FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 0-17707
Southwest Oil & Gas Income Fund VIII-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2220097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
407 N. Big Spring, Suite 300
Midland, Texas 79701
(Address of principal executive offices)
(915) 686-9927
(Registrant's telephone number,
including area code)
Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
Yes X No
The total number of pages contained in this report is 12.
PAGE
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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, 1995 which are found in the Registrant's Form 10-K Report
for 1995 filed with the Securities and Exchange Commission. The December 31,
1995 balance sheet included herein has been taken from the Registrant's 1995
Form 10-K Report. Operating results for the three month period ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the full year.
PAGE
<PAGE>
Southwest Oil & Gas Income Fund VIII-A, L.P.
Balance Sheets
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 41,246 38,356
Receivable from Managing General
Partner 160,359 147,157
--------- ---------
Total current assets 201,605 185,513
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 5,463,106 5,501,878
Less accumulated depreciation,
depletion and amortization 3,965,109 3,925,109
--------- ---------
Net oil and gas properties 1,497,997 1,576,769
--------- ---------
$ 1,699,602 1,762,282
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 6,050 -
Distributions payable 545 536
--------- ---------
Total current liabilities 6,595 536
--------- ---------
Partners' equity:
General partners 17,141 18,943
Limited partners 1,675,866 1,742,803
--------- ---------
Total partners' equity 1,693,007 1,761,746
--------- ---------
$ 1,699,602 1,762,282
========= =========
PAGE
<PAGE>
Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Revenues
Oil and gas revenue $ 392,827 410,323
Interest income from operations 325 481
------- -------
393,152 410,804
------- -------
Expenses
Production 256,728 257,218
General and administrative 34,451 35,945
Depreciation, depletion and
amortization 40,000 63,000
------- -------
331,179 356,163
------- -------
Net income $ 61,973 54,641
======= =======
Net income allocated to:
Managing General Partner $ 9,178 10,588
======= =======
General partner $ 1,020 1,176
======= =======
Limited partners $ 51,775 42,877
======= =======
Per limited partner unit $ 3.81 3.15
======= =======
PAGE
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Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Cash flows from operating activities:
Cash received from oil and
gas sales $ 363,383 375,418
Cash paid to suppliers (271,887) (276,949)
Interest received 325 481
------- -------
Net cash provided by
operating activities 91,821 98,950
------- -------
Cash flows from investing activities:
Sale of oil and gas properties 43,259 -
Additions to oil and gas
properties (1,487) (3,423)
------- -------
Net cash provided by (used in)
investing activities 41,772 (3,423)
------- -------
Cash flows used in financing activities:
Distributions to partners (130,703) (112,644)
------- -------
Net increase (decrease) in cash 2,890 (17,117)
Cash and cash equivalents:
Beginning of period 38,356 37,115
------- -------
End of period $ 41,246 19,998
======= =======
(continued)
PAGE
<PAGE>
Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 61,973 54,641
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion and
amortization 40,000 63,000
Increase in receivables (29,403) (34,905)
Increase in payables 19,251 16,214
------- -------
Net cash provided by operating
activities $ 91,821 98,950
======= =======
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund VIII-A, L.P. was organized as a Delaware
limited partnership on November 30, 1987. The offering of such limited
partnership interests began on March 31, 1988, minimum capital requirements
were met on July 6, 1988, and the offering concluded on March 31, 1989, with
total limited partner contributions of $6,798,000.
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 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.
PAGE
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Results of Operations
A. General Comparison of the Quarters Ended March 31, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1996 and 1995:
Three Months
Ended Percentage
March 31, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.23 16.71 9%
Average price per mcf of gas $ 2.31 2.12 9%
Oil production in barrels 18,000 20,500 (12%)
Gas production in mcf 27,900 31,900 (13%)
Gross oil and gas revenue $ 392,827 410,323 (4%)
Net oil and gas revenue $ 136,099 153,105 (11%)
Partnership distributions $ 130,712 113,000 16%
Limited partner distributions $ 118,712 101,700 17%
Per unit distribution to limited
partners $ 8.73 7.48 17%
Number of limited partner units 13,596 13,596
Revenues
The Partnership's oil and gas revenues decreased to $392,827 from $410,323
for the quarters ended March 31, 1996 and 1995, respectively, a decrease of
4%. The principal factors affecting the comparison of the quarters ended
March 31, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1996 as compared to the
quarter ended March 31, 1995 by 9%, or $1.52 per barrel, resulting in an
increase of approximately $31,200 in revenues. Oil sales represented 84%
of total oil and gas sales during the quarters ended March 31, 1996 and
1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 9%, or $.19 per mcf, resulting in an increase
of approximately $6,100 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $37,300. 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 2,500 barrels or 12% during the
quarter ended March 31, 1996 as compared to the quarter ended March 31,
1995, resulting in a decrease of approximately $45,600 in revenues.
Gas production decreased approximately 4,000 mcf or 13% during the same
period, resulting in a decrease of approximately $9,200 in revenues.
The total decrease in revenues due to the change in production is
approximately $54,800. The decrease is a result of downhole problems and
property sales.
Costs and Expenses
Total costs and expenses decreased to $331,179 from $356,163 for the quarters
ended March 31, 1996 and 1995, respectively, a decrease of 7%. 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 less than 1% lower, or
approximately $500 less during the quarter ended March 31, 1996 as
compared to the quarter ended March 31, 1995.
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 4%
or approximately $1,500 during the quarter ended March 31, 1996 as
compared to the quarter ended March 31, 1995.
3. Depletion expense decreased to $40,000 for the quarter ended March 31,
1996 from $63,000 for the same period in 1995. This represents a
decrease of 37%. Depletion is calculated using the gross 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. Consequently, depletion
will generally fluctuate in direct relation to oil and gas revenues. As
noted above, oil and gas revenues declined due to a decrease in
production for the quarter ended March 31, 1996 as compared to the same
period for 1995. Depletion reflected a comparable decline.
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.
<PAGE>
Cash flows provided by operating activities were approximately $91,800 in the
three months ended March 31, 1996 as compared to approximately $99,000 in the
three months ended March 31, 1995. The primary source of the 1996 cash flow
from operating activities was profitable operations.
Cash flows provided by or (used in) investing activities were approximately
$41,800 in the three months ended March 31, 1996 as compared to approximately
$(3,400) in the three months ended March 31, 1995. The principle source of
the 1996 cash flow from investing activities was the sale of oil and gas
properties, offset by the additions to oil and gas properties.
Cash flows used in financing activities were approximately $130,700 in the
three months ended March 31, 1996 as compared to approximately $112,600 in
the three months ended March 31, 1995. The only use in financing activities
was the distributions to partners.
Total distributions during the three months ended March 31, 1996 were
$130,712 of which $118,712 was distributed to the limited partners and
$12,000 to the general partners. The per unit distribution to limited
partners during the three months ended March 31, 1996 was $8.73. Total
distributions during the three months ended March 31, 1995 were $113,000 of
which $101,700 was distributed to the limited partners and $11,300 to the
general partners. The per unit distribution to limited partners during the
three months ended March 31, 1995 was $7.48.
The sources for the 1996 distributions of $130,712 were oil and gas
operations of approximately $91,800 and the sale of oil and gas properties of
approximately $43,300, offset by additions to oil and gas properties of
approximately $1,500, resulting in excess cash for contingencies or
subsequent distributions. The source for the 1995 distributions of $113,000
was oil and gas operations of approximately $99,000, offset by additions to
oil and gas properties of approximately $3,400, with the balance from
available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$5,707,651 have been made to the partners. As of March 31, 1996, $5,176,530
or $380.74 per limited partner unit has been distributed to the limited
partners, representing a 76% return of the capital contributed.
As of March 31, 1996, the Partnership had approximately $195,000 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
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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) None
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.
PAGE
<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 VIII-A, L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
Managing General Partner
By: /s/ Bill E. Coggin
------------------------------
Bill E. Coggin, Vice President
and Chief Financial Officer
Date: May 11, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet at March 31, 1996 (Unaudited) and the Statement of Operations for the
Three Months Ended March 31, 1996 (Unaudited) and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 41,246
<SECURITIES> 0
<RECEIVABLES> 160,359
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 201,605
<PP&E> 5,463,106
<DEPRECIATION> 3,965,109
<TOTAL-ASSETS> 1,699,602
<CURRENT-LIABILITIES> 6,595
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,693,007
<TOTAL-LIABILITY-AND-EQUITY> 1,699,602
<SALES> 392,827
<TOTAL-REVENUES> 393,152
<CGS> 256,728
<TOTAL-COSTS> 256,728
<OTHER-EXPENSES> 74,451
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 61,973
<INCOME-TAX> 0
<INCOME-CONTINUING> 61,973
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,973
<EPS-PRIMARY> 3.81
<EPS-DILUTED> 3.81
</TABLE>
