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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, 2001
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 33-47667-01
SOUTHWEST OIL & GAS 1992-93 INCOME PROGRAM
Southwest Oil & Gas Income Fund XI-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2427267
(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, 2000 which are found in the Registrant's Form
10-K Report for 2000 filed with the Securities and Exchange Commission.
The December 31, 2000 balance sheet included herein has been taken from the
Registrant's 2000 Form 10-K Report. Operating results for the three and
six month periods ended June 30, 2001 are not necessarily indicative of the
results that may be expected for the full year.
Southwest Oil & Gas Income Fund XI-A, L.P.
Balance Sheets
June 30, December 31,
2001 2000
--------- ------------
(unaudited)
Assets
------
Current assets:
Cash and cash equivalents $ 18,598 21,569
Receivable from Managing General Partner 33,313 55,379
--------- ---------
Total current assets 51,911 76,948
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 1,050,663 1,049,868
Less accumulated depreciation,
depletion and amortization 789,555 766,555
--------- ---------
Net oil and gas properties 261,108 283,313
--------- ---------
$ 313,019 360,261
========= =========
Liabilities and Partners' Equity
--------------------------------
Partners' equity:
General partners $ (3,159) (735)
Limited partners 316,178 360,996
--------- ---------
Total partners' equity 313,019 360,261
--------- ---------
$ 313,019 360,261
========= =========
Southwest Oil & Gas Income Fund XI-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
----- ----- ----- -----
Revenues
--------
Oil and gas $ 58,870 74,641 155,726 136,028
Interest 333 261 683 455
------- ------- ------- -------
59,203 74,902 156,409 136,483
------- ------- ------- -------
Expenses
--------
Production 39,922 51,558 73,394 69,990
General and administrative 4,654 4,398 8,757 8,795
Depreciation, depletion and
amortization 14,000 2,000 23,000 9,000
------- ------- ------- -------
58,576 57,956 105,151 87,785
------- ------- ------- -------
Net income $ 627 16,946 51,258 48,698
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 1,316 1,705 6,683 5,193
======= ======= ======= =======
General Partner $ 147 190 743 577
======= ======= ======= =======
Limited partners $ (836) 15,051 43,832 42,928
======= ======= ======= =======
Per limited partner unit $ (.30) 5.34 15.54 15.22
======= ======= ======= =======
Southwest Oil & Gas Income Fund XI-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
2001 2000
----- -----
Cash flows from operating activities:
Cash received from oil and gas sales $ 175,551 126,316
Cash paid to suppliers (79,910) (79,954)
Interest received 683 455
-------- --------
Net cash provided by operating activities 96,324 46,817
-------- --------
Cash flows used in investing activities:
Additions of oil and gas properties (795) (558)
-------- --------
Cash flows used in financing activities:
Distributions to partners (98,500) (30,000)
-------- --------
Net (decrease) increase in cash
(2,971) 16,259
Beginning of period 21,569 10,337
-------- --------
End of period $ 18,598 26,596
======== ========
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 51,258 48,698
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 23,000 9,000
Decrease (increase) in receivables 19,825 (9,712)
Increase (decrease) in payables 2,241 (1,169)
------- -------
Net cash provided by operating activities $ 96,324 46,817
======= =======
Southwest Oil & Gas Income Fund XI-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Oil & Gas Income Fund XI-A, L.P. was organized under the
laws of the state of Delaware on May 5, 1992, for the purpose of
acquiring producing oil and gas properties and to produce and market
crude oil and natural gas produced from such properties for a term of
50 years, unless terminated at an earlier date as provided for in the
Partnership Agreement. The Partnership will sell its oil and gas
production to a variety of purchasers with the prices it receives
being dependent upon the oil and gas economy. Southwest Royalties,
Inc. serves as the Managing General Partner and H. H. Wommack, III, as
the individual general partner. Partnership profits and losses, as
well as all items of income, gain, loss, deduction, or credit, will be
credited or charged as follows:
Limited General
Partners Partners (1)
-------- --------
Organization and offering expenses (2) 100% -
Acquisition costs 100% -
Operating costs 90% 10%
Administrative costs (3) 90% 10%
Direct costs 90% 10%
All other costs 90% 10%
Interest income earned on capital
contributions 100% -
Oil and gas revenues 90% 10%
Other revenues 90% 10%
Amortization 100% -
Depletion allowances 100% -
(1) H.H. Wommack, III, President of the Managing General
Partner, is an additional general partner in the Partnership and
has a one percent interest in the Partnership. Mr. Wommack is
the majority stockholder of the Managing General Partner whose
continued involvement in Partnership management is important to
its operations. Mr. Wommack, as a general partner, shares also
in Partnership liabilities.
(2) Organization and Offering Expenses (including all cost of
selling and organizing the offering) include a payment by the
Partnership of an amount equal to three percent (3%) of Capital
Contributions for reimbursement of such expenses. All
Organization Costs (which excludes sales commissions and fees) in
excess of three percent (3%) of Capital Contributions with
respect to the Partnership will be allocated to and paid by the
Managing General Partner.
(3) Administrative Costs will be paid from the Partnership's
revenues; however; Administrative Costs in the Partnership year
in excess of two percent (2%) of Capital Contributions shall be
allocated to and paid by the Managing General Partner.
2. Summary of Significant Accounting Policies
The interim financial information as of June 30, 2001, and for the
three and six months ended June 30, 2001, is unaudited. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in this Form 10-Q pursuant
to the rules and regulations of the Securities and Exchange
Commission. However, in the opinion of management, these interim
financial statements include all the necessary adjustments to fairly
present the results of the interim periods and all such adjustments
are of a normal recurring nature. The interim consolidated financial
statements should be read in conjunction with the audited financial
statements for the year ended December 31, 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund XI-A, L.P. 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 Oil & Gas 1992-93 Income Program.
Minimum capital requirements for the Partnership were met on March 17,
1993, with the offering of limited partnership interests concluding April
30, 1993. At the conclusion of the offering of limited partnership
interests, 122 limited partners had purchased 2,821 units for $1,410,500.
The Partnership was formed to acquire 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 performing some
workovers during 2001. The Partnership will most likely continue to
experience a historical decline of 10% per year.
Oil and Gas Properties
Oil and gas properties are accounted for at cost under the full-cost
method. Under this method, all productive and nonproductive costs incurred
in connection with the acquisition, exploration and development of oil and
gas reserves are capitalized. Gain or loss on the sale of oil and gas
properties is not recognized unless significant oil and gas reserves are
involved.
The Partnership's policy for depreciation, depletion and amortization of
oil and gas properties is computed under the units of revenue method.
Under the units of revenue method, depreciation, depletion and amortization
is computed on the basis of current gross revenues from production in
relation to future gross revenues, based on current prices, from estimated
production of proved oil and gas reserves.
Should the net capitalized costs exceed the estimated present value of oil
and gas reserves, discounted at 10%, such excess costs would be charged to
current expense. The Partnership's capitalized cost did not exceed
estimated present value of reserves as of June 30, 2001.
Results of Operations
A. General Comparison of the Quarters Ended June 30, 2001 and 2000
The following table provides certain information regarding performance
factors for the quarters ended June 30, 2001 and 2000:
Three Months
Ended Percentage
June 30, Increase
2001 2000 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 24.31 26.06 (7%)
Average price per mcf of gas $ 4.26 3.98 7%
Oil production in barrels 1,000 1,200 (17%)
Gas production in mcf 10,000 10,900 (8%)
Gross oil and gas revenue $ 58,870 74,641 (21%)
Net oil and gas revenue $ 18,948 23,083 (18%)
Partnership distributions $ 38,500 10,000 285%
Limited partner distributions $ 34,650 9,000 285%
Per unit distribution to limited
partners $ 12.28 3.19 285%
Number of limited partner units 2,821 2,821
Revenues
The Partnership's oil and gas revenues decreased to $58,870 from $74,641
for the quarters ended June 30, 2001 and 2000, respectively, a decrease of
21%. The principal factors affecting the comparison of the quarters ended
June 30, 2001 and 2000 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended June 30, 2001 as compared to the
quarter ended June 30, 2000 by 7%, or $1.75 per barrel, resulting in a
decrease of approximately $1,800 in revenues. Oil sales represented
36% of total oil and gas sales during the quarter ended June 30, 2001
as compared to 42% during the quarter ended June 30, 2000.
The average price for an mcf of gas received by the Partnership
increased during the same period by 7%, or $.28 per mcf, resulting in
an increase of approximately $2,800 in revenues.
The net total increase in revenues due to the change in prices received
from oil and gas production is approximately $1,000. 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 200 barrels or 17% during the
quarter ended June 30, 2001 as compared to the quarter ended June 30,
2000, resulting in a decrease of approximately $5,200 in revenues.
Gas production decreased approximately 900 mcf or 8% during the same
period, resulting in a decrease of approximately $3,600 in revenues.
The total decrease in revenues due to the change in production is
approximately $8,800. The decrease in oil production is due primarily
to steep natural decline of several small wells.
Costs and Expenses
Total costs and expenses increased to $58,576 from $57,956 for the quarters
ended June 30, 2001 and 2000, respectively, an increase of 1%. The
increase is the result of higher general and administrative expense and
depletion expense, partially offset by a decrease in lease operating costs.
1. Lease operating costs and production taxes were 23% lower, or
approximately $11,600 less during the quarter ended June 30, 2001 as
compared to the quarter ended June 30, 2000. The decline in lease
operating cost is due to repairs and maintenance performed in 2000.
2. General and administrative costs consist of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs increased 6%
or approximately $300 during the quarter ended June 30, 2001 as
compared to the quarter ended June 30, 2000.
3. Depletion expense increased to $14,000 for the quarter ended June 30,
2001 from $2,000 for the same period in 2000. This represents an
increase of 600%. 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 increase in depletion expense between the comparative
periods were the decrease in the price of oil and gas used to determine
the Partnership's reserves for July 1, 2001 as compared to 2000.
B. General Comparison of the Six Month Periods Ended June 30, 2001 and
2000
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 2001 and 2000:
Six Months
Ended Percentage
June 30, Increase
2001 2000 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 25.25 25.67 (2%)
Average price per mcf of gas $ 5.24 3.31 58%
Oil production in barrels 2,000 2,200 (9%)
Gas production in mcf 20,100 24,000 (16%)
Gross oil and gas revenue $ 155,726 136,028 14%
Net oil and gas revenue $ 82,332 66,038 25%
Partnership distributions $ 98,500 30,000 228%
Limited partner distributions $ 88,650 27,000 228%
Per unit distribution to limited
partners $ 31.43 9.57 228%
Number of limited partner units 2,821 2,821
Revenues
The Partnership's oil and gas revenues increased to $155,726 from $136,028
for the six months ended June 30, 2001 and 2000, respectively, an increase
of 14%. The principal factors affecting the comparison of the six months
ended June 30, 2001 and 2000 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the six months ended June 30, 2001 as compared to the
six months ended June 30, 2000 by 2%, or $.42 per barrel, resulting in
a decrease of approximately $800 in revenues. Oil sales represented
32% of total oil and gas sales during the six months ended June 30,
2001 as compared to 42% during the six months ended June 30, 2000.
The average price for an mcf of gas received by the Partnership
increased during the same period by 58%, or $1.93 per mcf, resulting in
an increase of approximately $38,800 in revenues.
The net total increase in revenues due to the change in prices received
from oil and gas production is approximately $38,000. 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 200 barrels or 9% during the six
months ended June 30, 2001 as compared to the six months ended June 30,
2000, resulting in a decrease of approximately $5,100 in revenues.
Gas production decreased approximately 3,900 mcf or 16% during the same
period, resulting in a decrease of approximately $12,900 in revenues.
The total decrease in revenues due to the change in production is
approximately $18,000.
Costs and Expenses
Total costs and expenses increased to $105,151 from $87,785 for the six
months ended June 30, 2001 and 2000, respectively, an increase of 20%. The
increase is the result of higher lease operating costs and depletion
expense, partially offset by a decrease in general and administrative
expense.
1. Lease operating costs and production taxes were 5% higher, or
approximately $3,400 more during the six months ended June 30, 2001 as
compared to the six months ended June 30, 2000.
2. General and administrative costs consist of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased
less than 1% or approximately $40 during the six months ended June 30,
2001 as compared to the six months ended June 30, 2000.
3. Depletion expense increased to $23,000 for the six months ended June
30, 2001 from $9,000 for the same period in 2000. This represents an
increase of 156%. 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 increase in depletion expense between the comparative
periods were the decrease in the price of oil and gas used to determine
the Partnership's reserves for July 1, 2001 as compared to 2000, and
the increase in oil and gas revenues received by the Partnership during
2001 as compared to 2000.
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 $96,300 in
the six months ended June 30, 2001 as compared to approximately $46,800 in
the six months ended June 30, 2000. The primary source of the 2001 cash
flow from operating activities was profitable operations.
Cash flows used in investing activities were approximately $800 in the six
months ended June 30, 2001 as compared to approximately $600 in the six
months ended June 30, 2000. The principle use of the 2001 cash flow from
investing activities was the additions to oil and gas properties.
Cash flows used in financing activities were approximately $98,500 in the
six months ended June 30, 2001 as compared to approximately $30,000 in the
six months ended June 30, 2000. The only use in financing activities was
the distributions to partners.
Total distributions during the six months ended June 30, 2001 were $98,500
of which $88,650 was distributed to the limited partners and $9,850 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 2001 was $31.43. Total distributions during the
six months ended June 30, 2000 were $30,000 of which $27,000 was
distributed to the limited partners and $3,000 to the general partners.
The per unit distribution to limited partners during the six months ended
June 30, 2000 was $9.57.
The source for the 2001 distributions of $98,500 was oil and gas operations
of approximately $96,300, and the change in oil and gas properties of
approximately $(800), with the balance from available cash on hand at the
beginning of the period. The sources for the 2000 distributions of $30,000
were oil and gas operations of approximately $46,800 and the change in oil
and gas properties of approximately $(600), resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $1,190,825 have been made to the partners. As of June 30, 2001,
$1,084,912 or $384.58 per limited partner unit has been distributed to the
limited partners, representing a 77% return of the capital contributed.
As of June 30, 2001, the Partnership had approximately $51,900 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Partnership is not a party to any derivative
or embedded derivative instruments.
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) Reports on Form 8-K:
No reports on Form 8-
K were filed during the quarter ended June 30, 2001.
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 OIL & GAS
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: August 15, 2001