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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 June 30, 1998
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 & GAS 1990-91 INCOME PROGRAM
Southwest Oil & 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 notes thereto for
the year ended December 31, 1997 which are found in the Registrant's Form
10-K Report for 1997 filed with the Securities and Exchange Commission.
The December 31, 1997 balance sheet included herein has been taken from the
Registrant's 1997 Form 10-K Report. Operating results for the three and
six month periods ended June 30, 1998 are not necessarily indicative of the
results that may be expected for the full year.
Southwest Oil & Gas Income Fund X-C, L.P.
Balance Sheets
June 30, December 31,
1998 1997
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,111 9,123
Receivable from Managing General Partner 70,300 140,208
Other receivable - 1,700
--------- ---------
Total current assets 77,411 151,031
--------- ---------
Oil and gas properties - using the
full cost method of accounting 2,422,171 2,418,082
Less accumulated depreciation,
depletion and amortization 1,857,496 1,798,496
--------- ---------
Net oil and gas properties 564,675 619,586
--------- ---------
$ 642,086 770,617
========= =========
Liabilities and Partners' Equity
Current liability - Distributions payable $ 207 116
--------- ---------
Partners' equity:
General partners (13,193) (6,231)
Limited partners 655,072 776,732
--------- ---------
Total partners' equity 641,879 770,501
--------- ---------
$ 642,086 770,617
========= =========
Southwest Oil & Gas Income Fund X-C, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues
Oil and gas $ 168,362 292,075 370,523 628,416
Interest 397 1,950 831 3,664
------- ------- ------- -------
168,759 294,025 371,354 632,080
------- ------- ------- -------
Expenses
Production 131,472 163,474 290,576 327,458
General and administrative 12,340 9,470 29,400 25,788
Depreciation, depletion and
amortization 31,000 26,000 59,000 55,000
------- ------- ------- -------
174,812 198,944 378,976 408,246
------- ------- ------- -------
Net income (loss) $ (6,053) 95,081 (7,622) 223,834
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 2,245 10,897 4,624 25,095
======= ======= ======= =======
General Partner $ 250 1,211 514 2,788
======= ======= ======= =======
Limited Partners $ (8,548) 82,973 (12,760) 195,951
======= ======= ======= =======
Per limited partner unit $ (1.37) 13.28 (2.04) 31.37
======= ======= ======= =======
Southwest Oil & Gas Income Fund X-C, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Cash received from sale of oil and gas $ 454,363 694,625
Cash paid to suppliers (333,908) (362,668)
Interest received 831 3,664
------- -------
Net cash provided by operating activities 121,286 335,621
------- -------
Cash flows from investing activities:
Additions to oil and gas properties (4,089) (8,313)
Cash received from sale of oil and gas
properties 1,700 2,690
------- -------
Net cash used in investing activities: (2,389) (5,623)
------- -------
Cash flows used in financing activities:
Distributions to partners (120,909) (379,501)
------- -------
Net decrease in cash and cash equivalents (2,012) (49,503)
Beginning of period 9,123 207,773
------- -------
End of period $ 7,111 158,270
======= =======
(continued)
Southwest Oil & Gas Income Fund X-C, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1998 1997
Reconciliation of net income (loss) to net
cash provided by operating activities:
Net income (loss) $ (7,622) 223,834
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 59,000 55,000
Decrease in receivables 83,840 66,209
Decrease in payables (13,932) (9,422)
------- -------
Net cash provided by operating activities $ 121,286 335,621
======= =======
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.
Based on current conditions, management does not anticipate performing
workovers in 1998. The Partnership could possibly experience a low
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 June 30, 1998, the net capitalized costs did not
exceed the estimated present value of the oil and gas reserves. A
continuation of the oil price environment experienced during the first half
of 1998 will have an adverse affect on the Company's revenues and operating
cash flow. Also, further declines in oil prices could result in additional
decreases in the carrying value of the Company's oil and gas properties.
Results of Operations
A. General Comparison of the Quarters Ended June 30, 1998 and 1997
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1998 and 1997:
Three Months
Ended Percentage
June 30, Increase
1998 1997 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 11.28 18.00 (37%)
Average price per mcf of gas $ 1.62 2.05 (21%)
Oil production in barrels 11,200 12,300 (9%)
Gas production in mcf 25,900 34,500 (25%)
Gross oil and gas revenue $ 168,362 292,075 (42%)
Net oil and gas revenue $ 36,890 128,601 (71%)
Partnership distributions $ 36,000 188,000 (81%)
Limited partner distributions $ 32,400 169,200 (81%)
Per unit distribution to limited
partners $ 5.19 27.09 (81%)
Number of limited partner units 6,246 6,246
Revenues
The Partnership's oil and gas revenues decreased to $168,362 from $292,075
for the quarters ended June 30, 1998 and 1997, respectively, a decrease of
42%. The principal factors affecting the comparison of the quarters ended
June 30, 1998 and 1997 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended June 30, 1998 as compared to the
quarter ended June 30, 1997 by 37%, or $6.72 per barrel, resulting in a
decrease of approximately $82,700 in revenues. Oil sales represented
75% of total oil and gas sales during the quarter ended June 30, 1998
as compared to 76% during the quarter ended June 30, 1997.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 21%, or $.43 per mcf, resulting in
a decrease of approximately $14,800 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $97,500. 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 1,100 barrels or 9% during the
quarter ended June 30, 1998 as compared to the quarter ended June 30,
1997, resulting in a decrease of approximately $12,400 in revenues.
Gas production decreased approximately 8,600 mcf or 25% during the same
period, resulting in a decrease of approximately $13,900 in revenues.
The total decrease in revenues due to the change in production is
approximately $26,300. The decrease in production is due to natural
decline.
Costs and Expenses
Total costs and expenses decreased to $174,812 from $198,944 for the
quarters ended June 30, 1998 and 1997, respectively, a decrease of 12%.
The decrease is the result of lower lease operating expense, partially
offset by an increase in general and administrative and depletion expense.
1. Lease operating costs and production taxes were 20% lower, or
approximately $32,000 less during the quarter ended June 30, 1998 as
compared to the quarter ended June 30, 1997.
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
30% or approximately $2,900 during the quarter ended June 30, 1998 as
compared to the quarter ended June 30, 1997. Increase in general and
administrative costs are the result of higher accounting fees due to
the necessity of contracting out preparation of tax depletion and K-1
schedules.
3. Depletion expense increased to $31,000 for the quarter ended June 30,
1998 from $26,000 for the same period in 1997. This represents an
increase of 19%. 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 January 1, 1998 as compared to 1997.
B. General Comparison of the Six Month Periods Ended June 30, 1998 and
1997
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1998 and 1997:
Six Months
Ended Percentage
June 30, Increase
1998 1997 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 11.66 19.70 (41%)
Average price per mcf of gas $ 1.96 2.40 (18%)
Oil production in barrels 22,500 23,600 (5%)
Gas production in mcf 55,200 68,100 (19%)
Gross oil and gas revenue $ 370,523 628,416 (41%)
Net oil and gas revenue $ 79,947 300,958 (73%)
Partnership distributions $ 121,000 379,500 (68%)
Limited partner distributions $ 108,900 341,550 (68%)
Per unit distribution to limited
partners $ 17.44 54.68 (68%)
Number of limited partner units 6,246 6,246
Revenues
The Partnership's oil and gas revenues decreased to $370,523 from $628,416
for the six months ended June 30, 1998 and 1997, respectively, a decrease
of 41%. The principal factors affecting the comparison of the six months
ended June 30, 1998 and 1997 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the six months ended June 30, 1998 as compared to the
six months ended June 30, 1997 by 41%, or $8.04 per barrel, resulting
in a decrease of approximately $189,700 in revenues. Oil sales
represented 71% of total oil and gas sales during the six months ended
June 30, 1998 as compared to 74% during the six months ended June 30,
1997.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 18%, or $.44 per mcf, resulting in
a decrease of approximately $30,000 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $219,700. 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 1,100 barrels or 5% during the
six months ended June 30, 1998 as compared to the six months ended June
30, 1997, resulting in a decrease of approximately $12,800 in revenues.
Gas production decreased approximately 12,900 mcf or 19% during the
same period, resulting in a decrease of approximately $25,300 in
revenues.
The total decrease in revenues due to the change in production is
approximately $38,100.
Costs and Expenses
Total costs and expenses decreased to $378,976 from $408,246 for the six
months ended June 30, 1998 and 1997, respectively, a decrease of 7%. The
decrease is the result of a decline in lease operating costs, partially
offset by an increase in general and administrative expense and depletion
expense.
1. Lease operating costs and production taxes were 11% lower, or
approximately $36,900 less during the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997.
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
14% or approximately $3,600 during the six months ended June 30, 1998
as compared to the six months ended June 30, 1997.
3. Depletion expense increased to $59,000 for the six months ended June
30, 1998 from $55,000 for the same period in 1997. This represents an
increase of 7%. 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 January 1, 1998 as compared to 1997.
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 $121,200 in
the six months ended June 30, 1998 as compared to approximately $335,600 in
the six months ended June 30, 1997. The primary source of the 1998 cash
flow from operating activities was profitable operations.
Cash flows used in investing activities were approximately $2,400 in the
six months ended June 30, 1998 as compared to approximately $5,600 in the
six months ended June 30, 1997. The principle use of the 1998 cash flow
from investing activities was the additions to oil and gas properties.
Cash flows used in financing activities were approximately $121,000 in the
six months ended June 30, 1998 as compared to approximately $379,500 in the
six months ended June 30, 1997. The only use in financing activities was
the distributions to partners.
Total distributions during the six months ended June 30, 1998 were $121,000
of which $108,900 was distributed to the limited partners and $12,100 to
the general partners. The per unit distribution to limited partners during
the six months ended June 30, 1998 was $17.44. Total distributions during
the six months ended June 30, 1997 were $379,500 of which $341,550 was
distributed to the limited partners and $37,950 to the general partners.
The per unit distribution to limited partners during the six months ended
June 30, 1997 was $54.68.
The source for the 1998 distributions of $121,000 were oil and gas
operations of approximately $121,200. The source for the 1997
distributions of $379,500 was oil and gas operations of approximately
$335,600, partially offset by the net change in oil and gas properties of
approximately $5,600, with the balance from available cash on hand at the
beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions
of $2,857,318 have been made to the partners. As of June 30, 1998,
$2,588,594 or $414.44 per limited partner unit has been distributed to the
limited partners, representing a 83% return of the capital contributed.
As of June 30, 1998, the Partnership had approximately $77,200 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.
Information Systems for the Year 2000
The Managing General Partner provides all data processing needs of the
Partnership. The Managing General Partner has reviewed and evaluated its
information systems to determine if its systems accurately process data
referencing the year 2000. Primarily all necessary programming
modifications to correct year 2000 referencing in the Managing General
Partners internal accounting and operating systems have been made to-date.
However the Managing General Partner has not completed its evaluation of
its vendors and suppliers systems to determine the effect, if any, the non-
compliance of such systems would have on the operation of the Managing
General Partnership or the operations 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
ended June 30, 1998.
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-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: August 15, 1998