FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 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.
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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, 1996 which are found in the Registrant's Form 10-K Report
for 1996 filed with the Securities and Exchange Commission. The December 31,
1996 balance sheet included herein has been taken from the Registrant's 1996
Form 10-K Report. Operating results for the three month period ended
March 31, 1997 are not necessarily indicative of the results that may be
expected for the full year.
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Southwest Oil & Gas Income Fund VIII-A, L.P.
Balance Sheets
March 31, December 31,
1997 1996
---- ----
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 23,272 55,844
Receivable from Managing General Partner 159,647 227,459
--------- ---------
Total current assets 182,919 283,303
--------- ---------
Oil and gas properties - using
the full-cost method of accounting 5,448,896 5,448,326
Less accumulated depreciation,
depletion and amortization 4,075,109 4,049,109
--------- ---------
Net oil and gas properties 1,373,787 1,399,217
--------- ---------
$ 1,556,706 1,682,520
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 6,800 -
Distributions payable 189 271
--------- ---------
Total current liabilities 6,989 271
--------- ---------
Partners' equity:
General partners 13,811 24,464
Limited partners 1,535,906 1,657,785
--------- ---------
Total partners' equity 1,549,717 1,682,249
--------- ---------
$ 1,556,706 1,682,520
========= =========
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Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Revenues
Oil and gas $ 377,458 392,827
Interest 735 325
------- -------
378,193 393,152
------- -------
Expenses
Production 205,701 256,728
General and administrative 34,024 34,451
Depreciation, depletion and amortization 26,000 40,000
------- -------
265,725 331,179
------- -------
Net income $ 112,468 61,973
======= =======
Net income allocated to:
Managing General Partner $ 12,462 9,178
======= =======
General partner $ 1,385 1,020
======= =======
Limited partners $ 98,621 51,775
======= =======
Per limited partner unit $ 7.25 3.81
======= =======
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Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 477,273 363,383
Cash paid to suppliers (259,524) (271,887)
Interest received 735 325
-------- --------
Net cash provided by operating activities 218,484 91,821
-------- --------
Cash flows from investing activities:
Sale of oil and gas properties 72 43,259
Additions to oil and gas properties (6,046) (1,487)
-------- --------
Net cash provided by (used in) investing
activities (5,974) 41,772
-------- --------
Cash flows used in financing activities:
Distributions to partners (245,082) (130,703)
-------- --------
Net increase (decrease) in cash and
cash equivalents (32,572) 2,890
Beginning of period 55,844 38,356
-------- --------
End of period $ 23,272 41,246
======== ========
(continued)
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Southwest Oil & Gas Income Fund VIII-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 112,468 61,973
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 26,000 40,000
(Increase) decrease in receivables 99,815 (29,403)
Increase (decrease) in payables (19,799) 19,251
------- -------
Net cash provided by operating activities $ 218,484 91,821
======= =======
Supplemental schedule of noncash investing
and financial activities:
Overcharge for oil and gas properties
included in receivable from Managing General
Partner $ 5,404 -
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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.
Based on current conditions, management anticipates performing workovers
during the next two years to enhance production. The Partnership may undergo
an increase later in 1997 and possibly in 1998. Thereafter, the Partnership
could possibly experience a normal decline of 10% to 12% per year.
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Results of Operations
A. General Comparison of the Quarters Ended March 31, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1997 and 1996:
Three Months
Ended Percentage
March 31, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 21.62 18.23 19%
Average price per mcf of gas $ 2.37 2.31 3%
Oil production in barrels 15,000 18,000 (17%)
Gas production in mcf 22,400 27,900 (20%)
Gross oil and gas revenue $ 377,458 392,827 (4%)
Net oil and gas revenue $ 171,757 136,099 26%
Partnership distributions $ 245,000 130,712 87%
Limited partner distributions $ 220,500 118,712 86%
Per unit distribution to limited
partners $ 16.22 8.73 86%
Number of limited partner units 13,596 13,596
Revenues
The Partnership's oil and gas revenues decreased to $377,458 from $392,827
for the quarters ended March 31, 1997 and 1996, respectively, a decrease of
4%. The principal factors affecting the comparison of the quarters ended
March 31, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1997 as compared to the
quarter ended March 31, 1996 by 19%, or $3.39 per barrel, resulting in an
increase of approximately $61,000 in revenues. Oil sales represented 86%
of total oil and gas sales during the quarter ended March 31, 1997 as
compared to 84% during the quarter ended March 31, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 3%, or $.06 per mcf, resulting in an increase
of approximately $1,700 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $62,700. 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.
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2. Oil production decreased approximately 3,000 barrels or 17% during the
quarter ended March 31, 1997 as compared to the quarter ended March 31,
1996, resulting in a decrease of approximately $64,900 in revenues.
Gas production decreased approximately 5,500 mcf or 20% during the same
period, resulting in a decrease of approximately $13,000 in revenues.
The total decrease in revenues due to the change in production is
approximately $77,900. The decrease is primarily a result of mechanical
problems causing lease downtime, some wells experiencing a sharp natural
decline and the gas production estimate for the first quarter of 1996
being higher than the actual gas produced during the first quarter of
1996 due to the wells experiencing a higher than normal natural decline
and unforeseeable well downtime during the first quarter of 1996.
Costs and Expenses
Total costs and expenses decreased to $265,725 from $331,179 for the quarters
ended March 31, 1997 and 1996, respectively, a decrease of 20%. 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 20% lower, or
approximately $51,000 less during the quarter ended March 31, 1997 as
compared to the quarter ended March 31, 1996. The decrease is primarily
attributable to higher workover costs incurred in 1996 as compared to
1997 and the December 31, 1995 accrual for lease operating costs being
lower than the actual lease operating costs incurred.
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 $400 during the quarter ended March 31, 1997 as compared
to the quarter ended March 31, 1996.
3. Depletion expense decreased to $26,000 for the quarter ended March 31,
1997 from $40,000 for the same period in 1996. This represents a
decrease of 35%. 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 used to determine the Partnership's reserve
for January 1, 1997 as compared to 1996 and the decrease in oil and gas
revenue.
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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 $218,500 in
the quarter ended March 31, 1997 as compared to approximately $91,800 in the
quarter ended March 31, 1996. The primary source of the 1997 cash flow from
operating activities was profitable operations.
Cash flows provided by or (used in) investing activities were approximately
$(6,000) in the quarter ended March 31, 1997 as compared to approximately
$41,800 in the quarter ended March 31, 1996. The principle use of the 1997
cash flow from investing activities was the addition to oil and gas
properties, partially offset by the sale of oil and gas properties.
Cash flows used in financing activities were approximately $245,100 in the
quarter ended March 31, 1997 as compared to approximately $130,700 in the
quarter ended March 31, 1996. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 1997 were $245,000 of
which $220,500 was distributed to the limited partners and $24,500 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1997 was $16.22. Total distributions during the
quarter 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 quarter ended March 31, 1996 was
$8.73.
The sources for the 1997 distributions of $245,000 were oil and gas
operations of approximately $218,500 and the sale of oil and gas properties
of approximately $70, offset by additions to oil and gas properties of
approximately $6,000, with the balance from available cash on hand at the
beginning of the period. 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.
Since inception of the Partnership, cumulative monthly cash distributions of
$6,455,651 have been made to the partners. As of March 31, 1997, $5,849,730
or $430.25 per limited partner unit has been distributed to the limited
partners, representing an 86% return of the capital contributed.
As of March 31, 1997, the Partnership had approximately $175,900 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.
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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) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for
which this report is filed.
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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 15, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at March 31, 1997 (Unaudited) and the Statement of Operations
for the Three Months Ended March 31, 1997 (Unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 23,272
<SECURITIES> 0
<RECEIVABLES> 159,647
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 182,919
<PP&E> 5,448,896
<DEPRECIATION> 4,075,109
<TOTAL-ASSETS> 1,556,706
<CURRENT-LIABILITIES> 6,989
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,549,717
<TOTAL-LIABILITY-AND-EQUITY> 1,556,706
<SALES> 377,458
<TOTAL-REVENUES> 378,193
<CGS> 205,701
<TOTAL-COSTS> 205,701
<OTHER-EXPENSES> 60,024
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 112,468
<INCOME-TAX> 0
<INCOME-CONTINUING> 112,468
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,468
<EPS-PRIMARY> 7.25
<EPS-DILUTED> 7.25
</TABLE>
