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, 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 0-18397
Southwest Oil & Gas Income Fund IX-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2274632
(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 14.
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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 and six month periods
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the full year.
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Southwest Oil & Gas Income Fund IX-A, L.P.
Balance Sheets
June 30, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 138,018 36,949
Receivable from Managing
General Partner 83,449 80,686
--------- ---------
Total current assets 221,467 117,635
--------- ---------
Oil and gas properties - using the
full cost method of accounting 3,341,788 3,604,574
Less accumulated depreciation,
depletion and amortization 2,429,000 2,372,000
--------- ---------
Net oil and gas properties 912,788 1,232,574
--------- ---------
$ 1,134,255 1,350,209
========= =========
Liabilities and Partners' Equity
Current liability - Distributions payable $ - 645
--------- ---------
Partners' equity:
General partners (46,056) (33,376)
Limited partners 1,180,311 1,382,940
--------- ---------
Total partners' equity 1,134,255 1,349,564
--------- ---------
$ 1,134,255 1,350,209
========= =========
PAGE
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Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues
Oil and gas $ 290,842 255,676 531,733 535,082
Interest 1,879 364 2,799 613
------- ------- ------- -------
292,721 256,040 534,532 535,695
------- ------- ------- -------
Expenses
Production 151,396 175,482 319,771 352,910
General and administrative 19,026 19,154 46,561 48,383
Depreciation, depletion and
amortization 31,000 34,000 57,000 84,000
------- ------- ------- -------
201,422 228,636 423,332 485,293
------- ------- ------- -------
Net income $ 91,299 27,404 111,200 50,402
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 11,007 5,526 15,138 12,096
======= ======= ======= =======
General Partner $ 1,223 614 1,682 1,344
======= ======= ======= =======
Limited Partners $ 79,069 21,264 94,380 36,962
======= ======= ======= =======
Per limited partner
unit $ 7.56 2.03 9.03 3.54
======= ======= ======= =======
PAGE
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Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Cash received from oil and
gas sales $ 537,488 542,844
Cash paid to suppliers (375,010) (393,877)
Interest received 2,799 613
------- -------
Net cash provided by operating
activities 165,277 149,580
------- -------
Cash flows from investing activities:
Additions to oil and gas properties (6,248) (7,336)
Sale of oil and gas properties 269,194 7,800
Sale of equipment - 1,716
------- -------
Net cash provided by investing
activities 262,946 2,180
------- -------
Cash flows used in financing activities:
Distributions to partners (327,154) (143,980)
------- -------
Net increase in cash and cash equivalents 101,069 7,780
Beginning of period 36,949 16,958
------- -------
End of period $ 138,018 24,738
======= =======
(continued)
PAGE
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Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1996 1995
Reconciliation of net income to
net cash provided by operating
activities:
Net income $ 111,200 50,402
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 57,000 84,000
Decrease in receivables 5,755 7,762
Increase (decrease) in payables (8,678) 7,416
------- -------
Net cash provided by operating
activities $ 165,277 149,580
======= =======
PAGE
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund IX-A, L.P. was organized as a Delaware
limited partnership on March 9, 1989. The offering of such limited
partnership interests began on May 11, 1989, minimum capital requirements
were met on October 25, 1989, and the offering concluded on March 31, 1990,
with total limited partner contributions of $5,226,500.
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 June 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1996 and 1995:
Three Months
Ended Percentage
June 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 21.08 16.49 28%
Average price per mcf of gas $ 1.75 1.12 56%
Oil production in barrels 9,600 12,400 (23%)
Gas production in mcf 50,300 44,900 12%
Gross oil and gas revenue $ 290,842 255,676 14%
Net oil and gas revenue $ 139,446 80,194 74%
Partnership distributions $ 235,000 75,607 211%
Limited partner distributions $ 211,500 68,607 208%
Per unit distribution to limited
partners $ 20.23 6.56 208%
Number of limited partner units 10,453 10,453
Revenues
The Partnership's oil and gas revenues increased to $290,842 from $255,676
for the quarters ended June 30, 1996 and 1995, respectively, an increase of
14%. The principal factors affecting the comparison of the quarters ended
June 30, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended June 30, 1996 as compared to the
quarter ended June 30, 1995 by 28%, or $4.59 per barrel, resulting in an
increase of approximately $56,900 in revenues. Oil sales represented 70%
of total oil and gas sales during the quarter ended June 30, 1996 as
compared to 80% during the quarter ended June 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 56%, or $.63 per mcf, resulting in an increase
of approximately $28,300 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $85,200. 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.
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2. Oil production decreased approximately 2,800 barrels or 23% during the
quarter ended June 30, 1996 as compared to the quarter ended June 30,
1995, resulting in a decrease of approximately $59,000 in revenues.
Gas production increased approximately 5,400 mcf or 12% during the same
period, resulting in an increase of approximately $9,500 in revenues.
The net total decrease in revenues due to the change in production is
approximately $49,500. The decrease is a result of property sales, a
well being shut-in during 1996 and scale damage to two wells.
Costs and Expenses
Total costs and expenses decreased to $201,422 from $228,636 for the quarters
ended June 30, 1996 and 1995, respectively, a decrease of 12%. 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 14% lower, or
approximately $24,100 less during the quarter ended June 30, 1996 as
compared to the quarter ended June 30, 1995. The decrease is a result of
property sales.
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 $100 during the quarter ended June 30, 1996 as compared
to the quarter ended June 30, 1995.
3. Depletion expense decreased to $31,000 for the quarter ended June 30,
1996 from $34,000 for the same period in 1995. This represents a
decrease of 9%. 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.
Two factors that attributed 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 January 1, 1996 as
compared to 1995 and the increase in property sales.
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B. General Comparison of the Six Month Periods Ended June 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1996 and 1995:
Six Months
Ended Percentage
June 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.88 16.09 17%
Average price per mcf of gas $ 1.67 1.29 29%
Oil production in barrels 20,200 25,300 (20%)
Gas production in mcf 90,500 99,000 (9%)
Gross oil and gas revenue $ 531,733 535,082 (1%)
Net oil and gas revenue $ 211,962 182,172 16%
Partnership distributions $ 326,509 143,607 127%
Limited partner distributions $ 297,009 129,807 129%
Per unit distribution to limited
partners $ 28.41 12.42 129%
Number of limited partner units 10,453 10,453
Revenues
The Partnership's oil and gas revenues decreased to $531,733 from $535,082
for the six months ended June 30, 1996 and 1995, respectively, a decrease of
1%. The principal factors affecting the comparison of the six months ended
June 30, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995 by 17%, or $2.79 per barrel, resulting in
an increase of approximately $70,600 in revenues. Oil sales represented
72% of total oil and gas sales during the six months ended June 30, 1996
as compared to 76% during the six months ended June 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 29%, or $.38 per mcf, resulting in an increase
of approximately $37,600 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $108,200. 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
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2. Oil production decreased approximately 5,100 barrels or 20% during the
six months ended June 30, 1996 as compared to the six months ended June
30, 1995, resulting in a decrease of approximately $96,300 in revenues.
Gas production decreased approximately 8,500 mcf or 9% during the same
period, resulting in a decrease of approximately $14,200 in revenues.
The total decrease in revenues due to the change in production is
approximately $110,500. The decrease is a result of property sales, a
well being shut-in during 1996 and scale damage to two wells.
Costs and Expenses
Total costs and expenses decreased to $423,332 from $485,293 for the six
months ended June 30, 1996 and 1995, respectively, a decrease of 13%. The
decrease is the result of a decline in lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 9% lower, or
approximately $33,100 less during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995. The decrease is a result
of property sales.
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 $1,800 during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995.
3. Depletion expense decreased to $57,000 for the six months ended June 30,
1996 from $84,000 for the same period in 1995. This represents a
decrease of 32%. 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.
Two factors that attributed 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 January 1, 1996 as
compared to 1995 and the increase in property sales.
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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 $165,300 in
the six months ended June 30, 1996 as compared to approximately $149,600 in
the six months ended June 30, 1995. The primary source of the 1996 cash flow
from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $262,900 in
the six months ended June 30, 1996 as compared to approximately $2,200 in the
six months ended June 30, 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 $327,200 in the
six months ended June 30, 1996 as compared to approximately $144,000 in the
six months ended June 30, 1995. The only use in financing activities was the
distributions to partners.
Total distributions during the six months ended June 30, 1996 were $326,509
of which $297,009 was distributed to the limited partners and $29,500 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1996 was $28.41. Total distributions during the
six months ended June 30, 1995 were $143,607 of which $129,807 was
distributed to the limited partners and $13,800 to the general partners. The
per unit distribution to limited partners during the six months ended June
30, 1995 was $12.42.
The sources for the 1996 distributions of $326,509 were oil and gas
operations of approximately $165,300 and sale of oil and gas properties of
approximately $269,200, offset by the additions to oil and gas properties of
approximately $6,200, resulting in excess cash for contingencies or
subsequent distributions. The sources for the 1995 distributions of $143,607
were oil and gas operations of approximately $149,600 and sale of oil and gas
properties of approximately $9,500, offset by the additions to oil and gas
properties of approximately $7,300, resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$4,902,018 have been made to the partners. As of June 30, 1996, $4,465,150
or $427.16 per limited partner unit has been distributed to the limited
partners, representing a 85% return of the capital contributed.
As of June 30, 1996, the Partnership had approximately $221,500 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
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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
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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 IX-A, L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
Managing General Partner
Date: August 11, 1996 By: /s/ Bill E. Coggin
Bill E. Coggin, Vice President
and Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet at June 30, 1996 (Unaudited) and the Statement of Operations for the Six
Months Ended June 30, 1996 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 138,018
<SECURITIES> 0
<RECEIVABLES> 83,449
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 221,467
<PP&E> 3,341,788
<DEPRECIATION> 2,429,000
<TOTAL-ASSETS> 1,134,255
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,134,255
<TOTAL-LIABILITY-AND-EQUITY> 1,134,255
<SALES> 531,733
<TOTAL-REVENUES> 534,532
<CGS> 319,771
<TOTAL-COSTS> 319,771
<OTHER-EXPENSES> 103,561
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 111,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 111,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,200
<EPS-PRIMARY> 9.03
<EPS-DILUTED> 9.03
</TABLE>
