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, 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 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 12.
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 month period ended
March 31, 1997 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
March 31, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 17,011 456
Receivable from Managing General Partner 48,169 74,527
--------- ---------
Total current assets 65,180 74,983
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 1,096,244 1,094,448
Less accumulated depreciation,
depletion and amortization 305,000 282,000
--------- ---------
Net oil and gas properties 791,244 812,448
--------- ---------
Organization costs, net of amortization 6,309 8,064
--------- ---------
$ 862,733 895,495
========= =========
Liabilities and Partners' Equity
Current liability - Accounts payable $ 4,750 -
--------- ---------
Partners' equity:
General partners (4,855) (3,579)
Limited partners 862,838 899,074
--------- ---------
Total partners' equity 857,983 895,495
--------- ---------
$ 862,733 895,495
========= =========
Southwest Oil & Gas Income Fund XI-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Revenues
Oil and gas $ 120,005 133,937
Interest 119 177
------- -------
120,124 134,114
------- -------
Expenses
Production 51,694 55,172
General and administrative 13,187 12,754
Depreciation, depletion and amortization 24,755 33,755
------- -------
89,636 101,681
------- -------
Net income $ 30,488 32,433
======= =======
Net income allocated to:
Managing General Partner $ 4,972 5,957
======= =======
General partner $ 552 662
======= =======
Limited partners $ 24,964 25,814
======= =======
Per limited partner unit $ 8.85 9.15
======= =======
Southwest Oil & Gas Income Fund XI-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 149,187 122,382
Interest received 119 177
Cash paid to suppliers (62,955) (67,197)
------- -------
Net cash provided by operating activities 86,351 55,362
------- -------
Cash flows from investing activities:
Additions to oil and gas properties (1,880) (556)
Sale of oil and gas properties 84 -
------- -------
Net cash used in investing activities (1,796) (556)
------- -------
Cash flows used in financing activities:
Distributions to partners (68,000) (71,000)
------- -------
Net increase (decrease) in cash and cash
equivalents 16,555 (16,194)
Beginning of period 456 28,968
------- -------
End of period $ 17,011 12,774
======= =======
(continued)
Southwest Oil & Gas Income Fund XI-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 30,488 32,433
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 24,755 33,755
(Increase) decrease in receivables 29,182 (11,555)
Increase in payables 1,926 729
------- -------
Net cash provided by operating activities $ 86,351 55,362
======= =======
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 workovers
during 1997 to enhance production. The Partnership could possibly experience
the following changes; a little less than normal decline in 1997, with no
decline in 1998 and thereafter, experience a steady decline.
Results of Operations
A. General Comparison of the Quarters Ended March 31, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1997 and 1996.
Three Months
Ended Percentage
March 31, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 22.10 18.22 21%
Average price per mcf of gas $ 2.60 2.08 25%
Oil production in barrels 2,700 3,400 (21%)
Gas production in mcf 23,200 34,600 (33%)
Gross oil and gas revenue $ 120,005 133,937 (10%)
Net oil and gas revenue $ 68,311 78,765 (13%)
Partnership distributions $ 68,000 71,000 (4%)
Limited partner distributions $ 61,200 63,900 (4%)
Per unit distribution to limited
partners $ 21.69 22.65 (4%)
Number of limited partner units 2,821 2,821
Revenues
The Partnership's oil and gas revenues decreased to $68,311 from $78,765 for
the quarters ended March 31, 1997 and 1996, respectively, a decrease of 13%.
The principal factors affecting the comparison of the quarters ended March
31, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1997 as compared to the
quarter ended March 31, 1996 by 21%, or $3.88 per barrel, resulting in an
increase of approximately $13,200 in revenues. Oil sales represented 50%
of total oil and gas sales during the quarter ended March 31, 1997 as
compared to 46% during the quarter ended March 31, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 25%, or $.52 per mcf, resulting in an increase
of approximately $18,000 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $31,200. 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 700 barrels or 21% during the
quarter ended March 31, 1997 as compared to the quarter ended March 31,
1996, resulting in a decrease of approximately $15,500 in revenues.
Gas production decreased approximately 11,400 mcf or 33% during the same
period, resulting in a decrease of approximately $29,600 in revenues.
The total decrease in revenues due to the change in production is
approximately $45,100. The decrease is primarily attributable to
property sales.
Costs and Expenses
Total costs and expenses decreased to $89,636 from $101,681 for the quarters
ended March 31, 1997 and 1996, respectively, a decrease of 12%. The decrease
is the result of lower lease operating costs and depletion expense, partially
offset by an increase in general and administrative expense.
1. Lease operating costs and production taxes were 6% lower, or
approximately $3,500 less during the quarter ended March 31, 1997 as
compared to the quarter ended March 31, 1996.
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 3%
or approximately $400 during the quarter ended March 31, 1997 as compared
to the quarter ended March 31, 1996.
3. Depletion expense decreased to $23,000 for the quarter ended March 31,
1997 from $32,000 for the same period in 1996. This represents a
decrease of 28%. 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 $86,400 in the
quarter ended March 31, 1997 as compared to approximately $55,400 in the
quarter ended March 31, 1996. The primary source of the 1997 cash flow from
operating activities was profitable operations.
Cash flows used in investing activities were approximately $1,800 in the
quarter ended March 31, 1997 as compared to approximately $600 in the quarter
ended March 31, 1996. The principle use of the 1997 cash flow from investing
activities was the additions of oil and gas properties, partially offset by
the sale to oil and gas properties.
Cash flows used in financing activities were $68,000 in the quarter ended
March 31, 1997 as compared to $71,000 in the quarter ended March 31, 1996.
The only use in financing activities was the distributions to partners.
Total distributions during the quarter ended March 31, 1997 were $68,000 of
which $61,200 was distributed to the limited partners and $6,800 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1997 was $21.69. Total distributions during the
quarter ended March 31, 1996 were $71,000 of which $63,900 was distributed to
the limited partners and $7,100 to the general partners. The per unit
distribution to limited partners during the quarter ended March 31, 1996 was
$22.65.
The sources for the 1997 distributions of $68,000 were oil and gas operations
of approximately $86,400 and the sale of oil and gas properties of
approximately $100, partially offset by the additions to oil and gas
properties of approximately $1,900, resulting in excess cash for
contingencies or subsequent distributions. The source for the 1996
distributions of $71,000 was oil and gas operations of approximately $55,400,
partially offset by the additions to oil and gas properties of approximately
$600, with the balance from available cash on hand at the beginning of the
period.
Since inception of the Partnership, cumulative monthly cash distributions of
$652,142 have been made to the partners. As of March 31, 1997, $592,992 or
$210.21 per limited partner unit has been distributed to the limited
partners, representing a 42% return of the capital contributed.
As of March 31, 1997, the Partnership had approximately $60,400 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:
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 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: May 15, 1997