11 of 1
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, 1999
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 0-15411
Southwest Royalties, Inc. Income Fund VI
(Exact name of registrant as specified
in its limited partnership agreement)
Tennessee 75-2127812
(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 17.
<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, 1998 which are found in the Registrant's Form
10-K Report for 1998 filed with the Securities and Exchange Commission.
The December 31, 1998 balance sheet included herein has been taken from the
Registrant's 1998 Form 10-K Report. Operating results for the three and
six month periods ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the full year.
<PAGE>
Southwest Royalties, Inc. Income Fund VI
Balance Sheets
June 30, December 31,
1999 1998
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 115,680 38,539
Receivable from Managing General Partner 174,445 110,000
--------- ---------
Total current assets 290,125 148,539
--------- ---------
Oil and gas properties - using the
full cost method of accounting 8,426,672 8,426,634
Less accumulated depreciation,
depletion and amortization 6,509,000 6,423,000
--------- ---------
Net oil and gas properties 1,917,672 2,003,634
--------- ---------
$ 2,207,797 2,152,173
========= =========
Liabilities and Partners' Equity
Current liability - Distributions payable $ 1,126 301
--------- ---------
Partners' equity:
General partners (633,902) (639,382)
Limited partners 2,840,573 2,791,254
--------- ---------
Total partners' equity 2,206,671 2,151,872
--------- ---------
$ 2,207,797 2,152,173
========= =========
<PAGE>
Southwest Royalties, Inc. Income Fund VI
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenues
Income from net profits
interests $ 257,027 55,995 367,946 228,664
Interest 1,072 1,318 1,783 2,709
------- ------- ------- -------
258,099 57,313 369,729 231,373
------- ------- ------- -------
Expenses
General and administrative 39,386 38,960 78,931 88,503
Depreciation, depletion and
amortization 42,000 44,000 86,000 105,000
------- ------- ------- -------
81,386 82,960 164,931 193,503
------- ------- ------- -------
Net income (loss) $ 176,713 (25,647) 204,798 37,870
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 15,904 (2,308) 18,432 3,408
======= ======= ======= =======
General Partner $ 1,767 (256) 2,048 380
======= ======= ======= =======
Limited Partners $ 159,042 (23,083) 184,318 34,082
======= ======= ======= =======
Per limited partner unit $ 7.95 (1.15) 9.22 1.70
======= ======= ======= =======
<PAGE>
Southwest Royalties, Inc. Income Fund VI
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1999 1998
Cash flows from operating activities:
Cash received from income from net
profits interests $ 272,926 317,273
Cash paid to suppliers (48,356) (53,074)
Interest received 1,783 2,709
-------- --------
Net cash provided by operating activities 226,353 266,908
-------- --------
Cash flows provided by investing activities:
Cash received from sale of oil and gas
property interest - 41,564
Additions to oil and gas properties (38) -
-------- --------
Net cash (used in) provided by investing activities (38) 41,564
-------- --------
Cash flows used in financing activities:
Distributions to partners (149,174) (296,925)
-------- --------
Net increase in cash and cash equivalents 77,141 11,547
Beginning of period 38,539 40,719
-------- --------
End of period $ 115,680 52,266
======== ========
(continued)
<PAGE>
Southwest Royalties, Inc. Income Fund VI
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1999 1998
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 204,798 37,870
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 86,000 105,000
Decrease (increase) in receivables (95,020) 88,609
Increase in payables 30,575 35,429
------- -------
Net cash provided by operating activities $ 226,353 266,908
======= =======
<PAGE>
Southwest Royalties, Inc. Income Fund VI
(a Tennessee limited partnership)
Notes to Financial Statements
1. Organization
Southwest Royalties, Inc. Income Fund VI was organized under the
laws of the state of Tennessee on December 4, 1986, 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 sells 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. Revenues, costs and expenses are allocated
as follows:
Limited General
Partners Partners
-------- --------
Interest income on capital contributions 100% -
Oil and gas sales 90% 10%
All other revenues 90% 10%
Organization and offering costs (1) 100% -
Amortization of organization costs 100% -
Property acquisition costs 100% -
Gain/loss on property disposition 90% 10%
Operating and administrative costs (2) 90% 10%
Depreciation, depletion and amortization
of oil and gas properties 90% 10%
All other costs 90% 10%
(1)All organization costs in excess of 3% of initial capital
contributions will be paid by the Managing General Partner and
will be treated as a capital contribution. The Partnership paid
the Managing General Partner an amount equal to 3% of initial
capital contributions for such organization costs.
(2)Administrative costs in any year which exceed 2% of capital
contributions shall be paid by the Managing General Partner and
will be treated as a capital contribution.
2. Summary of Significant Accounting Policies
The interim financial information as of June 30, 1999, and for the
three and six months ended June 30, 1999, 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, 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties, Inc. Income Fund VI was organized as a Tennessee
limited partnership on December 4, 1986. The offering of such limited
partnership interests began August 25, 1986, minimum capital requirements
were met October 3, 1986 and concluded January 29, 1987, with total limited
partner contributions of $10,000,000.
The Partnership was formed to acquire royalty and net profits interests in
producing oil and gas properties, to produce and market crude oil and
natural gas produced from such properties, and to distribute the net
proceeds from operations to the limited and general partners. Net revenues
from producing oil and gas properties will not be reinvested in other
revenue producing assets except to the extent that production facilities
and wells are improved or reworked or where methods are employed to improve
or enable more efficient recovery of oil and gas reserves.
Increases or decreases in Partnership revenues and, therefore,
distributions to partners will depend primarily on changes in the prices
received for production, changes in volumes of production sold, lease
operating expenses, enhanced recovery projects, offset drilling activities
pursuant to farm-out arrangements, sales of properties, and the depletion
of wells. Since wells deplete over time, production can generally be
expected to decline from year to year.
Well operating costs and general and administrative costs usually decrease
with production declines; however, these costs may not decrease
proportionately. Net income available for distribution to the partners is
therefore expected to fluctuate in later years based on these factors.
Based on current conditions, management anticipates performing necessary
workovers during the next few years to enhance production. The Partnership
has the opportunity for potential increases with little decline.
Thereafter, the Partnership could possibly experience a normal decline.
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. As of June 30, 1999, the net capitalized costs did not
exceed the estimated present value of oil and gas reserves. The oil price
environment experienced during 1998 had an adverse affect on the Company's
revenues and operating cash flow. Further declines of oil prices during
1999 could result in additional decreases in the carrying value of the
Company's oil and gas properties.
<PAGE>
Results of Operations
A. General Comparison of the Quarters Ended June 30, 1999 and 1998
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1999 and 1998:
Three Months
Ended Percentage
June 30, Increase
1999 1998 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 15.85 13.69 16%
Average price per mcf of gas $ 2.01 1.56 29%
Oil production in barrels 14,000 8,650 62%
Gas production in mcf 119,180 107,700 11%
Income from net profits interests $ 257,027 55,995 359%
Partnership distributions $ 150,000 92,000 63%
Limited partner distributions $ 135,000 82,800 63%
Per unit distribution to limited
partners $ 6.75 4.14 63%
Number of limited partner units 20,000 20,000
Revenues
The Partnership's income from net profits interests increased to $257,027
from $55,995 for the quarters ended June 30, 1999 and 1998, respectively,
an increase of 359%. The principal factors affecting the comparison of the
quarters ended June 30, 1999 and 1998 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended June 30, 1999 as compared to the
quarter ended June 30, 1998 by 16%, or $2.16 per barrel, resulting in
an increase of approximately $18,700 in income from net profits
interests. Oil sales represented 48% of total oil and gas sales during
the quarter ended June 30, 1999 as compared to 41% during the quarter
ended June 30, 1998.
The average price for an mcf of gas received by the Partnership
increased during the same period by 29%, or $.45 per mcf, resulting in
an increase of approximately $48,500 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
$67,200. 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.
<PAGE>
2. Oil production increased approximately 5,300 barrels or 62% during the
quarter ended June 30, 1999 as compared to the quarter ended June 30,
1998, resulting in an increase of approximately $84,800 in income from
net profits interests.
Gas production increased approximately 11,500 mcf or 11% during the
same period, resulting in an increase of approximately $23,100 in
income from net profits interests.
The total increase in income from net profits interests due to the
change in production is approximately $107,900. The increase in oil
production is primarily due to a successful workover.
3. Lease operating costs and production taxes were 11% lower, or
approximately $26,000 less during the quarter ended June 30, 1999 as
compared to the quarter ended June 30, 1998.
Costs and Expenses
Total costs and expenses decreased to $81,386 from $82,960 for the quarters
ended June 30, 1999 and 1998, respectively, a decrease of 2%. The decrease
is the result of lower depletion expense, partially 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 1%
or approximately $400 during the quarter ended June 30, 1999 as
compared to the quarter ended June 30, 1998.
2. Depletion expense decreased to $42,000 for the quarter ended June 30,
1999 from $44,000 for the same period in 1998. This represents a
decrease of 5%. 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.
<PAGE>
B. General Comparison of the Six Month Periods Ended June 30, 1999 and
1998
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1999 and 1998:
Six Months
Ended Percentage
June 30, Increase
1999 1998 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 13.75 13.12 5%
Average price per mcf of gas $ 1.83 2.00 (9%)
Oil production in barrels 25,000 21,300 17%
Gas production in mcf 219,800 230,200 (5%)
Income from net profits interests $ 367,946 228,664 61%
Partnership distributions $ 150,000 297,153 50%
Limited partner distributions $ 135,000 269,453 50%
Per unit distribution to limited
partners $ 6.75 13.47 50%
Number of limited partner units 20,000 20,000
Revenues
The Partnership's income from net profits interests increased to $367,946
from $228,664 for the six months ended June 30, 1999 and 1998,
respectively, an increase of 61%. The principal factors affecting the
comparison of the six months ended June 30, 1999 and 1998 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1999 as compared to the
six months ended June 30, 1998 by 5%, or $.63 per barrel, resulting in
an increase of approximately $13,400 in income from net profits
interests. Oil sales represented 46% of total oil and gas sales during
the six months ended June 30, 1999 as compared to 38% during the six
months ended June 30, 1998.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 9%, or $.17 per mcf, resulting in a
decrease of approximately $39,100 in income from net profits interests.
The net total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$25,700. 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 increased approximately 3,700 barrels or 17% during the
six months ended June 30, 1999 as compared to the six months ended June
30, 1998, resulting in an increase of approximately $50,900 in income
from net profits interests.
Gas production decreased approximately 10,400 mcf or 5% during the same
period, resulting in a decrease of approximately $19,000 in income from
net profits interests.
The net total increase in income from net profits interests due to the
change in production is approximately $31,900. The increase in oil
production is primarily due to a successful workover.
3. Lease operating costs and production taxes were 26% lower, or
approximately $133,100 less during the six months ended June 30, 1999
as compared to the six months ended June 30, 1998. The decline in
lease operating costs is primarily in relation to the drop in oil
prices experienced throughout 1998 and into the first six months of
1999, which made it uneconomical to perform workovers necessary to
increase production and perform major repairs thus making it necessary
to shut-in some wells.
Costs and Expenses
Total costs and expenses decreased to $164,931 from $193,503 for the six
months ended June 30, 1999 and 1998, respectively, a decrease of 15%. The
decrease is the result of lower general and administrative expense and
depletion expense.
1. General and administrative costs consists of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased
11% or approximately $9,600 during the six months ended June 30, 1999
as compared to the six months ended June 30, 1998.
2. Depletion expense decreased to $86,000 for the six months ended June
30, 1999 from $105,000 for the same period in 1998. This represents a
decrease of 18%. 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 increase in the price of oil and gas used to determine
the Partnership's reserves for April 1, 1999 as compared to 1998 and
the decrease in gross 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 $226,400 in
the six months ended June 30, 1999 as compared to approximately 266,900 in
the six months ended June 30, 1998. The primary source of the 1999 cash
flow from operating activities was profitable operations.
Cash flows provided by (used in) investing activities were $(38) in the six
months ended June 30, 1999 as compared to approximately $41,600 in the six
months ended June 30, 1998. The principle use of the 1999 cash flow from
investing activities was the additions of oil and gas properties.
Cash flows used in financing activities were approximately $149,200 in the
six months ended June 30, 1999 as compared to approximately $296,900 in the
six months ended June 30, 1998. The only use in financing activities was
the distributions to partners.
Total distributions during the six months ended June 30, 1999 were $150,000
of which $135,000 was distributed to the limited partners and $15,000 to
the general partners. The per unit distribution to limited partners during
the six months ended June 30, 1999 was $6.75. Total distributions during
the six months ended June 30, 1998 were $297,153 of which $269,453 was
distributed to the limited partners and $27,700 to the general partners.
The per unit distribution to limited partners during the six months ended
June 30, 1998 was $13.47.
The sources for the 1999 distributions of $150,000 were oil and gas
operations of approximately $226,400 and the change of oil and gas
properties $(38), resulting in excess cash for contingencies or subsequent
distributions. The sources for the 1998 distributions of $297,153 were oil
and gas operations of approximately $266,900 and property sales of
approximately $41,600, resulting in excess cash for contingencies or
subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $14,826,459 have been made to the partners. As of June 30, 1999,
$13,359,282 or $667.96 per limited partner unit has been distributed to the
limited partners, representing a 134% return of the capital contributed.
As of June 30, 1999, the Partnership had approximately $289,000 in working
capital. The Managing General Partner knows of no unusual contractual
commitments and believes the revenues generated from operations are
adequate to meet the needs of the Partnership.
<PAGE>
Liquidity - Managing General Partner
The Managing General Partner has a highly leveraged capital structure with
over $21.0 million of interest payments due in 1999 on its debt
obligations. Due to severely depressed commodity prices, the Managing
General Partner is experiencing difficulty in generating sufficient cash
flow to meet its obligations and sustain its operations. The Managing
General Partner is currently in the process of renegotiating the terms of
its various obligations with its creditors and/or attempting to seek new
lenders or equity investors. Additionally, the Managing General Partner
would consider disposing of certain assets in order to meet its
obligations.
There can be no assurance that the Managing General Partner's debt
restructuring efforts will be successful or that the lenders will agree to
a course of action consistent with the Managing General Partners
requirements in restructuring the obligations. Even if such agreement is
reached, it may require approval of additional lenders, which is not
assured. Furthermore, there can be no assurance that the sales of assets
can be successfully accomplished on terms acceptable to the Managing
General Partner. Under current circumstances, the Managing General
Partner's ability to continue as a going concern depends upon its ability
to (1) successfully restructure its obligations or obtain additional
financing as may be required, (2) maintain compliance with all debt
covenants, (3) generate sufficient cash flow to meet its obligations on a
timely basis, and (4) achieve satisfactory levels of future earnings. If
the Managing General Partner is unsuccessful in its efforts, it may be
unable to meet its obligations making it necessary to undertake such other
actions as may be appropriate to preserve asset values.
Information Systems for the Year 2000
The Managing General Partner provides all data processing needs of the
Partnership. The Managing General Partner is continuing in its effort to
identify and assess its exposure to the potential Year 2000 software and
imbedded chip processing and date sensitivity issue. Through the Managing
General Partners data processing subsidiary, Midland Southwest Software,
Inc., the Managing General Partner proactively initiated a plan to identify
applicable hardware and software, assess impact and effect, estimate costs,
construct and implement corrective actions, and prepare contingency plans.
Identification & Assessment
The Managing General Partner currently believes it has identified the
internal and external software and hardware that may have date sensitivity
problems. Four critical systems and/or functions were identified: (1) the
proprietary software of the Partnership (OGAS) that is used for oil & gas
property management and financial accounting functions, (2) the DEC VAX/VMS
hardware and operating system, (3) various third-party application software
including lease economic analysis, fixed asset management, geological
applications, and payroll/human resource programs, and (4) External Agents.
The proprietary software of the Partnership is currently in process of
meeting compliance requirements with an estimated completion date of mid-
year 1999. Since this is an internally generated software package, the
Managing General Partner has estimated the cost to be approximately $25,000
by estimating the necessary man-hours. These modifications are being made
by internal staff and do not represent additional costs to the Partnership.
The Managing General Partner has not made contingency plans at this time
since the conversion is ahead of schedule and being handled by Managing
General Partner controlled internal programmers. Given the complexity of
the systems being modified, it is anticipated that some problems may arise,
but with an expected early completion date, the Managing General Partner
feels that adequate time is available to overcome unforeseen delays.
DEC has released a fully compliant version of its operating system that is
used by the Partnership on the DEC VAX system. It will be installed in
August 1999, the Managing General Partner believes that this will solve any
potential problems on the system.
<PAGE>
The Managing General Partner has identified various third-party software
that may have date sensitivity problems and is working with the vendors to
secure solutions as well as prepare contingency plans. After review and
evaluation of the vendor plans and status, the Managing General Partner
believes that the problems will be resolved prior to the year 2000 or the
alternate contingency plan will sufficiently and adequately remediate the
problem so that there is no material disruption to business functions.
The External Agents of the Partnership include suppliers, customers,
owners, vendors, banks, product purchasers including pipelines, and other
oil and gas property operators. The Managing General Partner is in the
process of identifying and communicating with each critical External Agent
about its plan and progress thereof in addressing the Year 2000 issue.
This process is on schedule and the Managing General Partner, at this time,
believes that there should be no material interference or disruption
associated with any of the critical External Agent's functions necessary to
the Partnership's business. The Managing General Partner estimates
completion of this audit by mid-year 1999 and believes that alternate plans
can be devised to circumvent any material problems arising from critical
External Agent noncompliance.
Cost
To date, the Managing General Partner has incurred only minimal internal
man-hour costs for identification, planning, and maintenance. The Managing
General Partner believes that the necessary additional costs will also be
minimal and most will fall under normal and general maintenance procedures
and updates. An accurate cost cannot be determined at this time, but it is
expected that the total cost to remediate all systems to be less than
$50,000.
Risks/Contingency
The failure to correct critical systems of the Partnership, or the failure
of a material business partner or External Agent to resolve critical Year
2000 issues could have a serious adverse impact on the ability of the
Partnership to continue operations and meet obligations. Based on the
Managing General Partner's evaluation and assessment to date, it is
believed that any interruption in operation will be minor and short-lived
and pose no material monetary loss, safety, or environmental risk to the
Partnership. However, until all assessment is complete, it is impossible
to accurately identify the risks, quantify potential impacts or establish a
final contingency plan. The Managing General Partner believes that its
assessment and contingency planning will be complete no later than mid-year
1999.
Worst Case Scenario
The Securities and Exchange Commission requires that public companies must
forecast the most reasonably likely worst case Year 2000 scenario, assuming
that the Managing General Partner's Year 2000 plan is not effective.
Analysis of the most reasonably likely worst case Year 2000 scenarios the
Partnership may face leads to contemplation of the following possibilities
which, though considered highly unlikely, must be included in any
consideration of worst cases: widespread failure of electrical, gas, and
similar supplies by utilities serving the Partnership; widespread
disruption of the services of communications common carriers; similar
disruption to means and modes of transportation for the Partnership and its
employees, contractors, suppliers, and customers; significant disruption to
the Partnership's ability to gain access to, and continue working in,
office buildings and other facilities; and the failure, of third-parties
systems, the effects of which would have a cumulative material adverse
impact on the Partnership's critical systems. The Partnership could
experience an inability by customers, traders, and others to pay, on a
timely basis or at all, obligations owed to the Partnership. Under these
circumstances, the adverse effect on the Partnership, and the diminution of
Partnership revenues, could be material, although not quantifiable at this
time.
<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) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the
quarter ended June 30, 1999.
<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, INC.
INCOME FUND VI,
a Tennessee 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, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1999 (Unaudited) and the Statement of Operations
for the Six Months Ended June 30, 1999 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 115,680
<SECURITIES> 0
<RECEIVABLES> 174,445
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 290,125
<PP&E> 8,426,672
<DEPRECIATION> 6,509,000
<TOTAL-ASSETS> 2,207,797
<CURRENT-LIABILITIES> 1,126
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,206,671
<TOTAL-LIABILITY-AND-EQUITY> 2,207,797
<SALES> 367,946
<TOTAL-REVENUES> 369,729
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 164,931
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 204,798
<INCOME-TAX> 0
<INCOME-CONTINUING> 204,798
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 204,798
<EPS-BASIC> 9.22
<EPS-DILUTED> 9.22
</TABLE>
