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 0-20298
SOUTHWEST ROYALTIES INSTITUTIONAL 1990-91 INCOME PROGRAM
Southwest Royalties Institutional Income Fund X-C, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2374449
(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.
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 and six month periods
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the full year.
PAGE
Southwest Royalties Institutional Income Fund X-C, L.P.
Balance Sheets
June 30, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 295,569 29,574
Receivable from Managing
General Partner 130,302 128,764
--------- ---------
Total current assets 425,871 158,338
--------- ---------
Oil and gas properties - using the
full cost method of accounting 2,244,628 2,550,222
Less accumulated depreciation,
depletion and amortization 1,521,479 1,456,479
--------- ---------
Net oil and gas properties 723,149 1,093,743
--------- ---------
Organization costs, net 3,089 6,329
--------- ---------
$ 1,152,109 1,258,410
========= =========
Liabilities and Partners' Equity
Partners' equity:
General partners $ 11,206 13,786
Limited partners 1,140,903 1,244,624
--------- ---------
Total partners' equity 1,152,109 1,258,410
--------- ---------
$ 1,152,109 1,258,410
========= =========
PAGE
Southwest Royalties Institutional Income Fund X-C, 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 $ 144,978 84,629 242,851 202,499
Interest 2,791 478 3,742 912
------- ------- ------- -------
147,769 85,107 246,593 203,411
------- ------- ------- -------
Expenses
General and administrative 9,691 9,237 25,388 25,713
Depreciation, depletion and
amortization 35,620 60,620 68,240 121,240
------- ------- ------- -------
45,311 69,857 93,628 146,953
------- ------- ------- -------
Net income $ 102,458 15,250 152,965 56,458
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 12,427 6,828 19,908 15,993
======= ======= ======= =======
General Partner $ 1,381 759 2,212 1,777
======= ======= ======= =======
Limited Partners $ 88,650 7,663 130,845 38,688
======= ======= ======= =======
Per limited partner
unit $ 14.82 1.28 21.87 6.47
======= ======= ======= =======
PAGE
Southwest Royalties Institutional Income Fund X-C, 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 $ 241,313 223,916
Cash paid to suppliers (25,388) (25,713)
Interest received 3,742 912
------- -------
Net cash provided by operating
activities 219,667 199,115
------- -------
Cash flows provided by investing activities:
Cash received from sale of oil
and gas property interest 305,594 -
------- -------
Cash flows used in financing activities:
Distributions to partners (259,266) (198,200)
------- -------
Net increase in cash and cash equivalents 265,995 915
Beginning of period 29,574 31,287
------- -------
End of period $ 295,569 32,202
======= =======
(continued)
PAGE
Southwest Royalties Institutional Income Fund X-C, 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 $ 152,965 56,458
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 68,240 121,240
(Increase) decrease in receivables (1,538) 21,417
------- -------
Net cash provided by operating
activities $ 219,667 199,115
======= =======
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional Income Fund X-C, L.P. was organized as a
Delaware limited partnership on September 20, 1991. The offering of such
limited partnership interests began October 1, 1991 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
January 28, 1992, with the offering of limited partnership interests
concluding April 30, 1992, with 340 limited partners purchasing 5,983 units
for $2,991,500.
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.
PAGE
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 $ 19.58 17.12 14%
Average price per mcf of gas $ 2.09 1.30 61%
Oil production in barrels 12,400 15,900 (22%)
Gas production in mcf 22,800 25,800 (12%)
Income from net profits interests $ 144,978 84,629 71%
Partnership distributions $ 145,000 113,000 28%
Limited partner distributions $ 130,500 101,700 28%
Per unit distribution to limited
partners $ 21.81 17.00 28%
Number of limited partner units 5,983 5,983
Revenues
The Partnership's income from net profits interests increased to $144,978
from $84,629 for the quarters ended June 30, 1996 and 1995, respectively, an
increase of 71%. 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 14%, or $2.46 per barrel, resulting in an
increase of approximately $39,100 in income from net profits interests.
Oil sales represented 84% of total oil and gas sales during the quarter
ended June 30, 1996 as compared to 89% 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 61%, or $.79 per mcf, resulting in an increase
of approximately $20,400 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 $59,500.
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.
PAGE
2. Oil production decreased approximately 3,500 barrels or 22% during the
quarter ended June 30, 1996 as compared to the quarter ended June 30,
1995, resulting in a decrease of approximately $68,500 in income from net
profits interests.
Gas production decreased approximately 3,000 mcf or 12% during the same
period, resulting in a decrease of approximately $6,300 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $74,800. The decrease is a result of
property sales and downhole problems.
3. Lease operating costs and production taxes were 34% lower, or
approximately $76,000 less during the quarter ended June 30, 1996 as
compared to the quarter ended June 30, 1995. The decrease is a result of
property sales and workover cost incurred in 1995.
Costs and Expenses
Total costs and expenses decreased to $45,311 from $69,857 for the quarters
ended June 30, 1996 and 1995, respectively, a decrease of 35%. The decrease
is the result of lower depletion expense, 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 5%
or approximately $500 during the quarter ended June 30, 1996 as compared
to the quarter ended June 30, 1995.
2. Depletion expense decreased to $34,000 for the quarter ended June 30,
1996 from $59,000 for the same period in 1995. This represents a
decrease of 42%. 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 contributed to the decline in depletion 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.
PAGE
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 $ 18.62 16.63 12%
Average price per mcf of gas $ 1.90 1.41 35%
Oil production in barrels 25,500 32,300 (21%)
Gas production in mcf 40,500 54,300 (25%)
Income from net profits interests $ 242,851 202,499 20%
Partnership distributions $ 259,266 198,200 31%
Limited partner distributions $ 234,566 179,400 31%
Per unit distribution to limited
partners $ 39.21 29.98 31%
Number of limited partner units 5,983 5,983
Revenues
The Partnership's income from net profits interests increased to $242,851
from $202,499 for the six months ended June 30, 1996 and 1995, respectively,
an increase of 20%. 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 12%, or $1.99 per barrel, resulting in
an increase of approximately $64,300 in income from net profits
interests. Oil sales represented 86% of total oil and gas sales during
the six months ended June 30, 1996 as compared to 88% 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 35%, or $.49 per mcf, resulting in an increase
of approximately $26,600 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 $90,900.
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.
PAGE
2. Oil production decreased approximately 6,800 barrels or 21% during the
six months ended June 30, 1996 as compared to the six months ended June
30, 1995, resulting in a decrease of approximately $126,600 in income
from net profits interests.
Gas production decreased approximately 13,800 mcf or 25% during the same
period, resulting in a decrease of approximately $26,200 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $152,800. The decrease is a result of
property sales and downhole problems.
3. Lease operating costs and production taxes were 25% lower, or
approximately $102,600 less during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995. The decrease is a result
of property sales and workover costs incurred in 1995.
Costs and Expenses
Total costs and expenses decreased to $93,628 from $146,953 for the six
months ended June 30, 1996 and 1995, respectively, a decrease of 36%. 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 1%
or approximately $300 during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995.
2. Depletion expense decreased to $65,000 for the six months ended June 30,
1996 from $118,000 for the same period in 1995. This represents a
decrease of 45%. 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 contributed to the decline in depletion 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.
PAGE
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 $219,700 in
the six months ended June 30, 1996 as compared to approximately $199,100 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 $305,600 in
the six months ended June 30, 1996 as compared to none 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 $259,300 in the
six months ended June 30, 1996 as compared to approximately $198,200 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 $259,266
of which $234,566 was distributed to the limited partners and $24,700 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1996 was $39.21. Total distributions during the
six months ended June 30, 1995 were $198,200 of which $179,400 was
distributed to the limited partners and $18,800 to the general partners. The
per unit distribution to limited partners during the six months ended June
30, 1995 was $29.98.
The sources for the 1996 distributions of $259,266 were oil and gas
operations of approximately $219,700 and the sale of oil and gas properties
of approximately $305,600, resulting in excess cash for contingencies or
subsequent distributions. The source for the 1995 distributions of $198,200
was oil and gas operations of approximately $199,100, resulting in excess
cash for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$1,528,968 have been made to the partners. As of June 30, 1996, $1,387,928
or $231.98 per limited partner unit has been distributed to the limited
partners, representing a 46% return of the capital contributed.
As of June 30, 1996, the Partnership had approximately $425,900 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 X-C, 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 12, 1996