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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 March 31, 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 0-18997
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 13.
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, 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 month
period ended March 31, 2001 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
March 31, December 31,
2001 2000
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 42,036 61,502
Receivable from Managing General
Partner 71,103 84,202
--------- ---------
Total current assets 113,139 145,704
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 4,239,490 4,239,490
Less accumulated depreciation,
depletion and amortization 4,063,143 4,058,143
--------- ---------
Net oil and gas properties 176,347 181,347
--------- ---------
$ 289,486 327,051
========= =========
Liabilities and Partners' Equity
Current liability - Distributions payable $ 312 119
--------- ---------
Partners' equity:
General partners (5,471) (2,195)
Limited partners 294,645 329,127
--------- ---------
Total partners' equity 289,174 326,932
--------- ---------
$ 289,486 327,051
========= =========
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
2001 2000
---- ----
Revenues
Income from net profits interests $ 90,847 67,609
Interest 189 45
------- -------
91,036 67,654
------- -------
Expenses
General and administrative 23,794 24,064
Depreciation, depletion and amortization 5,000 4,000
------- -------
28,794 28,064
------- -------
Net income $ 62,242 39,590
======= =======
Net income allocated to:
Managing General Partner $ 6,052 3,923
======= =======
General partner $ 672 436
======= =======
Limited partners $ 55,518 35,231
======= =======
Per limited partner unit $ 4.91 3.11
======= =======
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
2001 2000
---- ----
Cash flows from operating activities:
Cash received from net profits interests $ 103,203 55,993
Cash paid to suppliers (23,051) (20,263)
Interest received 189 45
-------- -------
Net cash provided by operating activities 80,341 35,775
-------- -------
Cash flows used in investing activities
Addition of oil and gas properties - (5)
-------- -------
Cash flows used in financing activities:
Distributions to partners (99,807) (50,288)
-------- -------
Net decrease in cash and cash equivalents (19,466) (14,518)
Beginning of period 61,502 32,212
-------- -------
End of period $ 42,036 17,694
======== =======
(continued)
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
2001 2000
---- ----
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 62,242 39,590
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 5,000 4,000
Decrease (increase) in receivables 12,356 (11,616)
Increase in payables 743 3,801
------- -------
Net cash provided by operating activities $ 80,341 35,775
======= =======
Southwest Royalties Institutional Income Fund X-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Royalties Institutional Income Fund X-A, L.P. was organized
under the laws of the state of Delaware on January 29, 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 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 March 31, 2001, and for the
three months ended March 31, 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 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 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 performing a few
workovers during 2001 to enhance production. The partnership may have an
increase in production volumes for the year 2001, otherwise, the
partnership will most likely experience the historical production decline
of approximately 7% per year.
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 March 31, 2001, the net capitalized costs did not
exceed the estimated present value of oil and gas reserves.
Results of Operations
A. General Comparison of the Quarters Ended March 31, 2001 and 2000
The following table provides certain information regarding performance
factors for the quarters ended March 31, 2001 and 2000:
Three Months
Ended Percentage
March 31,
Increase
2001 2000 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 27.18 27.18 -
Average price per mcf of gas $ 7.82 3.09 153%
Oil production in barrels 3,800 3,900 (3%)
Gas production in mcf 8,900 7,300 22%
Income from net profits interests $ 90,847 67,609 34%
Partnership distributions $ 100,000 49,989 100%
Limited partner distributions $ 90,000 49,989 80%
Per unit distribution to limited
partners $ 7.95 4.42 80%
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests increased to $90,847
from $67,609 for the quarters ended March 31, 2001 and 2000, respectively,
an increase of 34%. The principal factors affecting the comparison of the
quarters ended March 31, 2001 and 2000 are as follows:
1. The average price for a barrel of oil received by the Partnership
remained unchanged during the quarter ended March 31, 2001 as compared
to the quarter ended March 31, 2000. Oil sales represented 60% of
total oil and gas sales during the quarter ended March 31, 2001 as
compared to 82% during the quarter ended March 31, 2000.
The average price for an mcf of gas received by the Partnership
increased during the same period by 153%, or $4.73 per mcf, resulting
in an increase of approximately $42,100 in income from net profits
interests.
The total increase in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$42,100. 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 100 barrels or 3% during the
quarter ended March 31, 2001 as compared to the quarter ended March 31,
2000, resulting in a decrease of approximately $2,700 in income from
net profits interests.
Gas production increased approximately 1,600 mcf or 22% during the same
period, resulting in an increase of approximately $4,900 in revenues.
The net total increase in income from net profit interests due to the
change in production is approximately $2,200. The increase in gas
production is due to successful workovers in 2000 on one non-operated
lease.
3. Lease operating costs and production taxes were 35% higher, or
approximately $21,100 more during the quarter ended March 31, 2001 as
compared to the quarter ended March 31, 2000. The increase in lease
operating expense is due to acoustical testing, maintenance and other
repairs being performed in 2001, and the increase in production taxes
in relation to the increase in gross revenues received in 2001.
Costs and Expenses
Total costs and expenses increased to $28,794 from $28,064 for the quarters
ended March 31, 2001 and 2000, respectively, an increase of 3%. The
increase is the result of higher depletion expense, partially offset by a
decrease in general and administrative 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 $300 during the quarter ended March 31, 2001 as
compared to the quarter ended March 31, 2000.
2. Depletion expense increased to $5,000 for the quarter ended March 31,
2001 from $4,000 for the same period in 2000. This represents an
increase of 25%. 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. The contributing
factors to the increase of depletion expense between the comparative
periods were the increase in oil and gas revenue and the increase in
the price of gas used to determine the Partnership's reserves.
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, other than the ones noted above, nor does it anticipate any such
change.
Cash flows provided by operating activities were approximately $80,300 in
the quarter ended March 31, 2001 as compared to approximately $35,800 in
the quarter ended March 31, 2000. The primary source of the 2001 cash flow
from operating activities was operations.
There were no cash flows used in investing activities in the quarter ended
March 31, 2001.
Cash flows used in investing activities were $(5) in the quarter ended
March 31, 2000.
Cash flows used in financing activities were approximately $99,800 in the
quarter ended March 31, 2001 as compared to approximately $50,300 in the
quarter ended March 31, 2000. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 2001 were $100,000
of which $90,000 was distributed to the limited partners and $10,000 to the
general partner. The per unit distribution to limited partners during the
quarter ended March 31, 2001 was $7.95. Total distributions during the
quarter ended March 31, 2000 were $49,989 of which $49,989 was distributed
to the limited partners. The per unit distribution to limited partners
during the quarter ended March 31, 2000 was $4.42.
The primary source for the 2001 distributions of $100,000 was oil and gas
operations of approximately $80,300, with the balance from available cash
on hand at the beginning of the period. The primary source for the 2000
distributions of $49,989 was oil and gas operations of approximately
$35,800, with the balance from available cash on hand at the beginning of
the period.
Since inception of the Partnership, cumulative monthly cash distributions
of $3,288,444 have been made to the partners. As of March 31, 2001,
$3,017,401 or $266.65 per limited partner unit has been distributed to the
limited partners, representing a 53% return of the capital contributed.
As of March 31, 2001, the Partnership had approximately $112,800 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) Reports on Form 8-K:
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: May 15, 2001