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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 0-18997
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, 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 Royalties Institutional Income Fund X-A, L.P.
Balance Sheets
September 30, December 31,
2001 2000
------------- ------------
(unaudited)
Assets
- ------
Current assets:
Cash and cash equivalents $ 13,299 61,502
Receivable from Managing General
Partner 27,584 84,202
--------- ---------
Total current assets 40,883 145,704
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 4,239,490 4,239,490
Less accumulated depreciation,
depletion and amortization 4,072,143 4,058,143
--------- ---------
Net oil and gas properties 167,347 181,347
--------- ---------
$ 208,230 327,051
========= =========
Liabilities and Partners' Equity
- --------------------------------
Current liability - Distributions payable $ 421 119
--------- ---------
Partners' equity:
General partners (12,707) (2,195)
Limited partners 220,516 329,127
--------- ---------
Total partners' equity 207,809 326,932
--------- ---------
$ 208,230 327,051
========= =========
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Revenues
- --------
Income from net profits
interests $ 25,803 81,382 165,929 215,930
Interest 77 141 490 222
------ ------ ------- -------
25,880 81,523 166,419 216,152
------ ------ ------- -------
Expenses
- --------
General and administrative 23,635 23,807 71,542 71,697
Depreciation, depletion and
amortization 6,000 4,000 14,000 9,000
------ ------ ------- -------
29,635 27,807 85,542 80,697
------ ------ ------- -------
Net income (loss) $ (3,755) 53,716 80,877 135,455
====== ====== ======= =======
Net income (loss) allocated to:
Managing General Partner $ 203 5,194 8,539 13,001
====== ====== ======= =======
General Partner $ 22 577 949 1,445
====== ====== ======= =======
Limited Partners $ (3,980) 47,945 71,389 121,009
====== ====== ======= =======
Per limited partner unit $ (.35) 4.24 6.31 10.69
====== ====== ======= =======
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
2001 2000
---- ----
Cash flows from operating activities
Cash received from income from net
profits interests $ 219,232 171,825
Cash paid to suppliers (68,227) (64,668)
Interest received 490 222
------- -------
Net cash provided by operating activities 151,495 107,379
------- -------
Cash flows provided by investing activities
Sale of oil and gas properties - 180
------- -------
Cash flows used in financing activities
Distributions to partners (199,698) (104,855)
------- -------
Net (decrease) increase in cash and cash
equivalents (48,203) 2,704
Beginning of period 61,502 32,212
------- -------
End of period $ 13,299 34,916
======= =======
Reconciliation of net income to net
cash provided by operating activities
Net income $ 80,877 135,455
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and amortization 14,000 9,000
Decrease (increase) in receivables 53,303 (44,105)
Increase in payables 3,315 7,029
--------- -------
Net cash provided by operating activities $ 151,495 107,379
========= =======
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 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 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.
Management does not anticipate performing workovers during the next twelve
months. The Partnership could possibly experience a normal decline of 8%
to 10% 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 quarter ended September 30, 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 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 $ 22.48 30.49 (26%)
Average price per mcf of gas $ 2.66 5.04 (47%)
Oil production in barrels 3,500 4,000 (13%)
Gas production in mcf 9,000 8,700 3%
Income from net profits interests $ 25,803 81,382 (68%)
Partnership distributions $ 35,000 34,514 1%
Limited partner distributions $ 31,500 33,514 (6%)
Per unit distribution to limited partners $ 2.78 2.96 (6%)
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests decreased to $25,803
from $81,382 for the quarters ended September 30, 2001 and 2000,
respectively, a decrease of 68%. 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 26%, or $8.01 per barrel,
resulting in a decrease of approximately $28,000 in income from net
profits interests. Oil sales represented 77% of total oil and gas
sales during the quarter ended September 30, 2001 as compared to 74%
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 47%, or $2.38 per mcf, resulting
in a decrease of approximately $21,400 in income from net profits
interests.
The total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$49,400. 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 500 barrels or 13% during the
quarter ended September 30, 2001 as compared to the quarter ended
September 30, 2000, resulting in a decrease of approximately $15,200 in
income from net profits interests.
Gas production increased approximately 300 mcf or 3% during the same
period, resulting in an increase of approximately $1,500 in income from
net profits interests.
The net total decrease in income from net profits interests due to the
change in production is approximately $13,700.
3. Lease operating costs and production taxes were 3% lower, or
approximately $2,400 less during the quarter ended September 30, 2001
as compared to the quarter ended September 30, 2000.
Costs and Expenses
Total costs and expenses increased to $29,635 from $27,807 for the quarters
ended September 30, 2001 and 2000, respectively, an increase of 7%. 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 $200 during the quarter ended September 30, 2001 as
compared to the quarter ended September 30, 2000.
2. Depletion expense increased to $6,000 for the nine months ended
September 30, 2001 from $4,000 for the same period in 2000. This
represents an increase of 50%. 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 $ 23.90 28.04 (15%)
Average price per mcf of gas $ 4.49 3.95 14%
Oil production in barrels 11,100 11,600 (4%)
Gas production in mcf 28,200 24,300 16%
Income from net profits interests $ 165,929 215,930 (23%)
Partnership distributions $ 200,000 104,503 91%
Limited partner distributions $ 180,000 103,503 74%
Per unit distribution to limited partners $ 15.91 9.15 74%
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests decreased to $165,929
from $215,930 for the nine months ended September 30, 2001 and 2000,
respectively, a decrease of 23%. 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 15%, or $4.14 per
barrel, resulting in a decrease of approximately $46,000 in income from
net profits interests. Oil sales represented 68% of total oil and gas
sales during the nine months ended September 30, 2001 as compared to
77% 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 $.54 per mcf, resulting in
an increase of approximately $15,200 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
$30,800. 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 500 barrels or 4% during the
nine months ended September 30, 2001 as compared to the nine months
ended September 30, 2000, resulting in a decrease of approximately
$14,000 in income from net profits interests.
Gas production increased approximately 3,900 mcf or 16% during the same
period, resulting in an increase of approximately $15,400 in income
from net profits interests.
The net total increase in income from net profits interests due to the
change in production is approximately $1,400. The increase in gas
production is due to one lease that once prices began to rise the wells
were put back on-line at the end of 2000.
3. Lease operating costs and production taxes were 10% higher, or
approximately $20,600 more during the nine months ended September 30,
2001 as compared to the nine months ended September 30, 2000.
Costs and Expenses
Total costs and expenses increased to $85,542 from $80,697 for the nine
months ended September 30, 2001 and 2000, respectively, an increase of 6%.
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
less than 1% or approximately $200 during the nine months ended
September 30, 2001 as compared to the nine months ended September 30,
2000.
2. Depletion expense increased to $14,000 for the nine months ended
September 30, 2001 from $9,000 for the same period in 2000. This
represents an increase 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.
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 $151,500 in
the nine months ended September 30, 2001 as compared to approximately
$107,400 in the nine months ended September 30, 2000. The primary source
of the 2001 cash flow from operating activities was oil and gas operations.
There were no cash flows provided by investing activities for the nine
months ended September 30, 2001 as compared to approximately $200 in the
nine months ended September 30, 2000.
Cash flows used in financing activities were approximately $199,700 in the
nine months ended September 30, 2001 as compared to approximately $104,900
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
$200,000 of which $180,000 was distributed to the limited partners and
$20,000 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 2001 was $15.91. Total
distributions during the nine months ended September 30, 2000 were $104,503
of which $103,503 was distributed to the limited partners and $1,000 to the
general partners. The per unit distribution to limited partners during the
nine months ended September 30, 2000 was $9.15.
The sources for the 2001 distributions of $200,000 were oil and gas
operations of approximately $151,500, with the balance from available cash
on hand at the beginning of the period. The sources for the 2000
distributions of $104,500 were oil and gas operations of approximately
$107,400, and the change in oil and gas properties of approximately $180,
resulting in excess cash for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $3,388,444 have been made to the partners. As of September 30, 2001,
$3,107,401 or $274.60 per limited partner unit has been distributed to the
limited partners, representing a 55% return of the capital contributed.
As of September 30, 2001, the Partnership had approximately $40,500 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 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 14, 2001