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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 0-20299
SOUTHWEST OIL AND GAS 1990-91 INCOME PROGRAM
Southwest Oil and Gas Income Fund X-C, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2374445
(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-C, L.P.
Balance Sheets
September 30, December 31,
2001 2000
------------- ------------
(unaudited)
Assets
- ------
Current assets:
Cash and cash equivalents $ 46,678 65,399
Receivable from Managing General Partner 31,622 112,098
--------- ---------
Total current assets 78,300 177,497
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 2,414,515 2,411,782
Less accumulated depreciation,
depletion and amortization 2,186,496 2,083,496
--------- ---------
Net oil and gas properties 228,019 328,286
--------- ---------
$ 306,319 505,783
========= =========
Liabilities and Partners' Equity
- --------------------------------
Partners' equity:
General partners $ (12,029) (2,383)
Limited partners 318,348 508,166
--------- ---------
306,319 505,783
--------- ---------
Total partners' equity $ 306,319 505,783
========= =========
Southwest Oil and Gas Income Fund X-C, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Revenues
- --------
Oil and gas $ 180,666 249,871 678,980 674,358
Interest 696 882 2,699 1,947
------- ------- ------- -------
181,362 250,753 681,679 676,305
------- ------- ------- -------
Expenses
- --------
Production 137,487 116,490 422,221 423,726
General and administrative 10,256 10,242 30,922 31,002
Depreciation, depletion and
amortization 53,000 12,000 103,000 29,000
------- ------- ------- -------
200,743 138,732 556,143 483,728
------- ------- ------- -------
Net income (loss) $ (19,381) 112,021 125,536 192,577
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 3,026 11,162 20,569 19,942
======= ======= ======= =======
General Partner $ 336 1,240 2,285 2,216
======= ======= ======= =======
Limited Partners $ (22,743) 99,619 102,682 170,419
======= ======= ======= =======
Per limited partner unit $ (3.64) 15.95 16.44 27.28
======= ======= ======= =======
Southwest Oil and Gas Income Fund X-C, 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 $ 763,526 668,677
Cash paid to suppliers (457,213) (446,096)
Interest received 2,699 1,947
------- -------
Net cash provided by operating activities 309,012 224,528
------- -------
Cash flows used in investing activities
Additions to oil and gas properties (2,733) (6,869)
------- -------
Cash flows used in financing activities
Distributions to partners (325,000) (179,908)
------- -------
Net (decrease) increase in cash and cash equivalents (18,721)
37,751
Beginning of period 65,399 26,435
------- -------
End of period $ 46,678 64,186
======= =======
Reconciliation of net income to net
cash provided by operating activities
Net income $ 125,536 192,577
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation, depletion and amortization 103,000 29,000
Decrease (increase) in receivables 84,546 (5,681)
(Decrease) increase in payables (4,070) 8,632
--------- ---------
Net cash provided by operating activities $ 309,012 224,528
========= =========
Southwest Oil & Gas Income Fund X-C, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Oil & Gas Income Fund X-C, L.P. was organized under the laws
of the state of Delaware on September 20, 1991, 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 several 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 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-C, L.P. was organized as a Delaware
limited partnership on September 20, 1991. The offering of such limited
partnership interests began October 1, 1991 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 January 13,
1992 and the offering concluded on April 30, 1992 with total limited
partner contributions of $3,123,000.
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 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 twelve
months. The Partnership could possibly experience a 10% to 12% decline.
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, 2001, the net capitalized costs did
not exceed the estimated present value of the 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 $ 21.89 28.46 (23%)
Average price per mcf of gas $ 1.97 3.97 (50%)
Oil production in barrels 7,300 7,400 (1%)
Gas production in mcf 14,000 9,500 47%
Gross oil and gas revenue $ 180,666 249,871 (28%)
Net oil and gas revenue $ 43,179 133,381 (68%)
Partnership distributions $ 100,000 80,000 25%
Limited partner distributions $ 90,000 72,000 25%
Per unit distribution to limited partners $ 14.41 11.53 25%
Number of limited partner units 6,246 6,246
Revenues
The Partnership's oil and gas revenues decreased to $180,666 from $249,871
for the quarters ended September 30, 2001 and 2000, respectively, a
decrease of 28%. 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 $6.57 per barrel,
resulting in a decrease of approximately $48,000 in revenues. Oil
sales represented 85% of total oil and gas sales during the quarter
ended September 30, 2001 as compared to 85% during the quarter ended
September 30, 2000.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 50%, or $2.00 per mcf, resulting in
a decrease of approximately $28,000 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $76,000. 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 100 barrels or 1% during the
quarter ended September 30, 2001 as compared to the quarter ended
September 30, 2000, resulting in a decrease of approximately $2,800 in
revenues.
Gas production increased approximately 4,500 mcf or 47% during the same
period, resulting in an increase of approximately $17,900 in revenues.
The net total increase in revenues due to the change in production is
approximately $15,100. The increase in gas production is in relation
to an unsuccessful workover, which was performed on a non-operated
lease during 2000. The workover caused the well to shut down and was
determined to be unrecoverable. During the nine months ended September
30, 2001, a new well on the same lease was brought on line and has
proven successful in replacing the lost production of the old well.
Costs and Expenses
Total costs and expenses increased to $200,743 from $138,732 for the
quarters ended September 30, 2001 and 2000, respectively, an increase of
45%. The increase is the result of higher lease operating costs, depletion
expense and general and administrative expense.
1. Lease operating costs and production taxes were 18% higher, or
approximately $21,000 more during the quarter ended September 30, 2001 as
compared to the quarter ended September 30, 2000. The increase in lease
operating expense is due to a workover and maintenance on one lease being
performed in 2001.
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
less than 1% or approximately $14 during the quarter ended September
30, 2001 as compared to the quarter ended September 30, 2000.
3. Depletion expense increased to $53,000 for the quarter ended September
30, 2001 from $12,000 for the same period in 2000. This represents an
increase of 342%. 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 $ 23.18 26.97 (14%)
Average price per mcf of gas $ 4.21 3.65 15%
Oil production in barrels 21,400 22,600 (5%)
Gas production in mcf 43,400 17,800 144%
Gross oil and gas revenue $ 678,980 674,358 1%
Net oil and gas revenue $ 256,759 250,632 2%
Partnership distributions $ 325,000 180,000 81%
Limited partner distributions $ 292,500 162,000 81%
Per unit distribution to limited partners $ 46.83 25.94 81%
Number of limited partner units 6,246 6,246
Revenues
The Partnership's oil and gas revenues increased to $678,980 from $674,358
for the nine months ended September 30, 2001 and 2000, respectively, an
increase of 1%. 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 14%, or $3.79 per
barrel, resulting in a decrease of approximately $81,100 in revenues.
Oil sales represented 73% of total oil and gas sales during the nine
months ended September 30, 2001 as compared to 90% 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 15%, or $.56 per mcf, resulting in
an increase of approximately $24,300 in revenues.
The net total decrease in revenues due to the change in prices received
from oil and gas production is approximately $56,800. 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 1,200 barrels or 5% during the
nine months ended September 30, 2001 as compared to the nine months
ended September 30, 2000, resulting in a decrease of approximately
$32,400 in revenues.
Gas production increased approximately 25,600 mcf or 144% during the
same period, resulting in an increase of approximately $93,400 in
revenues.
The net total increase in revenues due to the change in production is
approximately $61,000. The increase in gas production is in relation to
an unsuccessful workover, which was performed on a non-operated lease
during 2000. The workover caused the well to shut down and was
determined to be unrecoverable. During the nine months ended September
30, 2001, a new well on the same lease was brought on line and has
proven successful in replacing the lost production of the old well.
Costs and Expenses
Total costs and expenses increased to $556,143 from $483,728 for the nine
months ended September 30, 2001 and 2000, respectively, an increase of 15%.
The increase is the result of higher depletion expense, partially offset by
a decrease in lease operating costs and general and administrative expense.
1. Lease operating costs and production taxes were less than 1% lower, or
approximately $1,500 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
less than 1% or approximately $100 during the nine months ended
September 30, 2001 as compared to the nine months ended September 30,
2000.
3. Depletion expense increased to $103,000 for the nine months ended
September 30, 2001 from $29,000 for the same period in 2000. This
represents an increase of 255%. 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 $309,000 in
the nine months ended September 30, 2001 as compared to approximately
$224,500 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 $2,700 in the
nine months ended September 30, 2001 as compared to approximately $6,900 in
the nine months ended September 30, 2000. The principle use of the 2001
cash flow from investing activities was the change to oil and gas
properties.
Cash flows used in financing activities were approximately $325,000 in the
nine months ended September 30, 2001 as compared to approximately $179,900
in the nine months ended September 30, 2000. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 2001 were
$325,000 of which $292,500 was distributed to the limited partners and
$32,500 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 2001 was $46.83. Total
distributions during the nine months ended September 30, 2000 were $180,000
of which $162,000 was distributed to the limited partners and $18,000 to
the general partners. The per unit distribution to limited partners during
the nine months ended September 30, 2000 was $25.94.
The source for the 2001 distributions of $325,000 was oil and gas
operations of approximately $309,000, the change in oil and gas property of
approximately $(2,700), with the balance from available cash on hand at the
beginning of the period. The sources for the 2000 distributions of
$180,000 were oil and gas operations of approximately $224,500 and the
change in oil and gas property of approximately $(6,900), resulting in
excess cash for contingencies or subsequent distribution.
Since inception of the Partnership, cumulative monthly cash distributions
of $ 3,639,322 have been made to the partners. As of September 30, 2001,
$3,294,218 or $527.42 per limited partner unit has been distributed to the
limited partners, representing a 106% return of the capital contributed.
As of September 30, 2001, the Partnership had approximately $78,300 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.
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-C,
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