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, 1996
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 notes thereto for the year
ended December 31, 1995 which are found in the Registrant's Form 10-K Report
for 1995 filed with the Securities and Exchange Commission. The December 31,
1995 balance sheet included herein has been taken from the Registrant's 1995
Form 10-K Report. Operating results for the three and nine month periods
ended September 30, 1996 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,
1996 1995
------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 20,942 46,452
Receivable from Managing
General Partner 79,497 19,003
--------- ---------
Total current assets 100,439 65,455
--------- ---------
Oil and gas properties - using the
full cost method of accounting 4,387,442 4,388,192
Less accumulated depreciation,
depletion and amortization 3,811,000 3,717,000
--------- ---------
Net oil and gas properties 576,442 671,192
--------- ---------
$ 676,881 736,647
========= =========
Liabilities and Partners' Equity
Current liability - Distributions payable $ 387 273
--------- ---------
Partners' equity:
General partners (1,404) (4,816)
Limited partners 677,898 741,190
--------- ---------
Total partners' equity 676,494 736,374
--------- ---------
$ 676,881 736,647
========= =========
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues
Income from net profits
interests $ 76,023 6,994 262,487 135,182
Interest 278 288 887 960
------- ------- ------- -------
76,301 7,282 263,374 136,142
------- ------- ------- -------
Expenses
General and administrative 22,832 23,085 76,254 77,854
Depreciation, depletion and
amortization 27,000 24,000 94,000 93,690
------- ------- ------- -------
49,832 47,085 170,254 171,544
------- ------- ------- -------
Net income (loss) $ 26,469 (39,803) 93,120 (35,402)
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 4,812 (1,422) 16,841 5,246
======= ======= ======= =======
General Partner $ 535 (158) 1,871 583
======= ======= ======= =======
Limited Partners $ 21,122 (38,223) 74,408 (41,231)
======= ======= ======= =======
Per limited partner
unit $ 1.87 (3.38) 6.58 (3.64)
======= ======= ======= =======
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Cash received from income from net
profits interests $ 201,952 168,949
Cash paid to suppliers (76,254) (75,479)
Interest received 887 960
-------- -------
Net cash provided by operating
activities 126,585 94,430
-------- -------
Cash flows provided by investing activities:
Cash received from sale of oil
and gas property interest 791 -
-------- -------
Cash flows used in financing activities:
Distributions to partners (152,886) (97,872)
-------- -------
Net decrease in cash and cash equivalents (25,510) (3,442)
Beginning of period 46,452 37,681
-------- -------
End of period $ 20,942 34,239
======== =======
(continued)
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
1996 1995
Reconciliation of net income (loss)
to net cash provided by operating
activities:
Net income (loss) $ 93,120 (35,402)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion and
amortization 94,000 93,690
(Increase) decrease in receivables (60,535) 33,767
Increase in payables - 2,375
------- -------
Net cash provided by operating
activities $ 126,585 94,430
======= =======
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.
Results of Operations
A. General Comparison of the Quarters Ended September 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended September 30, 1996 and 1995:
Three Months
Ended Percentage
September 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 20.97 15.37 36%
Average price per mcf of gas $ 2.09 1.78 17%
Oil production in barrels 8,500 8,000 6%
Gas production in mcf 12,000 13,000 (8%)
Income from net profits interests $ 76,023 6,994 987%
Partnership distributions $ 63,000 19,000 232%
Limited partner distributions $ 56,700 17,600 222%
Per unit distribution to limited
partners $ 5.01 1.56 222%
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests increased to $76,023 from
$6,994 for the quarters ended September 30, 1996 and 1995, respectively, an
increase of 987%. The principal factors affecting the comparison of the
quarters ended September 30, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended September 30, 1996 as compared to the
quarter ended September 30, 1995 by 36%, or $5.60 per barrel, resulting
in an increase of approximately $44,800 in income from net profits
interests. Oil sales represented 88% of total oil and gas sales during
the quarter ended September 30, 1996 as compared to 84% during the
quarter ended September 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 17%, or $.31 per mcf, resulting in an increase
of approximately $4,000 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 $48,800.
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 increased approximately 500 barrels or 6% during the
quarter ended September 30, 1996 as compared to the quarter ended
September 30, 1995, resulting in an increase of approximately $10,500 in
income from net profits interests.
Gas production decreased approximately 1,000 mcf or 8% during the same
period, resulting in a decrease of approximately $2,100 in income from
net profits interests.
The net total increase in income from net profits interests due to the
change in production is approximately $8,400.
3. Lease operating costs and production taxes were 9% lower, or
approximately $12,100 less during the quarter ended September 30, 1996 as
compared to the quarter ended September 30, 1995.
Costs and Expenses
Total costs and expenses increased to $49,832 from $47,085 for the quarters
ended September 30, 1996 and 1995, respectively, an increase of 6%. The
increase is the result of higher depletion expense, 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 September 30, 1996 as
compared to the quarter ended September 30, 1995.
2. Depletion expense increased to $27,000 for the quarter ended September
30, 1996 from $24,000 for the same period in 1995. This represents an
increase of 13%. Depletion is calculated using the gross 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. Consequently, depletion
will generally fluctuate in direct relation to oil and gas revenues. As
noted above, oil and gas revenues increased due to an increase in price
and production for the quarter ended September 30, 1996 as compared to
the same period for 1995. Depletion reflected a comparable increase.
B. General Comparison of the Nine Month Periods Ended September 30, 1996 and
1995
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 1996 and 1995:
Nine Months
Ended Percentage
September 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.02 16.43 16%
Average price per mcf of gas $ 2.33 1.79 30%
Oil production in barrels 31,700 29,200 9%
Gas production in mcf 38,200 39,500 (3%)
Income from net profits interests $ 262,487 135,182 94%
Partnership distributions $ 153,000 98,000 56%
Limited partner distributions $ 137,700 88,700 55%
Per unit distribution to limited
partners $ 12.17 7.84 55%
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests increased to $262,487
from $135,182 for the nine months ended September 30, 1996 and 1995,
respectively, an increase of 94%. The principal factors affecting the
comparison of the nine months ended September 30, 1996 and 1995 are as
follows:
1. The average price for a barrel of oil received by the Partnership
increased during the nine months ended September 30, 1996 as compared to
the nine months ended September 30, 1995 by 16%, or $2.59 per barrel,
resulting in an increase of approximately $75,600 in income from net
profits interests. Oil sales represented 87% of total oil and gas sales
during the nine months ended September 30, 1996 and 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 30%, or $.54 per mcf, resulting in an increase
of approximately $21,300 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 $96,900.
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 increased approximately 2,500 barrels or 9% during the
nine months ended September 30, 1996 as compared to the nine months ended
September 30, 1995, resulting in an increase of approximately $47,600 in
income from net profits interests.
Gas production decreased approximately 1,300 mcf or 3% during the same
period, resulting in a decrease of approximately $3,000 in income from
net profits interests.
The net total increase in income from net profits interests due to the
change in production is approximately $44,600.
3. Lease operating costs and production taxes were 3% higher, or
approximately $13,100 more during the nine months ended September 30,
1996 as compared to the nine months ended September 30, 1995.
Costs and Expenses
Total costs and expenses decreased to $170,254 from $171,544 for the nine
months ended September 30, 1996 and 1995, respectively, a decrease of 1%.
The decrease is the result of lower general and administrative expense and
amortization expense, offset by an increase in depletion 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 2%
or approximately $1,600 during the nine months ended September 30, 1996
as compared to the nine months ended September 30, 1995.
2. Depletion expense increased to $94,000 for the nine months ended
September 30, 1996 from $90,000 for the same period in 1995. This
represents an increase of 4%. Depletion is calculated using the gross
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. Consequently,
depletion will generally fluctuate in direct relation to oil and gas
revenues. As noted above, oil and gas revenues increased due to an
increase in price and production for the nine months ended September 30,
1996 as compared to the same period for 1995. Depletion reflected a
comparable increase.
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 $126,600 in
the nine months ended September 30, 1996 as compared to approximately $94,400
in the nine months ended September 30, 1995. The primary source of the 1996
cash flow from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $800 in the
nine months ended September 30, 1996 as compared to none in the nine months
ended September 30, 1995. The principle source of the 1996 cash flow from
investing activities was the sale of oil and gas properties.
Cash flows used in financing activities were approximately $152,900 in the
nine months ended September 30, 1996 as compared to approximately $97,900 in
the nine months ended September 30, 1995. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 1996 were
$153,000 of which $137,700 was distributed to the limited partners and
$15,300 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 1996 was $12.17. Total
distributions during the nine months ended September 30, 1995 were $98,000 of
which $88,700 was distributed to the limited partners and $9,300 to the
general partners. The per unit distribution to limited partners during the
nine months ended September 30, 1995 was $7.84.
The sources for the 1996 distributions of $153,000 were oil and gas
operations of approximately $126,600 and the sale of oil and gas properties
of approximately $800, with the balance from available cash on hand at the
beginning of the period. The source for the 1995 distributions of $98,000
was oil and gas operations of approximately $94,400, with the balance from
available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$2,680,122 have been made to the partners. As of September 30, 1996,
$2,460,461 or $217.43 per limited partner unit has been distributed to the
limited partners, representing a 43% return of the capital contributed.
As of September 30, 1996, the Partnership had approximately $100,100 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.
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) Financial Data Schedule
(b) 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 15, 1996