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, 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 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 six month periods
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the full year.
Southwest Royalties Institutional Income Fund XI-A, L.P.
Balance Sheets
June 30, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 48,254 73,533
Receivable from Managing
General Partner 107,793 74,521
--------- ---------
Total current assets 156,047 148,054
--------- ---------
Oil and gas properties - using the
full cost method of accounting 2,150,592 2,156,397
Less accumulated depreciation,
depletion and amortization 432,000 315,000
--------- ---------
Net oil and gas properties 1,718,592 1,841,397
--------- ---------
Organization costs, net 15,448 20,608
--------- ---------
$ 1,890,087 2,010,059
========= =========
Liabilities and Partners' Equity
Partners' equity:
General partners $ 1,679 (3,600)
Limited partners 1,888,408 2,013,659
--------- ---------
Total partners' equity 1,890,087 2,010,059
--------- ---------
$ 1,890,087 2,010,059
========= =========
Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues
Income from net profits
interests $ 109,254 134,931 241,686 203,321
Interest 711 2,069 1,227 2,826
------- ------- ------- -------
109,965 137,000 242,913 206,147
------- ------- ------- -------
Expenses
General and administrative 11,980 12,982 28,622 29,081
Depreciation, depletion and
amortization 59,580 71,580 122,160 125,160
------- ------- ------- -------
71,560 84,562 150,782 154,241
------- ------- ------- -------
Net income $ 38,405 52,438 92,131 51,906
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 8,819 11,162 19,286 15,936
======= ======= ======= =======
General Partner $ 980 1,240 2,143 1,771
======= ======= ======= =======
Limited Partners $ 28,606 40,036 70,702 34,199
======= ======= ======= =======
Per limited partner
unit $ 5.28 7.39 13.05 6.31
======= ======= ======= =======
Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Cash received from income from net
profits interests $ 208,414 172,800
Cash paid to suppliers (28,622) (28,906)
Interest received 1,227 2,890
------- -------
Net cash provided by operating
activities 181,019 146,784
------- -------
Cash flows from investing activities:
Cash received from sale of oil
and gas property interest 5,805 125,195
Additions to oil and gas properties - (92,313)
------- -------
Net cash provided investing activities 5,805 32,882
------- -------
Cash flows used in financing activities:
Distributions to partners (212,103) (168,987)
------- -------
Net increase (decrease) in cash and
cash equivalents (25,279) 10,679
Beginning of period 73,533 154,502
------- -------
End of period $ 48,254 165,181
======= =======
(continued)
Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1996 1995
Reconciliation of net income to
net cash provided by operating
activities:
Net income $ 92,131 51,906
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 122,160 125,160
Increase in receivables (33,272) (30,457)
Increase in payables - 175
------- -------
Net cash provided by operating
activities $ 181,019 146,784
======= =======
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)
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 and the offering concluding on April 30, 1993
with total limited partner contributions of $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.
Results of Operations
A. General Comparison of the Quarters Ended June 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1996 and 1995:
Three Months
Ended Percentage
June 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 20.58 17.62 17%
Average price per mcf of gas $ 2.12 1.51 40%
Oil production in barrels 4,700 6,700 (30%)
Gas production in mcf 52,100 76,400 (32%)
Income from net profits interests $ 109,254 134,931 (19%)
Partnership distributions $ 105,603 150,000 (30%)
Limited partner distributions $ 100,103 138,000 (27%)
Per unit distribution to limited
partners $ 18.48 25.47 (27%)
Number of limited partner units 5,418 5,418
Revenues
The Partnership's income from net profits interests decreased to $109,254
from $134,931 for the quarters ended June 30, 1996 and 1995, respectively, a
decrease of 19%. The principal factors affecting the comparison of the
quarters ended June 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 June 30, 1996 as compared to the
quarter ended June 30, 1995 by 17%, or $2.96 per barrel, resulting in an
increase of approximately $19,800 in income from net profits interests.
Oil sales represented 46% of total oil and gas sales during the quarter
ended June 30, 1996 as compared to 50% during the quarter ended June 30,
1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 40%, or $.61 per mcf, resulting in an increase
of approximately $46,600 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 $66,400.
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 2,000 barrels or 30% during the
quarter ended June 30, 1996 as compared to the quarter ended June 30,
1995, resulting in a decrease of approximately $41,200 in income from net
profits interests.
Gas production decreased approximately 24,300 mcf or 32% during the same
period, resulting in a decrease of approximately $51,500 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $92,700. The decrease is primarily a
result of property sales and surface problems.
3. Lease operating costs and production taxes were 1% lower, or
approximately $900 less during the quarter ended June 30, 1996 as
compared to the quarter ended June 30, 1995.
Costs and Expenses
Total costs and expenses decreased to $71,560 from $84,562 for the quarters
ended June 30, 1996 and 1995, respectively, a decrease of 15%. 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 8%
or approximately $1,000 during the quarter ended June 30, 1996 as
compared to the quarter ended June 30, 1995.
2. Depletion expense decreased to $57,000 for the quarter ended June 30,
1996 from $69,000 for the same period in 1995. This represents a
decrease of 17%. 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.
Three factors that attributed to the decline in expense between the
comparative periods were the increase in the price of oil and gas used to
determine the Partnership's reserves for January 1, 1996 as compared to
1995, the increase in property sales and the decrease in oil and gas
revenues.
B. General Comparison of the Six Month Periods Ended June 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1996 and 1995:
Six Months
Ended Percentage
June 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.97 17.30 10%
Average price per mcf of gas $ 2.13 1.55 37%
Oil production in barrels 11,000 11,300 (3%)
Gas production in mcf 105,100 133,100 (21%)
Income from net profits interests $ 241,686 203,321 19%
Partnership distributions $ 212,103 168,805 26%
Limited partner distributions $ 195,953 155,205 26%
Per unit distribution to limited
partners $ 36.17 28.65 26%
Number of limited partner units 5,418 5,418
Revenues
The Partnership's income from net profits interests increased to $241,686
from $203,321 for the six months ended June 30, 1996 and 1995, respectively,
an increase of 19%. The principal factors affecting the comparison of the
six months ended June 30, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995 by 10%, or $1.67 per barrel, resulting in
an increase of approximately $18,900 in income from net profits
interests. Oil sales represented 48% of total oil and gas sales during
the six months ended June 30, 1996 as compared to 49% during the six
months ended June 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 37%, or $.58 per mcf, resulting in an increase
of approximately $77,200 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 $96,100.
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 300 barrels or 3% during the six
months ended June 30, 1996 as compared to the six months ended June 30,
1995, resulting in a decrease of approximately $5,700 in income from net
profits interests.
Gas production decreased approximately 28,000 mcf or 21% during the same
period, resulting in a decrease of approximately $59,600 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $65,300. The decrease is primarily a
result of property sales and surface problems.
3. Lease operating costs and production taxes were 3% lower, or
approximately $6,600 less during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995.
Costs and Expenses
Total costs and expenses decreased to $150,782 from $154,241 for the six
months ended June 30, 1996 and 1995, respectively, a decrease of 2%. The
decrease is the result of a decline in 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 2%
or approximately $500 during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995.
2. Depletion expense decreased to $117,000 for the six months ended June 30,
1996 from $120,000 for the same period in 1995. This represents a
decrease of 3%. 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.
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 $181,000 in
the six months ended June 30, 1996 as compared to approximately $146,800 in
the six months ended June 30, 1995. The primary source of the 1996 cash flow
from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $5,800 in the
six months ended June 30, 1996 as compared to approximately $32,900 in the
six months ended June 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 $212,100 in the
six months ended June 30, 1996 as compared to approximately $169,000 in the
six months ended June 30, 1995. The only use in financing activities was the
distributions to partners.
Total distributions during the six months ended June 30, 1996 were $212,103
of which $195,953 was distributed to the limited partners and $16,150 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1996 was $36.17. Total distributions during the
six months ended June 30, 1995 were $168,805 of which $155,205 was
distributed to the limited partners and $13,600 to the general partners. The
per unit distribution to limited partners during the six months ended June
30, 1995 was $28.65.
The sources for the 1996 distributions of $212,103 were oil and gas
operations of approximately $181,000, the sale of oil and gas properties of
approximately $5,800 and the excess capital of $48,070, resulting in excess
cash for contingencies or subsequent distributions. The sources for the 1995
distributions of $168,805 were oil and gas operations of approximately
$146,800 and the sale of oil and gas properties of approximately $125,200,
offset by the additions to oil and gas properties of approximately $92,300,
resulting in excess cash for contingencies of subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$748,810 have been made to the partners. As of June 30, 1996, $689,760 or
$127.31 per limited partner unit has been distributed to the limited
partners, representing a 25% return of the capital contributed.
As of June 30, 1996, the Partnership had approximately $156,000 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) None
(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 XI-A, L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
Managing General Partner
Date: August 12, 1996 By: /s/ Bill E. Coggin
Bill E. Coggin, Vice President
and Chief Financial Officer