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, 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 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, 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 and six month periods
ended June 30, 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
June 30, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 16,152 6,736
Receivable from Managing General Partner 53,156 99,877
Other receivable - 14,850
--------- ---------
Total current assets 69,308 121,463
--------- ---------
Oil and gas properties - using the
full cost method of accounting 4,387,142 4,387,142
Less accumulated depreciation,
depletion and amortization 3,815,000 3,789,000
--------- ---------
Net oil and gas properties 572,142 598,142
--------- ---------
$ 641,450 719,605
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 384 -
Distributions payable 233 142
--------- ---------
Total current liabilities 617 142
--------- ---------
Partners' equity:
General partners (4,570) 693
Limited partners 645,403 718,770
--------- ---------
Total partners' equity 640,833 719,463
--------- ---------
$ 641,450 719,605
========= =========
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues
Income from net profits
interests $ 75,797 108,102 135,337 186,464
Interest 139 322 362 610
Miscellaneous income - - 1,650 -
------- ------- ------- -------
75,936 108,424 137,349 187,074
------- ------- ------- -------
Expenses
General and administrative 23,219 22,830 52,979 53,423
Depreciation, depletion and
amortization 13,000 31,000 26,000 67,000
------- ------- ------- -------
36,219 53,830 78,979 120,423
------- ------- ------- -------
Net income $ 39,717 54,594 58,370 66,651
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 4,744 7,703 7,593 12,029
======= ======= ======= =======
General Partner $ 528 856 844 1,337
======= ======= ======= =======
Limited partners $ 34,445 46,035 49,933 53,285
======= ======= ======= =======
Per limited partner unit $ 3.04 4.07 4.41 4.71
======= ======= ======= =======
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Cash received from income from net profits
interests $ 198,558 117,370
Cash paid to suppliers (52,595) (53,423)
Interest received 362 610
------- -------
Net cash provided by operating activities 146,325 64,557
------- -------
Cash flows provided by investing activities:
Cash received from sale of oil and gas
property - 41
------- -------
Cash flows used in financing activities:
Distributions to partners (136,909) (90,081)
------- -------
Net increase (decrease) in cash and cash
equivalents 9,416 (25,483)
Beginning of period 6,736 46,452
------- -------
End of period $ 16,152 20,969
======= =======
(continued)
Southwest Royalties Institutional Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1997 1996
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 58,370 66,651
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 26,000 67,000
(Increase) decrease in receivables 61,571 (69,094)
Increase in payables 384 -
------- -------
Net cash provided by operating activities $ 146,325 64,557
======= =======
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.
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 June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1997 and 1996:
Three Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.49 20.07 (8%)
Average price per mcf of gas $ 2.49 2.39 4%
Oil production in barrels 7,500 9,500 (21%)
Gas production in mcf 12,600 13,600 (7%)
Income from net profits interests $ 75,797 108,102 (30%)
Partnership distributions $ 32,000 61,000 (48%)
Limited partner distributions $ 28,800 54,900 (48%)
Per unit distribution to limited
partners $ 2.55 4.85 (48%)
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests decreased to $75,797 from
$108,102 for the quarters ended June 30, 1997 and 1996, respectively, a
decrease of 30%. The principal factors affecting the comparison of the
quarters ended June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended June 30, 1997 as compared to the
quarter ended June 30, 1996 by 8%, or $1.58 per barrel, resulting in a
decrease of approximately $15,000 in income from net profits interests.
Oil sales represented 82% of total oil and gas sales during the quarter
ended June 30, 1997 as compared to 85% during the quarter ended June 30,
1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 4%, or $.10 per mcf, resulting in an increase
of approximately $1,400 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
$13,600. 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 2,000 barrels or 21% during the
quarter ended June 30, 1997 as compared to the quarter ended June 30,
1996, resulting in a decrease of approximately $37,000 in income from net
profits interests.
Gas production decreased approximately 1,000 mcf or 7% during the same
period, resulting in a decrease of approximately $2,500 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $39,500. The decrease in oil production
is primarily attributable to a farm-out agreement, which lowered the
Partnership's interest in the Ballard Grayburg San Andres Unit.
3. Lease operating costs and production taxes were 17% lower, or
approximately $19,900 less during the quarter ended June 30, 1997 as
compared to the quarter ended June 30, 1996. The decrease is primarily
attributable to a farm-out agreement which lowered the Partnership's
interest in the Ballard Grayburg San Andres Unit.
Costs and Expenses
Total costs and expenses decreased to $36,219 from $53,830 for the quarters
ended June 30, 1997 and 1996, respectively, a decrease of 33%. The decrease
is the result of lower depletion expense, partially offset by an increase 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 increased 2%
or approximately $400 during the quarter ended June 30, 1997 as compared
to the quarter ended June 30, 1996.
2. Depletion expense decreased to $13,000 for the quarter ended June 30,
1997 from $31,000 for the same period in 1996. This represents a
decrease of 58%. 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 in 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.
B. General Comparison of the Six Month Periods Ended June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1997 and 1996:
Six Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.62 18.31 2%
Average price per mcf of gas $ 2.63 2.44 8%
Oil production in barrels 14,700 23,200 (37%)
Gas production in mcf 25,000 26,200 (5%)
Income from net profits interests $ 135,337 186,464 (27%)
Partnership distributions $ 137,000 90,000 52%
Limited partner distributions $ 123,300 81,000 52%
Per unit distribution to limited
partners $ 10.90 7.16 52%
Number of limited partner units 11,316 11,316
Revenues
The Partnership's income from net profits interests decreased to $135,337
from $186,464 for the six months ended June 30, 1997 and 1996, respectively,
a decrease of 27%. The principal factors affecting the comparison of the six
months ended June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1997 as compared to the
six months ended June 30, 1996 by 2%, or $.31 per barrel, resulting in an
increase of approximately $7,200 in income from net profits interests.
Oil sales represented 81% of total oil and gas sales during the six
months ended June 30, 1997 as compared to 87% during the six months ended
June 30, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 8%, or $.19 per mcf, resulting in an increase
of approximately $5,000 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 $12,200.
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 8,500 barrels or 37% during the
six months ended June 30, 1997 as compared to the six months ended June
30, 1996, resulting in a decrease of approximately $158,300 in income
from net profits interests.
Gas production decreased approximately 1,200 mcf or 5% during the same
period, resulting in a decrease of approximately $3,200 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $161,500. 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 contributing to the
decline is a farm-out agreement, which lowered the Partnership's interest
in the Ballard Grayburg San Andres Unit.
3. Lease operating costs and production taxes were 32% lower, or
approximately $97,700 less during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996. The decrease is
primarily attributable to the litigation costs of approximately $56,000
incurred during the first quarter of 1996 and a farm-out agreement, which
lowered the Partnership's interest in the Ballard Grayburg San Andres
Unit.
Costs and Expenses
Total costs and expenses decreased to $78,979 from $120,423 for the six
months ended June 30, 1997 and 1996, respectively, a decrease of 34%. 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 1%
or approximately $400 during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996.
2. Depletion expense decreased to $26,000 for the six months ended June 30,
1997 from $67,000 for the same period in 1996. This represents a
decrease of 61%. 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 in 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, nor does it anticipate any such change.
Cash flows provided by operating activities were approximately $146,300 in
the six months ended June 30, 1997 as compared to approximately $64,600 in
the six months ended June 30, 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 six months
ended June 30, 1997 as compared to approximately $40 in the six months ended
June 30, 1996.
Cash flows used in financing activities were approximately $136,900 in the
six months ended June 30, 1997 as compared to approximately $90,100 in the
six months ended June 30, 1996. The only use in financing activities was the
distributions to partners.
Total distributions during the six months ended June 30, 1997 were $137,000
of which $123,300 was distributed to the limited partners and $13,700 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1997 was $10.90. Total distributions during the
six months ended June 30, 1996 were $90,000 of which $81,000 was distributed
to the limited partners and $9,000 to the general partners. The per unit
distribution to limited partners during the six months ended June 30, 1996
was $7.16.
The source for the 1997 distributions of $137,000 was oil and gas operations
of approximately $146,300, resulting in excess cash for contingencies or
subsequent distributions. The sources for the 1996 distributions of $90,000
were oil and gas operations of approximately $64,600 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
$2,890,122 have been made to the partners. As of June 30, 1997, $2,649,461
or $234.13 per limited partner unit has been distributed to the limited
partners, representing a 47% return of the capital contributed.
As of June 30, 1997, the Partnership had approximately $68,700 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:
On June 12, 1997, the Partnership filed Form 8-K and on June
24, 1997, the Partnership filed Form 8-K Amended, with
respect to Item 4, Changes in Registrant's Certifying
Accountant.
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: August 15, 1997