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, 1997
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, 1996 which are found in the Registrant's Form 10-K Report
for 1996 filed with the Securities and Exchange Commission. The December 31,
1996 balance sheet included herein has been taken from the Registrant's 1996
Form 10-K Report. Operating results for the three month period ended
March 31, 1997 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,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 11,717 6,736
Receivable from Managing General
Partner 41,521 99,877
Other receivable - 14,850
--------- ---------
Total current assets 53,238 121,463
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 4,387,142 4,387,142
Less accumulated depreciation,
depletion and amortization 3,802,000 3,789,000
--------- ---------
Net oil and gas properties 585,142 598,142
--------- ---------
$ 638,380 719,605
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 4,950 -
Distributions payable 315 142
--------- ---------
Total current liabilities 5,265 142
--------- ---------
Partners' equity:
General partners (6,642) 693
Limited partners 639,757 718,770
--------- ---------
Total partners' equity 633,115 719,463
--------- ---------
$ 638,380 719,605
========= =========
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Revenues
Income from net profits interests $ 59,541 78,361
Interest 223 287
Miscellaneous income 1,650 -
------- -------
61,414 78,648
------- -------
Expenses
General and administrative 29,762 30,591
Depreciation, depletion and amortization 13,000 36,000
------- -------
42,762 66,591
------- -------
Net income $ 18,652 12,057
======= =======
Net income allocated to:
Managing General Partner $ 2,849 4,325
======= =======
General partner $ 316 481
======= =======
Limited partners $ 15,487 7,251
======= =======
Per limited partner unit $ 1.37 .64
======= =======
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Cash received from net profits interests $ 134,397 36,842
Cash paid to suppliers (24,812) (24,891)
Interest received 223 287
-------- -------
Net cash provided by operating activities 109,808 12,238
-------- -------
Cash flows provided by investing activities:
Sale of oil and gas properties - 41
-------- -------
Cash flows used in financing activities:
Distributions to partners (104,827) (28,763)
-------- -------
Net increase (decrease) in cash and cash
equivalents 4,981 (16,484)
Beginning of period 6,736 46,452
-------- -------
End of period $ 11,717 29,968
======== =======
(continued)
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 18,652 12,057
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 13,000 36,000
(Increase) decrease in receivables 73,206 (41,519)
Increase in payables 4,950 5,700
------- -------
Net cash provided by operating activities $ 109,808 12,238
======= =======
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 participating in a
farmout agreement and performing workovers during the next two years to
enhance production. The Partnership may undergo an increase later in 1997
and possibly in 1998. Thereafter, the Partnership could possibly experience
a normal decline of 8% to 10% per year.
Results of Operations
A. General Comparison of the Quarters Ended March 31, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1997 and 1996:
Three Months
Ended Percentage
March 31, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.56 17.10 14%
Average price per mcf of gas $ 2.71 1.48 83%
Oil production in barrels 6,900 13,700 (50%)
Gas production in mcf 12,700 21,100 (40%)
Income from net profits interests $ 59,541 78,361 (24%)
Partnership distributions $ 105,000 29,000 262%
Limited partner distributions $ 94,500 26,100 262%
Per unit distribution to limited
partners $ 8.35 2.31 262%
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests decreased to $59,541 from
$78,361 for the quarters ended March 31, 1997 and 1996, respectively, a
decrease of 24%. The principal factors affecting the comparison of the
quarters ended March 31, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1997 as compared to the
quarter ended March 31, 1996 by 14%, or $2.46 per barrel, resulting in an
increase of approximately $33,700 in income from net profits interests.
Oil sales represented 80% of total oil and gas sales during the quarter
ended March 31, 1997 as compared to 88% during the quarter ended March
31, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 83%, or $1.23 per mcf, resulting in an increase
of approximately $26,000 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 $59,700.
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 6,800 barrels or 50% during the
quarter ended March 31, 1997 as compared to the quarter ended March 31,
1996, resulting in a decrease of approximately $133,000 in income from
net profits interests.
Gas production decreased approximately 8,400 mcf or 40% during the same
period, resulting in a decrease of approximately $22,800 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $155,800. The decrease is primarily
attributable to eleven months of revenue, on one lease, being held in
suspense during litigation between a third party operator, the lease's
pumper and the Managing General Partner. Upon conclusion of the
litigation, all revenues, approximately 5,900 barrels of oil, was
released during the first quarter of 1996. Also during the first quarter
of 1996, approximately 7,100 mcf of gas from two leases, which
represented twelve months of production, was received. Excluding the
effects of the lump sum settlements of oil and gas production, oil
production decreased approximately 900 barrels or 12% and gas production
decreased approximately 1,300 mcf of gas or 10%.
The Partnership was carried into a project on the Ballard Grayburg San
Andres Unit to drill five infill producers. An evaluation, prepared by
an independent certified petroleum engineer, of the proposed infill
drilling to determine a fair arrangement for the Partnership to
participate has resulted in a farm-out agreement with Southwest
Royalties, Inc., the Managing General Partner, to pay all the
Partnership's costs in the proposed drilling in return for a working
interest equal to 90% of the Partnership's combined working interest in
the Ballard Grayburg San Andres Unit, effective January 1, 1997. As a
result, The Partnership had been receiving approximately 450 barrels of
oil and will now receive approximately 40 barrels of oil from the Ballard
Grayburg San Andres Unit.
3. Lease operating costs and production taxes were 41% lower, or
approximately $77,900 less during the quarter ended March 31, 1997 as
compared to the quarter ended March 31, 1996. The decrease is primarily
attributable to the litigation costs of approximately $56,000 incurred
during the first quarter of 1996 and the farm-out agreement, which
lowered the Partnership's working interest, on the Ballard Grayburg San
Andres Unit.
Costs and Expenses
Total costs and expenses decreased to $42,762 from $66,591 for the quarters
ended March 31, 1997 and 1996, respectively, a decrease of 36%. The decrease
is the result of lower general and administrative expense and 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 3%
or approximately $800 during the quarter ended March 31, 1997 as compared
to the quarter ended March 31, 1996.
2. Depletion expense decreased to $13,000 for the quarter ended March 31,
1997 from $36,000 for the same period in 1996. This represents a
decrease of 64%. 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 decline of depletion expense between the comparative periods were the
decrease in oil and gas revenue and the increase in the price of oil used
to determine the Partnership's reserves for January 1, 1997 as compared
to 1996.
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 the ones noted above, nor does it anticipate any such change.
Cash flows provided by operating activities were approximately $109,800 in
the quarter ended March 31, 1997 as compared to approximately $12,200 in the
quarter ended March 31, 1996. The primary source of the 1997 cash flow from
operating activities was profitable operations.
There were no cash flows provided by investing activities in the quarter
ended March 31, 1997 as compared to approximately $41 in the quarter ended
March 31, 1996.
Cash flows used in financing activities were approximately $104,800 in the
quarter ended March 31, 1997 as compared to approximately $28,800 in the
quarter ended March 31, 1996. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 1997 were $105,000 of
which $94,500 was distributed to the limited partners and $10,500 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1997 was $8.35. Total distributions during the
quarter ended March 31, 1996 were $29,000 of which $26,100 was distributed to
the limited partners and $2,900 to the general partners. The per unit
distribution to limited partners during the quarter ended March 31, 1996 was
$2.31.
The source for the 1997 distributions of $105,000 was oil and gas operations
of approximately $109,800, resulting in excess cash for contingencies or
subsequent distributions. The sources for the 1996 distributions of $29,000
were oil and gas operations of approximately $12,200 and the sale of oil and
gas properties of approximately $40, with the balance from available cash on
hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$2,858,122 have been made to the partners. As of March 31, 1997, $2,620,661
or $231.59 per limited partner unit has been distributed to the limited
partners, representing a 46% return of the capital contributed.
As of March 31, 1997, the Partnership had approximately $48,000 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) Exhibits:
27 Financial Data Schedule
(b) 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, 1997