<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 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 NO. 333-22829
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
Delaware 75-2692499
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3901 SOUTH BROADWAY, TYLER, TEXAS 75701
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (903) 561-2900
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the act:
LIMITED AND GENERAL PARTNERSHIP INTEREST $1,000 PER INTEREST
Indicate by check mark whether the 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. [X] Yes [ ] No
No market currently exists for the limited and general partnership interest of
the registrant. Based on original purchase price the aggregate market value of
limited and general partnership interest owned by non-affiliates of the
registrant is $3,141,000.00.
The following documents are incorporated by reference into the indicated parts
of this Annual Report on Form 10-K: Part of the information called for by Part
IV of the Annual Report on Form 10-K is incorporated by reference from the
Registrant's Registration Statement on Form S-1, File No. 333-22829
<PAGE> 2
PART I
ITEM 1. BUSINESS
Mewbourne Energy Partners 97-A, L.P. (the "Registrant") is a limited
partnership organized under the laws of the State of Delaware in 1997. Its
managing general partner is Mewbourne Development Corporation, a Delaware
corporation ("MD").
A Registration Statement filed pursuant to the Securities Act of 1933, as
amended, registering limited partnership interests aggregating $2,000,000 and
$8,000,000 in general partnership interests in a series of Delaware limited
partnerships formed under Mewbourne Energy 97 Drilling Program, was declared
effective by the Securities and Exchange Commission on June 12, 1997. On
November 7, 1997, the offering of limited and general partnership interests in
the Registrant, was closed, with interests aggregating $3,141,000 being sold to
146 subscribers of which $2,844,000 were sold to 133 subscribers as general
partner interests and $297,000 were sold to 13 subscribers as limited partner
interests.
The Registrant engages primarily in oil and gas development and production and
is not involved in any other industry segment. See the selected financial data
in Item 6 and the financial statements in Item 8 of this report for a summary
of the Registrant's revenue, income and identifiable assets.
The Registrant has acquired interests in oil and gas prospects for the purpose
of development drilling. At December 31, 1997, six wells were in the process
of being drilled and completed. The following table summarizes the
Registrant's drilling activity for the initial investment through December 31,
1997:
Gross Net
--------------- ---------------
Dry Productive Dry Productive
--- ---------- --- ----------
Development wells 0 0 0 0
The sale of crude oil and natural gas produced by the Registrant will be
affected by a number of factors which are beyond the Registrant's control.
These factors include the price of crude oil and natural gas, the fluctuating
supply of and demand for these products, competitive fuels, refining,
transportation, extensive federal and state regulations governing the
production and sale of crude oil and natural gas, and other competitive
conditions. It is impossible to predict with any certainty the future effect
of these factors on the Registrant.
The Registrant does not have long-term contracts with purchasers of its crude
oil or natural gas. The market for crude oil is such that the Registrant
anticipates it will be able to sell all the
<PAGE> 3
crude oil it can produce. Natural gas will be sold to local distribution
companies, gas marketers and end users on the spot market. The spot market
reflects immediate sales of natural gas without long-term contractual
commitments. The future market condition for natural gas cannot be predicted
with any certainty, and the Registrant may experience delays in marketing
natural gas production and fluctuations in natural gas prices.
Many aspects of the Registrant's activities are highly competitive including,
but not limited to, the acquisition of suitable drilling prospects and the
procurement of drilling and related oil field equipment, and are subject to
governmental regulation, both at Federal and state levels. The Registrant's
ability to compete depends on its financial resources and on the managing
general partner's staff and facilities, none of which are significant in
comparison with those of the oil and gas exploration, development and
production industry as a whole. Federal and state regulation of oil and gas
operations generally includes drilling and spacing of wells on producing
acreage, the imposition of maximum allowable production rates, the taxation of
income and other items, and the protection of the environment.
The Registrant does not have any employees of its own. MD is responsible for
all management functions. Mewbourne Oil Company ("MOC"), a wholly-owned
subsidiary of Mewbourne Holdings, Inc., which is also the parent of the
Registrant's managing general partner, has been appointed Program Manager and
is responsible for activities in accordance with a Drilling Program Agreement
entered into by the Registrant, MD and MOC. At March 20, 1998, MOC employed 94
persons, many of whom dedicated a part of their time to the conduct of the
Registrant's business during the period for which this report is filed.
The production of oil and gas is not considered subject to seasonal factors
although the Registrant's natural gas sales will tend to increase during the
winter months. Order backlog is not pertinent to the Registrant's business.
<PAGE> 4
ITEM 2. PROPERTIES
The Registrant's properties consist primarily of leasehold interests in
properties on which oil and gas wells-in- progress are located. Such property
interests are often subject to landowner royalties, overriding royalties and
other oil and gas leasehold interests.
Fractional working interests in developmental oil and gas prospects located
primarily in the Anadarko Basin of Western Oklahoma and the Texas Panhandle
were acquired by the Registrant, resulting in the Registrant's participation in
the drilling of six oil and gas wells. At December 31, 1997, all six wells
were in the process of being drilled and completed.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not aware of any pending legal proceedings to which it is a
party or to which its properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of the year ended December 31, 1997 covered by this report.
<PAGE> 5
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
At March 20, 1998, the Registrant had 3,141 outstanding limited and general
partnership interests held of record by 146 subscribers. There is no
established public or organized trading market for the limited and general
partnership interests.
Revenues which, in the sole judgement of the managing general partner, are not
required to meet the Registrant's obligations will be distributed to the
partners at least quarterly in accordance with the Registrant's Partnership
Agreement. During the period ended December 31, 1997, no distributions had
been made to the limited and general partners.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the period from
February 17, 1997 (date of inception) through December 31, 1997:
<TABLE>
<S> <C>
Operating results:
- ------------------
Oil and gas sales $ 0
Net loss $ (7,818)
Allocation of net loss:
Managing general partner $ ( 78)
Limited and general partners $ (7,740)
Net loss per limited and general
partner interest ( 2.49)
Limited and general partners'
cash distributions per interest. $ 0.00
At year end:
- ------------
Cash $1,320,813
Non-Cash assets 1,883,597
----------
Total Assets $3,204,410
==========
Note payable, affiliate $ 298,395
</TABLE>
<PAGE> 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Mewbourne Energy Partners 97-A, L.P. (the "Registrant") was organized as a
Delaware limited partnership on February 17, 1997. The offering of limited and
general partner interests began June 12, 1997 as part of an offering registered
under the name Mewbourne Energy 97 Drilling Program. The offering of limited
and general partner interests in the Registrant concluded November 7, 1997,
with total investor partner contributions of $3,141,000. The Managing General
Partner made a contribution to the capital of the Registrant at the conclusion
of the offering period in an amount equal to 1% of its net capital
contributions. The Managing General Partner contribution was $31,727.
The Registrant was formed to engage primarily in the business of drilling
development wells, to produce and market crude oil and natural gas produced
from such properties, to distribute any net proceeds from operations to the
general and limited partners and to the extent necessary, acquire leases which
contain drilling prospects. The economic life of the Registrant depends on the
period over which the Registrant's oil and gas reserves are economically
recoverable.
Results of Operations
Because the Registrant was formed during the period covered by this report, no
trend analysis based on yearly changes in liquidity, capital resources or
results of operations is available.
There were no revenues realized by the Registrant during the period from
February 17, 1997 (date of inception) through December 31, 1997. Expenses
totaling $7,818, consisting primarily of interest expense, and administrative
and general expense, resulted in a $7,818 net loss for the period. At December
31, 1997, six wells were in the process of being drilled and completed. The
Registrant's oil and gas revenues should increase during 1998 as wells are
completed and oil and gas production is sold. Interest income should increase
in 1998. The Registrant expects that drilling and completion cost will
decrease during 1998 and that production cost and depletion provisions will
increase.
<PAGE> 7
Liquidity and capital resources
Net cash and cash equivalents increased by $1,320,813 during the period from
February 17, 1997 (date of inception) through December 31, 1997. Approximately
$1,853,234 of the net initial partners' capital of $3,199,297 was used for
drilling and completion cost and for lease acquisition cost. Capital
requirements in the future are expected to be paid with the initial partner's
capital. Management believes that funds are sufficient to complete the six
wells for which funds have been committed. Under certain circumstances, as
provided in the Registrant's Partnership Agreement, the Registrant may use
revenues and/or borrow monies to fund additional capital requirements.
Year 2000 Issue
Due to the fact that the partnership has no accounting systems of its own, it
is not directly impacted by any potential Year 2000 issue. Substantially all
of the partnership's financial results, however, are derived from the
accounting systems of Mewbourne Oil Company. MOC has made an assessment of the
impact of the Year 2000 on its financial and operational systems and is in the
process of upgrading its systems to those which the corresponding vendors have
certified are Year 2000 compliant. The cost of these upgrades, which are
estimated to be completed by December 31, 1998, are not expected to be
materially different from the cost of normal upgrades under the software
maintenance contracts MOC has with its software vendors. MOC is also in the
process of communicating with its significant suppliers, larger customers, and
partners to determine the extent to which it is vulnerable to those third
parties' failure to remediate their Year 2000 issue.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The required financial statements of the Registrant are contained in a separate
section of this report beginning with page 14 following the signature
attestation. See "Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K".
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE> 8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant does not have any officers or directors. Under the
Registrant's Partnership Agreement, the Registrant's managing general partner,
MD, is granted the exclusive right and full authority to manage, control and
administer the Registrant's business. MD is a wholly-owned subsidiary of
Mewbourne Holdings, Inc.
Set forth below are the names, ages and positions of the directors and
executive officers of MD, the Registrant's managing general partner. Directors
of MD are elected to serve until the next annual meeting of stockholders or
until their successors are elected and qualified.
<TABLE>
<CAPTION>
Age as of
December 31,
Name 1997 Position
- ---- ---- --------
<S> <C> <C>
Curtis W. Mewbourne 62 President and Director
J. Roe Buckley 35 Treasurer and Chief
Financial Officer
Michael F. Shepard 51 Secretary and General
Counsel
Dorothy M. Cuenod 37 Assistant Secretary
and Director
Ruth M. Buckley 36 Assistant Secretary
and Director
Julie M. Greene 34 Assistant Secretary
and Director
</TABLE>
<PAGE> 9
CURTIS W. MEWBOURNE, age 62, formed Mewbourne Holdings in 1965 and
serves as Chairman of the Board and President of Mewbourne Holdings, MOC and
MD. He has operated as an independent oil and gas producer for the past 32
years. Mr. Mewbourne received a Bachelor of Science Degree in Petroleum
Engineering from the University of Oklahoma in 1957. Mr. Mewbourne is the
father of Dorothy M. Cuenod, Ruth M. Buckley, and Julie M. Greene and the
father-in-law of J. Roe Buckley.
J. ROE BUCKLEY, age 35, joined Mewbourne Holdings in July, 1990 and
serves a Treasurer and Chief Financial Officer of both MD and MOC. Mr. Buckley
was employed by MBank Dallas from 1985-1990 where he served as a commercial
loan officer. He received a Bachelor of Arts in Economics from Sewanee in
1984. Mr. Buckley is the son-in-law of Curtis W. Mewbourne and is married to
Ruth M. Buckley. He is also the brother-in-law of Dorothy M. Cuenod and Julie
M. Greene.
MICHAEL F. SHEPARD, age 51, joined MOC in 1986 and serves as Secretary
and General Counsel of MD. He has practiced law exclusively in the oil and gas
industry since 1979 and formerly was counsel with Parker Drilling Company and
its Perry Gas subsidiary for seven years. Mr. Shepard holds the Juris Doctor
degree from the University of Tulsa where he received the National Energy Law
and Policy Institute award as the outstanding graduate in the Energy Law
curriculum. He received the B.A. degree, magna cum laude, from the University
of Massachusetts in 1976. Mr. Shepard is a member of the bar in Texas and
Oklahoma.
DOROTHY MEWBOURNE CUENOD, age 37, received a B.A. Degree in Art
History from The University of Texas and a Masters of Business Administration
Degree from Southern Methodist University. Since 1984 she has served as a
Director and Assistant Secretary of both MD and MOC. Ms. Cuenod is the
daughter of Curtis W. Mewbourne and is the sister of Ruth M. Buckley and Julie
M. Greene. She is also the sister-in-law of J. Roe Buckley.
RUTH MEWBOURNE BUCKLEY, age 36, received a Bachelor of Science Degrees
in both Engineering and Geology from Vanderbilt University. Since 1987 she has
served as a Director and Assistant Secretary of both MD and MOC. Ms. Buckley
is the daughter of Curtis W. Mewbourne and is the sister of Dorothy M. Cuenod
and Julie M. Greene. She is also the wife of J. Roe Buckley.
JULIE MEWBOURNE GREENE, age 34, received a B.A. in Business
Administration from the University of Oklahoma. Since 1988 she has served as a
Director and Assistant Secretary of both MD and MOC. Prior to that time she
was employed by Rauscher, Pierce, Refsnes, Inc. Ms. Greene is the daughter of
Curtis W. Mewbourne and is the sister of Dorothy M. Cuenod and Ruth M.
Buckley. She is also the sister-in-law of J. Roe Buckley.
<PAGE> 10
ITEM 11. EXECUTIVE COMPENSATION
The Registrant does not have any directors or officers. Management of the
Registrant is vested in the managing general partner. None of the officers or
directors of MD or MOC will receive remuneration directly from the Registrant,
but will continue to be compensated by their present employers. The Registrant
will reimburse MD and MOC and affiliates thereof for certain costs of overhead
falling within the definition of Administrative Costs, including without
limitation, salaries of the officers and employees of MD and MOC; provided that
no portion of the salaries of the directors or of the executive officer of MOC
or MD may be reimbursed as Administrative Costs.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Beneficial owners of more than five percent
<TABLE>
<CAPTION>
Name of Amount & Nature Percent
Beneficial of Beneficial of
Title of Class Owner Owner Class
- --------------- ---------- --------------- --------
<S> <C> <C> <C>
Limited and Donald J. Dorr 160 General 5.04%
General Unit #601 Partnership
Partnership 15011 Punta Rassa Dr. Interests
Interests Fort Myers, FL 33908
</TABLE>
The owner listed above is an unaffiliated investor with full voting rights.
(b) Security ownership of management
The Registrant does not have any officers or directors. The managing general
partner of the Registrant, MD, has the exclusive right and full authority to
manage, control and administer the Registrant's business. Under the
Registrant's Partnership Agreement, limited and general partners holding a
majority of the outstanding limited and general partnership interests have the
right to take certain actions, including the removal of the managing general
partner. The Registrant is not aware of any current arrangement or activity
which may lead to such removal.
<PAGE> 11
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with MD and its affiliates
Pursuant to the Registrant's Partnership Agreement, the Registrant had the
following related party transactions with MD and its affiliates during the
period February 17, 1997 (date of inception) through December 31, 1997:
Payment of well charges
and supervision charges in
accordance with standard
industry operating agreements $ 21,378
In 1997, the Registrant was charged by MD for reimbursement of organization
cost of equal to 1% of initial partnership contributions.
Under the Registrant's Partnership Agreement, MD pays 1% of Registrant's
acquisition, drilling and completion costs and 1% of its operating and general
and administrative expenses. In return, it is allocated 1% of the Registrant's
revenues.
The Registrant participates in oil and gas activities through a drilling
program created by the Drilling Program Agreement (the "Program"). Pursuant to
the Program, MD pays approximately 2% of the Program's acquisition, drilling
and completion costs and approximately 12% of its operating and general and
administrative expenses. The Registrant pays the remainder of the costs and
expenses of the Program. In return, MD is allocated approximately 12% of the
Program's revenues.
<PAGE> 12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial statements
The following are filed as part of this annual report:
Report of Independent Accountants
Balance sheet as of December 31, 1997
Statement of loss for the period from February 17,
1997 (date of inception) through December 31, 1997
Statement of changes in partners' capital for the
period from February 17, 1997 (date of inception)
through December 31, 1997
Statement of cash flows for the period from February
17, 1997 (date of inception) through December 31,
1997
Notes to financial statements
2. Financial statement schedules
None.
All required information is in the financial statements
or the notes thereto, or is not applicable or required.
3. Exhibits
The exhibits listed on the accompanying index are
filed or incorporated by reference as part of this annual
report.
(b) Reports on Form 8-K
None.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
By: Mewbourne Development Corporation
Managing General Partner
By: /s/ Curtis W. Mewbourne
------------------------------------
Curtis W. Mewbourne
President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
/s/ Curtis W. Mewbourne President/Director March 20, 1998
- ---------------------------
Curtis W. Mewbourne
/s/ J. Roe Buckley Treasurer/Chief March 20, 1998
- --------------------------- Financial Officer
J. Roe Buckley
/s/ Dorothy M. Cuenod Director March 20, 1998
- ---------------------------
Dorothy M. Cuenod
/s/ Ruth M. Buckley Director March 20, 1998
- ---------------------------
Ruth M. Buckley
/s/ Julie M. Greene Director March 20, 1998
- ---------------------------
Julie M. Greene
</TABLE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT
TO SECTION 12 OF THE ACT
No annual report or proxy material has been sent to the Registrants security
holders.
<PAGE> 14
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE PERIOD FROM FEBRUARY 17, 1997
(DATE OF INCEPTION)
THROUGH DECEMBER 31, 1997
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Mewbourne Development Corporation:
We have audited the accompanying balance sheet of Mewbourne Energy Partners
97-A, L.P. as of December 31, 1997, and the related statements of loss, changes
in partners' capital and cash flows for the period from February 17, 1997 (date
of inception) through December 31, 1997. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the financial position of Mewbourne Energy Partners
97-A, L.P. as of December 31, 1997, and the results of its operations and its
cash flows for the period from February 17, 1997 (date of inception) through
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Dallas, Texas
March 9, 1998
<PAGE> 16
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
Cash $ 1,320,813
------------
Oil and gas properties at cost --full cost method 1,853,234
------------
Organization costs, net 30,363
------------
Total Assets $ 3,204,410
------------
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable, affiliate $ 8,091
------------
Notes payable, affiliate 298,395
------------
Partners' capital:
Limited and general partners 2,868,945
Managing general partner 28,979
------------
Total partners' capital 2,897,924
------------
Total liabilities and partners' capital $ 3,204,410
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 17
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
STATEMENT OF LOSS
FOR THE PERIOD FROM FEBRUARY 17, 1997 (DATE
OF INCEPTION) THROUGH DECEMBER 31, 1997
<TABLE>
<S> <C>
Revenues: $ 0
Expenses:
Administrative and general expenses 2,500
Interest expense 4,271
Amortization expense 1,047
---------
7,818
---------
Net loss $ (7,818)
---------
Allocation of net loss:
Managing general partner $ (78)
---------
Limited and general partners $ (7,740)
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 18
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD FROM FEBRUARY 17, 1997 (DATE
OF INCEPTION) THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
Limited
and Managing
General General
Partners Partner Total
-------- -------- -----
<S> <C> <C> <C>
Partners' capital, beginning of period $ -- $ -- $ --
Capital contributions 3,141,000 31,727 3,172,727
Offering costs (264,315) (2,670) (266,985)
Net loss (7,740) (78) (7,818)
---------- ---------- ----------
Partners' capital, end of period $2,868,945 $ 28,979 $2,897,924
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 19
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 17, 1997 (DATE
OF INCEPTION) THROUGH DECEMBER 31, 1997
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ ( 7,818)
Adjustment to reconcile net loss to net cash used in operating activities:
Amortization expense 1,047
Changes in operating assets and liabilities:
Increase in organization costs (31,410)
Increase in accounts payable, affiliate 8,091
---------------
Net cash used in operating activities (30,090)
---------------
Cash flows from investing activities:
Purchase of oil and gas properties (1,853,234)
---------------
Net cash used in investing activities (1,853,234)
---------------
Cash flows from financing activities:
Capital contributions from partners 3,172,727
Proceeds from issuance of note payable, affiliate 298,395
Offering costs (266,985)
---------------
Net cash provided by financing activities 3,204,137
---------------
Cash at end of period $ 1,320,813
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 20
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
ACCOUNTING FOR OIL AND GAS PRODUCING ACTIVITIES
Mewbourne Energy Partners 97-A, L.P., (the partnership), a
Delaware limited partnership engaged primarily in oil and gas
development and production in Texas, Oklahoma and New Mexico, was
organized on February 17, 1997. The offering of limited and general
partnership interests began June 12, 1997 as a part of an offering
registered under the name Mewbourne Energy 97 Drilling Program and
concluded November 7, 1997, with total investor contributions of
$3,141,000.
The partnership follows the full-cost method of accounting for
its oil and gas activities. Under the full-cost method, all
productive and nonproductive costs incurred in the acquisition,
exploration and development of oil and gas properties are capitalized.
Depreciation, depletion and amortization of oil and gas properties
subject to amortization is computed on the units-of-production method
based on the proved reserves underlying the oil and gas properties.
At December 31, 1997, no capitalized costs were subject to
amortization. Gains and losses on the sale or other disposition of
properties are not recognized unless such adjustments would
significantly alter the relationship between capitalized costs and the
proved oil and gas reserves. Capitalized costs are subject to an
annual ceiling test that limits such costs to the aggregate of the
present value of future net cash flows of proved reserves and the
lower of cost or fair value of unproved properties.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
ORGANIZATION COSTS
Organization costs are capitalized and amortized on the
straight-line method over 60 months.
CASH
The partnership maintains all its cash in one financial
institution.
<PAGE> 21
INCOME TAXES
The partnership is treated as a partnership for income tax
purposes, and as a result, income of the partnership is reported on
the tax returns of the partners and no recognition is given to income
taxes in the financial statements.
2. ORGANIZATION AND RELATED PARTY TRANSACTIONS:
The partnership's operations commenced on February 17, 1997.
Mewbourne Development Corporation (MD) is managing general partner and
Mewbourne Oil Company (MOC) is operator of oil and gas properties
owned by the partnership. Substantially all transactions are with MD
and MOC.
MD pays 1% of all costs of the partnership and receives 1% of
all revenue. The limited and general partners pay all other costs and
receive all other revenue.
Reimbursement to MOC for supervision and other operating
charges totaled $21,378 for the period February 17, 1997 (date of
inception) through December 31, 1997, respectively. Services and
operator charges are billed in accordance with the program and
partnership agreements.
MD, on behalf of the partnership, incurred organization and
offering costs of $31,410 and $266,985, respectively. As of December
31, 1997 these amounts had been reimbursed to MD with proceeds of
$298,395 from a note payable to Mewbourne Financial Corporation (MFC),
an affiliate of MD. The note payable bears interest at NationsBank
prime plus 1% and is payable in twenty equal quarterly installments of
principal and interest commencing February 7, 1998. The carrying
value of the note payable approximates its fair value at December 31,
1997. As the note agreement prohibits the use of individual partners'
contributions for principal and interest payments, no payments had
been made as of March 9, 1998. The partnership has incurred no
penalties as a result and can make payments at any time when there are
sufficient distributable earnings from operations.
In addition, MD can charge the partnership up to 5.5% of
initial partners' capital in management fees. In accordance with the
partnership agreement, management fees can only be reimbursed to MD
with funds which would otherwise be available for distribution. There
had been no reimbursements for management fees as of December 31,
1997.
In general, during any particular calendar year the total
amount of administrative expenses allocated to the partnership shall
not exceed the greater of (a) 3.5% of the partnership's gross revenue
from the sale of oil and natural gas production during each year
(calculated without any deduction for operating costs or other costs
and expenses) or (b) the sum of $50,000 plus .25% of the capital
contributions of limited and general partners.
<PAGE> 22
The partnership participates in oil and gas activities through
an income tax partnership (the Program). The partnership and MD are
parties to the Program agreement. The costs and revenues of the
Program are allocated to MD and the partnership as follows:
<TABLE>
<CAPTION>
MD(1) Partnership
----------------- -----------------
Revenues:
<S> <C> <C>
Proceeds from disposition of depreciable and
depletable properties 12.121213% 87.878787%
All other revenues 12.121213% 87.878787%
Costs and expenses:
Lease acquisition costs and drilling and
completion costs 2.020202% 97.979798%
Operating costs, reporting and legal
expenses, general and administrative
expenses and all other costs 12.121213% 87.878787%
</TABLE>
(1) Excludes MD's one percent (1%) general partner ownership which is
allocated at the partnership level.
The partnership's financial statements reflect its respective proportionate
interest in the Program.
<PAGE> 23
3. RECONCILIATION OF NET LOSS PER STATEMENT OF LOSS WITH NET LOSS PER
FEDERAL INCOME TAX RETURN:
The following is a reconciliation of net loss per statement of
loss with the net loss per federal income tax return for the period
from February 17, 1997 (date of inception) through December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Net loss per statement of loss $ ( 7,818)
Intangible development costs capitalized for financial reporting
purposes and expensed for tax reporting purposes (1,270,374)
Net loss per federal income tax return before tentative tax
depletion $ (1,278,192)
-------------
The partnership's financial reporting bases of its net assets
exceeded the tax bases of its net assets by $1,270,374 at December 31,
1997.
</TABLE>
4. PRELIMINARY OIL AND GAS INFORMATION (UNAUDITED):
A majority of the wells drilled, or to be drilled, by the
partnership have been, or will be, completed subsequent to December
31, 1997. Sufficient information is not yet available from well tests
or from initial production to accurately present numerical unaudited
reserve information.
<PAGE> 24
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
INDEX TO EXHIBITS
The following documents are incorporated by reference in response to Item
14(a)3.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Form of Certificate of Limited Partnership
(filed as Exhibit 3.1 to Registration Statement on Form S-1,
File No. 333-22829 and incorporate herein by reference)
3.2 Form of Certificate of Amendment of the
Certificate of Limited Partnership (filed as Exhibit 3.2 to
Registration Statement on Form S-1, File No.333-22829 and
incorporated herein by reference)
4.1 Form of Agreement of Partnership
(filed as Exhibit 4.1 to Registration Statement on Form S-1,
File No.333-22829 and incorporated herein by reference)
4.1.2 Amendment to Agreement of
Partnership (filed herewith)
10.1 Form of Drilling Program Agreement
(filed as Exhibit 10.1 to Registration Statement on Form S-1,
File No.333-22829 and incorporated herein by reference)
10.5 Form of Operating Agreement
(filed as Exhibit 10.1 to Registration Statement on Form S-1,
File No.333-22829 and incorporated herein by reference)
27 Financial Data Schedule
</TABLE>
<PAGE> 1
CERTIFICATE OF SECOND AMENDMENT
TO
CERTIFICATE OF LIMITED PARTNERSHIP
OF
MEWBOURNE ENERGY PARTNERS 97-A, L.P.
The Certificate of Second Amendment to Certificate of Limited
Partnership of MEWBOURNE ENERGY PARTNERS 97-A, L.P. (the "Partnership") is
being executed and filed by the undersigned general partners under the Delaware
Revised Uniform Limited Partnership Act.
ARTICLE ONE
In order to reflect the assignment and withdrawal by certain general
partners of their General Partner Interest in the Partnership and the
substitution of their respective transferees as a substituted General Partner
in the Partnership, Exhibit A to the Certificate of Limited Partnership of
the Partnership, as previously amended by that certain Certificate of
Amendment to Certificate of Limited Partnership dated November 7, 1997, is
hereby deleted and such Exhibit A is hereby restated as set forth in Exhibit
A hereto.
ARTICLE TWO
Article Four of the Certificate of Limited Partnership of the Partnership is
hereby amended in its entirety to read as follows:
The name and business address of the managing general partner of the
Partnership is Mewbourne Development Corporation, 3901 S. Broadway, Tyler,
Texas 75701. The names of the investor general partners admitted to the
Partnership are set forth on Exhibit A hereto. The business address of the
investor general partners is 3901 S. Broadway, Tyler, Texas 75701.
IN WITNESS WHEREOF, the undersigned, the Managing Partner by and
through a duly authorized officer thereof acting for itself and as
attorney-in-fact for each of the General Partners set forth on Exhibit A has
executed this Certificate of Amendment to Certificate of Limited Partnership on
this 23rd day of December, 1997.
MEWBOURNE DEVELOPMENT CORPORATION,
acting for itself and as attorney-in-fact for each of
the General Partners as set forth on Exhibit A
By: /s/ J. Roe Buckley
---------------------------------------------------
J. Roe Buckley, Treasurer
<PAGE> 2
EXHIBIT A
GENERAL PARTNER INTEREST
MEWBOURNE ENERGY PARTNERS 97-A
Billy J. & Val Joyce Adams
John R. Amrien, M.D.
Howard L. Baker Jr. Trust
Albert D. Ballance
Dale W. & Lillian R. Beebee
L. Walter, Jr. & Joan B. Benjamin
Doris M. Bishop
Herman & Anne K. Blackman
Blackman Family Trust
James E. & Virginia M. Blackman, Trustees
Frederick W. Bode
Thomas C. Bode
Michael F. & Mary Ann Bond
Mark J. Bowman
William L. & Nancy H. Brach
Ivor E. & Delores Bridge
Anne J. Britt
Brook Family Trust
Arthur H. & Mary P. Brook, Trustees
Eric B. & Ann G. Brown
Esther L. Bucher
Greg & Molly Bunton
J. Millard & Diane Burr
Esther Calcaterra Trust
Esther Calcaterra, Trustee
<PAGE> 3
Carroll E. Caldwell Trust
Carroll E. Caldwell, Trustee
Mary M. Caldwell Trust
Mary M. Caldwell, Trustee
John E. Cameron, Jr.
L. Robert Castorr
Miriam M. Chang & Arthur W. Donoho
Philip W. Chao
Marcella H. Cleary Trust
Marcella H. Cleary, Trustee
John T. & Mary J. Coffey
Donald W. Cohen
Linda S. Cohen
Conrad Family Trust
William D. & Eloise D. Conrad, Trustees
Clare Crawford-Mason
R. Russell Darby
Greg D. Davis
Del-Kijaico, Inc.
Anthony J. & Rosina Disalvo
Carlo J. Disalvo Trust
Carlo J. Disalvo, Trustee
Timothy R. & Nancy L. Dorlac
Donald J. Dorr
Mary Lou Doyle
The Engle Trust
Charles V. & Marjorie C. Engle, Trustees
Sigo Falk
Louis E. Fettig Rev. Trust
Louis E. Fettig, Trustee
Dr. George Figacz Trust
Dr. George Figacz, Trustee
<PAGE> 4
Robert S. Fishman Trust
Richard C. Freedman & Michele Fishman, Trustees
Mary M. Flauaus Rev. Living Trust
Mary M. Wurtz, Trustee
Francus Family Ltd. Partnership
Cyril Francus General Partner
Norman G. Frank
Stephen J. Fukayama
Edward Gilbert
Dorothy I. Goggio Trust
Dorothy I. Goggio, Trustee
Leonard & Margaret Goggio
Lawrence S. & Jolande E. Goldberg
Vivian F. Goode
Anne R. Gregg Rev. Trust
Anne R. Gregg, Trustee
Walter E. Gregg Rev. Trust
Walter E. Gregg, Trustee
Alice Griffey Rev. Living Trust
Alice Griffey, Trustee
David L. & Diane M. Grubbs
Joan M. Gruebner Trust
Herman W. Gruebner, Trustee
George E. & Judy Guttschalk
Farzana S. Habib
Don E. & Gloria F. Hamrick
Timothy A. Harrison Revocable Trust
Timothy A. Harrison, Trustee
Donald G. Heth Revocable Trust
Donald G. Heth, Trustee
Elaine M. & Phillip Heverin
Floyd & Alice Ho
<PAGE> 5
Larue A. & Amy M. Hoffman Family Trust
Amy M. Hoffman, Trustee
Holbrook Family Trust
Joseph C. & Martha S. Holbrook, Trustees
Rett & Jeanne Humke
Larry S. & Beverly Humphries
Barbara G. Johnson
Larry A. Jones
Jodi P. & Jessica L. Kane
David K. Kennedy
Kevin P. Kertz
Rose Mary Kinder Rev. Living Trust
William L. Kraus III
Dennis L. Krause
Richard D. Lind Trust
Richard D. Lind, Trustee
Edward G. Lippitt
Albert L., Jr. & Barbara A. Lock
Susan M. Longust Trust
Rose Lorie Trust
Richard A. Bishop, Trustee
Robert B. & Susan G. McKimens
C. Robert Meloni
John G. Mergner, Sr.
Ralph W. Minard Trust
Ralph W. Minard, Trustee
Nancy Thompson Minnich
Lois A. Minto Rev. Living Trust
Lois A. Minto, Trustee
C. W. Moore
Robert E. Mortensen
<PAGE> 6
Mothershead Family Trust
Theodore & Beaty Mothershead, Trustees
John C. & Mildred Estes New
Robert E. O'Neill
Linda J. Ochenrider
Loretta A. Perry
Danial L. & Robbie L. Rose-Poel
Patricia H. Polinsky
Charles H. Powers
Katherine Rallo Trust
Katherine Rallo, Trustee
Rita A. Relyea
The Richards Family Trust
Jeanette A. Richards, Trustee
David P. Robinson
Marilyn D. Rodell Trust
Marilyn D. Rodell, Trustee
Fred L. Romantine
Lance D. & Carmen E. Samuelson
Thomas P. & Rachel M. Schneider
Judy L. Schreiber & Loren R. Mosher
David R. & Jan Schroeder
James Burton Shaw
Tina R. Sigman Trust
John T. Skehan
James C. Smith, Jr. Trust
James C. Smith, Jr., Trustee
R. Curtis, Jr. & Anne V. Steele
Ronald W. & Mary Jane Steele
Carol H. Straus
Mary A. Suchan Rev. Living Trust
<PAGE> 7
Gladyce Sumida
Jesse L. & Charlene A. Szwargulski Trust
Jesse L. & Charlene A. Szwargulski, Trustees
George S. & Susan D. Templeton
Thompson Revocable Living Trust
Cary J. & Linda L. Thompson, Trustees
The Thompson Family Trust
Virgil R. Thompson, Trustee
Gary R. Todd
Thomas M. & Barbara A. Tuggle
Ka Khy Tze
Barbara Waldman
Wamhoff Revocable Trust
Robert E. & Diane F. Wamhoff, Trustees
Weiland Family Trust
Barbara Waldman, Trustee
Gary S. & Patricia J. Wilson
Dennis P. Yarnell
Maria A. Zettler Trust
Maria A. Zettler, Trustee
<PAGE> 8
EXHIBIT B
LIMITED PARTNER INTEREST
MEWBOURNE ENERGY PARTNERS 97-A
Elizabeth C. O. Bellaver
William F. Ferguson, Jr.
Helen F. Grim
John E. Gusto Trust
John E. Gusto, Trustee
C. Russell & Anita D. Johnson
Johnson Loving Trust
Susan G. Johnson, Trustee
Thomas Michael & Anne L. Knasel
Wilfred Mendez
Charles W. Rannells, III
Marian M. Reagan
Josephine L. Smith
Josephine L. Smith Trust B
Josephine L. Smith, Trustee
Russell F. & Laurie A. Warren
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> FEB-17-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,320,813
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,320,813
<PP&E> 1,883,597
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,204,410
<CURRENT-LIABILITIES> 306,486
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,897,924
<TOTAL-LIABILITY-AND-EQUITY> 3,204,410
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,547
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,271
<INCOME-PRETAX> (7,818)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,818)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,818)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
