Page 17 of 16
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 0-16493
Southwest Oil & Gas Income Fund VII-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2145576
(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 Oil & Gas Income Fund VII-A, L.P.
Balance Sheets
June 30, December 31,
1999 1998
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 33,943 92,168
Receivable from Managing General Partner 44,930 -
--------- ---------
Total current assets 78,873 92,168
--------- ---------
Oil and gas properties - using the
full cost method of accounting 4,492,224 4,491,806
Less accumulated depreciation,
depletion and amortization 3,958,691 3,925,691
--------- ---------
Net oil and gas properties 533,533 566,115
--------- ---------
$ 612,406 658,283
========= =========
Liabilities and Partners' Equity
Current liability
Distribution payable $ 359 584
Payable to Managing General Partner - 493
--------- ---------
Total current liabilities 359 1,077
--------- ---------
Partners' equity:
General partners (573,250) (568,734)
Limited partners 1,185,297 1,225,940
--------- ---------
Total partners' equity 612,047 657,206
--------- ---------
$ 612,406 658,283
========= =========
<PAGE>
Southwest Oil & Gas Income Fund VII-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenues
Oil and gas $ 139,493 149,542 236,039 321,073
Interest 603 274 1,253 795
------- ------- ------- -------
140,096 149,816 237,292 321,868
------- ------- ------- -------
Expenses
Production 65,791 95,249 114,189 189,256
General and administrative 30,559 30,873 60,262 69,062
Depreciation, depletion and
amortization 15,000 44,000 33,000 83,000
------- ------- ------- -------
111,350 170,122 207,451 341,318
------- ------- ------- -------
Net income (loss) $ 28,746 (20,306) 29,841 (19,450)
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 2,588 (1,828) 2,686 (1,751)
======= ======= ======= =======
General Partner $ 287 (203) 298 (194)
======= ======= ======= =======
Limited partners $ 25,871 (18,275) 26,857 (17,505)
======= ======= ======= =======
Per limited partner unit $ 1.72 (1.22) 1.79 (1.17)
======= ======= ======= =======
<PAGE>
Southwest Oil & Gas Income Fund VII-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1999 1998
Cash flows from operating activities:
Cash received from oil and gas sales $ 208,513 360,381
Cash paid to suppliers (192,348) (269,117)
Interest received 1,253 795
-------- --------
Net cash provided by operating activities 17,418 92,059
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (418) (2,322)
-------- --------
Cash flows used in financing activities:
Distributions to partners (75,225) (117,972)
-------- --------
Net decrease in cash and cash equivalents (58,225) (28,235)
Beginning of period 92,168 29,210
-------- --------
End of period $ 33,943 975
======== ========
(continued)
<PAGE>
Southwest Oil & Gas Income Fund VII-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1999 1998
Reconciliation of net income (loss) to net
cash provided by operating activities:
Net income (loss) $ 29,841 (19,450)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 33,000 83,000
Decrease (increase) in receivables (27,526) 39,308
Decrease in payables (17,897) (10,799)
------- -------
Net cash provided by operating activities $ 17,418 92,059
======= =======
<PAGE>
Southwest Oil & Gas Income Fund VII-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Oil & Gas Income Fund VII-A, L.P. was organized under the
laws of the state of Delaware on January 30, 1987, 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 dispositions 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 Oil & Gas Income Fund VII-A, L.P. was organized as a Delaware
limited partnership on January 30, 1987. The offering of limited
partnership interests began on March 4, 1987; minimum capital requirements
were met on April 28, 1987 and the offering concluded on September 21,
1987, with total limited partner contributions of $7,500,000.
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 are not 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, increases
and decreases in lease operating expenses, enhanced recovery projects,
offset drilling activities pursuant to farmout arrangements, sale 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 does not anticipate performing
workovers during the next year. The Partnership could possibly experience
a normal decline of 8% to 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. 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 $ 15.07 12.15 24%
Average price per mcf of gas $ 2.03 2.08 (2%)
Oil production in barrels 6,200 8,000 (23%)
Gas production in mcf 22,700 25,200 (10%)
Gross oil and gas revenue $ 139,493 149,542 (7%)
Net oil and gas revenue $ 73,702 54,293 36%
Total cost and expense $ 111,350 170,122 (35%)
Partnership distributions $ 75,000 19,000 295%
Limited partner distributions $ 67,500 17,100 295%
Per unit distribution to limited
partners $ 4.50 1.14 295%
Number of limited partner units 15,000 15,000
Revenues
The Partnership's oil and gas revenues decreased to $139,493 from $149,542
for the quarters ended June 30, 1999 and 1998, respectively, a decrease of
7%. 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 24%, or $2.92 per barrel, resulting in
an increase of approximately $23,400 in revenues. Oil sales
represented 67% of total oil and gas sales during the quarter ended
June 30, 1999 as compared to 65% during the quarter ended June 30,
1998.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 2%, or $.05 per mcf, resulting in a
decrease of approximately $1,300 in revenues.
The net total increase in revenues due to the change in prices received
from oil and gas production is approximately $22,100. The market price
for oil and gas has been extremely volatile over the past decade and
management expects a certain amount of volatility to continue in the
foreseeable future.
<PAGE>
2. Oil production decreased approximately 1,800 barrels or 23% during the
quarter ended June 30, 1999 as compared to the quarter ended June 30,
1998, resulting in a decrease of approximately $27,100 in revenues.
Gas production decreased approximately 2,500 mcf or 10% during the same
period, resulting in a decrease of approximately $5,100 in revenues.
The total decrease in revenues due to the change in production is
approximately $32,200. The decrease in production was primarily due to
property sales in 1998.
Costs and Expenses
Total costs and expenses decreased to $111,350 from $170,122 for the
quarters ended June 30, 1999 and 1998, respectively, a decrease of 35%.
The decrease is the result of lower lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 31% lower, or
approximately $29,500 less during the quarter ended June 30, 1999 as
compared to the quarter 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.
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 1%
or approximately $300 during the quarter ended June 30, 1999 as
compared to the quarter ended June 30, 1998.
3. Depletion expense decreased to $15,000 for the quarter ended June 30,
1999 from $44,000 for the same period in 1998. This represents a
decrease of 66%. 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>
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 $ 12.79 13.10 (2%)
Average price per mcf of gas $ 1.85 2.09 (11%)
Oil production in barrels 11,800 16,000 (26%)
Gas production in mcf 45,900 53,300 (14%)
Gross oil and gas revenue $ 236,039 321,073 (26%)
Net oil and gas revenue $ 121,850 131,817 (8%)
Total cost and expense $ 207,451 341,318 (39%)
Partnership distribution $ 75,000 114,000 (34%)
Limited partner distributions $ 67,500 102,600 (34%)
Per unit distribution to limited
partners $ 4.50 6.84 (34%)
Number of limited partner units 15,000 15,000
Revenues
The Partnership's oil and gas revenues decreased to $236,039 from $321,073
for the six months ended June 30, 1999 and 1998, respectively, a decrease
of 26%. 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
decreased during the six months ended June 30, 1999 as compared to the
six months ended June 30, 1998 by 2%, or $.31 per barrel, resulting in
a decrease of approximately $5,000 in revenues. Oil sales represented
64% of total oil and gas sales during the six months ended June 30,
1999 as compared to 65% 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 11%, or $.24 per mcf, resulting in
a decrease of approximately $12,800 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $17,800. The market price
for oil and gas has been extremely volatile over the past decade and
management expects a certain amount of volatility to continue in the
foreseeable future.
<PAGE>
2. Oil production decreased approximately 4,200 barrels or 26% during the
six months ended June 30, 1999 as compared to the six months ended June
30, 1998, resulting in a decrease of approximately $53,700 in revenues.
Gas production decreased approximately 7,400 mcf or 14% during the same
period, resulting in a decrease of approximately $13,700 in revenues.
The total decrease in revenues due to the change in production is
approximately $67,400. The decrease in production was primarily due to
property sales in 1998.
Costs and Expenses
Total costs and expenses decreased to $207,451 from $341,318 for the six
months ended June 30, 1999 and 1998, respectively, a decrease of 39%. The
decrease is the result of lower lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 40% lower, or
approximately $75,100 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.
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
13% or approximately $8,800 during the six months ended June 30, 1999
as compared to the six months ended June 30, 1998.
3. Depletion expense decreased to $33,000 for the six months ended June
30, 1999 from $83,000 for the same period in 1998. This represents a
decrease of 60%. 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 $17,400 in
the six months ended June 30, 1999 as compared to approximately $92,100 in
the six months ended June 30, 1998. The primary source of the 1999 cash
flow from operating activities was profitable operations.
Cash flows used in investing activities were approximately $400 in the six
months ended June 30, 1999 as compared to approximately $2,300 in the six
months ended June 30, 1998. The principle use of the 1999 cash flow from
investing activities was the additions to oil and gas properties.
Cash flows used in financing activities were approximately $75,200 in the
six months ended June 30, 1999 as compared to approximately $118,000 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 $75,000
of which $67,500 was distributed to the limited partners and $7,500 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1999 was $4.50. Total distributions during the
six months ended June 30, 1998 were $114,000 of which $102,600 was
distributed to the limited partners and $11,400 to the general partners.
The per unit distribution to limited partners during the six months ended
June 30, 1998 was $6.84.
The source for the 1999 distributions of $75,000 was oil and gas operations
of approximately $17,400, less the net change in oil and gas properties of
approximately $400, with the balance from available cash on hand at the
beginning of the period. The sources for the 1998 distributions of
$114,000 were oil and gas operations of approximately $92,100 less the net
change in oil and gas properties of approximately $2,300, with the balance
from available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions
of $9,833,730 have been made to the partners. As of June 30, 1999,
$8,868,571 or $591.24 per limited partner unit has been distributed to the
limited partners, representing a 118% return of the capital contributed.
As of June 30, 1999, the Partnership had approximately $78,500 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 OIL & GAS
INCOME FUND VII-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, 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> 33,943
<SECURITIES> 0
<RECEIVABLES> 44,930
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 78,873
<PP&E> 4,492,224
<DEPRECIATION> 3,958,691
<TOTAL-ASSETS> 612,406
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0
0
<COMMON> 0
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<SALES> 236,039
<TOTAL-REVENUES> 237,292
<CGS> 114,189
<TOTAL-COSTS> 114,189
<OTHER-EXPENSES> 93,262
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<INCOME-PRETAX> 29,841
<INCOME-TAX> 0
<INCOME-CONTINUING> 29,841
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,841
<EPS-BASIC> 1.79
<EPS-DILUTED> 1.79
</TABLE>
