in general and
administrative expense.
1. Lease operating costs and production taxes were 1% higher, or
approximately $1,100 more during the quarter ended September 30, 2001 as
compared to the quarter ended September 30, 2000.
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 $200 during the quarter ended September 30, 2001 as
compared to the quarter ended September 30, 2000.
3. Depletion expense increased to $27,000 for the quarter ended September
30, 2001 from $5,000 for the same period in 2000. This represents an
increase of 440%. 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 increase in depletion expense between the comparative
periods were the decrease in the price of oil and gas used to determine
the Partnership's reserves for October 1, 2001 as compared to 2000, and
the decrease in oil and gas revenues received by the Partnership during
2001 as compared to 2000.
B. General Comparison of the Nine Month Periods Ended September 30, 2001
and 2000
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 2001 and 2000:
Nine Months
Ended Percentage
September 30, Increase
2001 2000 (Decrease)
---- ---- ---------
Average price per barrel of oil $ 24.23 27.57 (12%)
Average price per mcf of gas $ 4.18 3.67 14%
Oil production in barrels 23,400 25,200 (7%)
Gas production in mcf 37,400 36,200 3%
Gross oil and gas revenue $ 723,233 827,746 (13%)
Net oil and gas revenue $ 296,380 390,694 (24%)
Partnership distributions $ 327,000 255,000 28%
Limited partner distributions $ 294,300 229,500 28%
Per unit distribution to limited partners $ 27.03 21.08 28%
Number of limited partner units 10,889 10,889
Revenues
The Partnership's oil and gas revenues decreased to $723,233 from $827,746
for the nine months ended September 30, 2001 and 2000, respectively, a
decrease of 13%. The principal factors affecting the comparison of the
nine months ended September 30, 2001 and 2000 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the nine months ended September 30, 2001 as compared
to the nine months ended September 30, 2000 by 12%, or $3.34 per
barrel, resulting in a decrease of approximately $78,200 in revenues.
Oil sales represented 78% of total oil and gas sales during the nine
months ended September 30, 2001 as compared to 84% during the nine
months ended September 30, 2000.
The average price for an mcf of gas received by the Partnership
increased during the same period by 14%, or $.51 per mcf, resulting in
an increase of approximately $19,100 in revenues.
The net total decrease in revenues due to the change in prices received
from oil and gas production is approximately $59,100. 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 1,800 barrels or 7% during the
nine months ended September 30, 2001 as compared to the nine months
ended September 30, 2000, resulting in a decrease of approximately
$49,600 in revenues.
Gas production increased approximately 1,200 mcf or 3% during the same
period, resulting in an increase of approximately $4,400 in revenues.
The net total decrease in revenues due to the change in production is
approximately $45,200.
Costs and Expenses
Total costs and expenses increased to $535,821 from $510,319 for the nine
months ended September 30, 2001 and 2000, respectively, an increase of 5%.
The increase is the result of higher depletion expense, partially offset by
a decrease general and administrative expense and lease operating costs.
1. Lease operating costs and production taxes were 2% lower, or
approximately $10,200 less during the nine months ended September 30,
2001 as compared to the nine months ended September 30, 2000.
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 $300 during the nine months ended September 30, 2001
as compared to the nine months ended September 30, 2000.
3. Depletion expense increased to $51,000 for the nine months ended
September 30, 2001 from $15,000 for the same period in 2000. This
represents an increase of 240%. 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 increase in depletion expense
between the comparative periods were the decrease in the price of oil
and gas used to determine the Partnership's reserves for October 1,
2001 as compared to 2000, and the decrease in oil and gas revenues
received by the Partnership during 2001 as compared to 2000.
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 $291,000 in
the nine months ended September 30, 2001 as compared to approximately
$322,200 in the nine months ended September 30, 2000. The primary source
of the 2001 cash flow from operating activities was profitable operations.
Cash flows used in investing activities were approximately $35,000 in the
nine months ended September 30, 2001 as compared to approximately $21,200
in the nine months ended September 30, 2000. The principle use of the 2001
cash flow from investing activities was the change in oil and gas
properties.
Cash flows used in financing activities were approximately $326,900 in the
nine months ended September 30, 2001 as compared to approximately $255,000
in the nine months ended September 30, 2000. The only use of financing
activities was in relation to distributions to partners.
Total distributions during the nine months ended September 30, 2001 were
$327,000 of which $294,300 was distributed to the limited partners and
$32,700 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 2001 was $27.03. Total
distributions during the nine months ended September 30, 2000 were $255,000
of which $229,500 was distributed to the limited partners and $25,500 to
the general partners. The per unit distribution to limited partners during
the nine months ended September 30, 2000 was $21.08.
The sources for the 2001 distributions of $327,000 were oil and gas
operations of approximately $291,000 and the change in oil and gas property
of approximately $(35,000), with the balance from available cash on hand at
the beginning of the period. The sources for the 2000 distributions of
$255,000 were oil and gas operations of approximately $322,200 and the
change in oil and gas property of approximately $(21,200), resulting in
excess cash for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $5,377,939 have been made to the partners. As of September 30, 2001,
$4,866,600 or $446.93 per limited partner unit has been distributed to the
limited partners, representing a 89% return of the capital contributed.
As of September 30, 2001, the Partnership had approximately $124,100 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Partnership is not a party to any derivative or
embedded derivative instruments.
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) 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-B,
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 14, 2001