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, 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 33-47668-01
SOUTHWEST ROYALTIES INSTITUTIONAL 1992-93 INCOME PROGRAM
Southwest Royalties Institutional Income Fund XI-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2427297
(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 12.
PAGE
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 month period ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the full year.
PAGE
Southwest Royalties Institutional Income Fund XI-A, L.P.
Balance Sheets
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 57,901 73,533
Receivable from Managing General
Partner 104,959 74,521
--------- ---------
Total current assets 162,860 148,054
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 2,156,397 2,156,397
Less accumulated depreciation,
depletion and amortization 375,000 315,000
--------- ---------
Net oil and gas properties 1,781,397 1,841,397
--------- ---------
Organization costs, net of
amortization 18,028 20,608
--------- ---------
$ 1,962,285 2,010,059
========= =========
Liabilities and Partners' Equity
Current liability - Accounts payable $ 5,000 -
--------- ---------
Partners' equity:
General partners (2,619) (3,600)
Limited partners 1,959,904 2,013,659
--------- ---------
Total partners' equity 1,957,285 2,010,059
--------- ---------
$ 1,962,285 2,010,059
========= =========
PAGE
Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Revenues
Income from net profits interests $ 132,430 68,389
Interest income from operations 516 757
------- -------
132,946 69,146
------- -------
Expenses
General and administrative 16,640 16,098
Depreciation, depletion and
amortization 62,580 53,580
------- -------
79,220 69,678
------- -------
Net income (loss) $ 53,726 (532)
======= =======
Net income (loss) allocated to:
Managing General Partner $ 10,468 4,774
======= =======
General partner $ 1,163 530
======= =======
Limited partners $ 42,095 (5,836)
======= =======
Per limited partner unit $ 7.77 (1.08)
======= =======
PAGE
Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 101,992 69,030
Cash paid to suppliers (11,640) (12,425)
Interest received 516 821
------- -------
Net cash provided by operating
activities 90,868 57,426
------- -------
Cash flows from investing activities:
Cash received from sale of oil and
gas properties - 4,013
Additions to oil and gas properties - (26,957)
------- -------
Net cash used in investing activities - (22,944)
------- -------
Cash flows used in financing activities:
Distributions to partners (106,500) (18,987)
------- -------
Net increase (decrease) in cash
(15,632) 15,495
Cash and cash equivalents:
Beginning of period 73,533 154,502
------- -------
End of period $ 57,901 169,997
======= =======
(continued)
PAGE
Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Reconciliation of net income (loss)
to net cash provided by operating
activities:
Net income (loss) $ 53,726 (532)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion, depreciation and
amortization 62,580 53,580
(Increase) decrease in receivables (30,438) 705
Increase in payables 5,000 3,673
------- -------
Net cash provided by operating
activities $ 90,868 57,426
======= =======
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional Income Fund XI-A, L.P. (the "Partnership"
or "Registrant") was organized as a Delaware limited partnership on May 5,
1992. The offering of such limited partnership interests began August 20,
1992, as part of a shelf offering registered under the name Southwest
Royalties Institutional 1992-93 Income Program. Minimum capital requirements
for the Partnership were met on December 10, 1992, with the offering of
limited partnership interests concluding April 30, 1993. At the conclusion
of the offering of limited partnership interests, 217 limited partners had
purchased 5,418 units for $2,709,000.
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.
PAGE
Results of Operations
A. General Comparison of the Quarters Ended March 31, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1996 and 1995:
Three Months
Ended Percentage
March 31, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 17.80 16.84 6%
Average price per mcf of gas $ 1.98 1.61 23%
Oil production in barrels 6,400 4,600 39%
Gas production in mcf 57,200 56,600 1%
Income from net profits interests $ 132,430 68,389 94%
Partnership distributions $ 106,500 18,805 466%
Limited partner distributions $ 95,850 17,205 457%
Per unit distribution to limited
partners $ 17.69 3.18 457%
Number of limited partner units 5,418 5,418
Revenues
The Partnership's income from net profits interests increased to $132,430
from $68,389 for the quarters ended March 31, 1996 and 1995, respectively, an
increase of 94%. The principal factors affecting the comparison of the
quarters ended March 31, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1996 as compared to the
quarter ended March 31, 1995 by 6%, or $.96 per barrel, resulting in an
increase of approximately $4,400 in income from net profits interests.
Oil sales represented 50% of total oil and gas sales during the quarter
ended March 31, 1996 as compared to 46% during the quarter ended March
31, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 23%, or $.37 per mcf, resulting in an increase
of approximately $20,900 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 $25,300.
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 1,800 barrels or 39% during the
quarter ended March 31, 1996 as compared to the quarter ended March 31,
1995, resulting in an increase of approximately $32,000 in income from
net profits interests.
Gas production increased approximately 600 mcf or 1% during the same
period, resulting in an increase of approximately $1,200 in income from
net profits interests.
The total increase in income from net profits interests due to the change
in production is approximately $33,200. The increase is a result of an
acquisition with an effective date of June 1995.
3. Lease operating costs and production taxes were 6% lower, or
approximately $5,700 less during the quarter ended March 31, 1996 as
compared to the quarter ended March 31, 1995.
Costs and Expenses
Total costs and expenses increased to $79,220 from $69,678 for the quarters
ended March 31, 1996 and 1995, respectively, an increase of 14%. The
increase is the result of higher 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 increased 3%
or approximately $500 during the quarter ended March 31, 1996 as compared
to the quarter ended March 31, 1995.
2. Depletion expense increased to $60,000 for the quarter ended March 31,
1996 from $51,000 for the same period in 1995. This represents an
increase of 18%. 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 March 31, 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 $90,900 in the
three months ended March 31, 1996 as compared to approximately $57,400 in the
three months ended March 31, 1995. The primary source of the 1996 cash flow
from operating activities was profitable operations.
Cash flows used in investing activities were none in the three months ended
March 31, 1996 as compared to approximately $22,900 in the three months ended
March 31, 1995.
Cash flows used in financing activities were approximately $106,500 in the
three months ended March 31, 1996 as compared to approximately $19,000 in the
three months ended March 31, 1995. The only use in financing activities was
the distributions to partners.
Total distributions during the three months ended March 31, 1996 were
$106,500 of which $95,850 was distributed to the limited partners and $10,650
to the general partners. The per unit distribution to limited partners
during the three months ended March 31, 1996 was $17.69. Total distributions
during the three months ended March 31, 1995 were $18,805 of which $17,205
was distributed to the limited partners and $1,600 to the general partners.
The per unit distribution to limited partners during the three months ended
March 31, 1995 was $3.18.
The source for the 1996 distributions of $106,500 was oil and gas operations
of approximately $90,900, with the balance from available cash on hand at the
beginning of the period. The sources for the 1995 distributions of $18,805
were oil and gas operations of approximately $57,400 and the sale of oil and
gas properties of approximately $4,000, offset by additions to oil and gas
properties of approximately $27,000, resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$643,207 have been made to the partners. As of March 31, 1996, $589,657 or
$108.83 per limited partner unit has been distributed to the limited
partners, representing a 22% return of the capital contributed.
As of March 31, 1996, the Partnership had approximately $157,900 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.
PAGE
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) None
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.
PAGE
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 XI-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 11, 1996