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 0-18397
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 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 IX-A, L.P.
Balance Sheets
March 31, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 38,874 10,813
Receivable from Managing General Partner 77,313 180,600
--------- ---------
Total current assets 116,187 191,413
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 3,362,432 3,364,170
Less accumulated depreciation,
depletion and amortization 2,470,000 2,450,000
--------- ---------
Net oil and gas properties 892,432 914,170
--------- ---------
$ 1,008,619 1,105,583
========= =========
Liabilities and Partners' Equity
Current liabilities:
Distributions payable $ 57 41
Accounts payable 6,250 -
--------- ---------
Total current liabilities 6,307 41
--------- ---------
Partners' equity:
General partners (55,150) (46,827)
Limited partners 1,057,462 1,152,369
--------- ---------
Total partners' equity 1,002,312 1,105,542
--------- ---------
$ 1,008,619 1,105,583
========= =========
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Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Revenues
Oil and gas $ 293,123 240,891
Interest 432 919
------- -------
293,555 241,810
------- -------
Expenses
Production 158,290 168,374
General and administrative 26,995 27,536
Depreciation, depletion and amortization 20,000 26,000
------- -------
205,285 221,910
------- -------
Net income $ 88,270 19,900
======= =======
Net income allocated to:
Managing General Partner $ 9,744 4,131
======= =======
General partner $ 1,083 459
======= =======
Limited partners $ 77,443 15,310
======= =======
Per limited partner unit $ 7.41 1.46
======= =======
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Southwest Oil & Gas Income Fund IX-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 $ 389,123 275,519
Cash paid to suppliers (171,748) (208,712)
Interest received 432 919
-------- -------
Net cash provided by operating activities 217,807 67,726
-------- -------
Cash flows from investing activities:
Additions to oil and gas properties (1,450) (6,178)
Sale of oil and gas properties 3,188 265,319
-------- -------
Net cash provided by (used in) investing
activities 1,738 259,141
-------- -------
Cash flows used in financing activities:
Distributions to partners (191,484) (91,917)
-------- -------
Net increase in cash and cash equivalents 28,061 234,950
Beginning of period 10,813 36,949
-------- -------
End of period $ 38,874 271,899
======== =======
(continued)
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Southwest Oil & Gas Income Fund IX-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 $ 88,270 19,900
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 20,000 26,000
Decrease in receivables 96,000 34,628
Increase (decrease) in payables 13,537 (12,802)
------- -------
Net cash provided by operating activities $ 217,807 67,726
======= =======
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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. 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 8% to 10% 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 $ 20.03 16.88 19%
Average price per mcf of gas $ 2.07 1.56 33%
Oil production in barrels 9,000 10,500 (14%)
Gas production in mcf 54,400 40,200 35%
Gross oil and gas revenue $ 293,123 240,891 22%
Net oil and gas revenue $ 134,833 72,517 86%
Partnership distributions $ 191,500 91,509 109%
Limited partner distributions $ 172,350 85,509 102%
Per unit distribution to limited
partners $ 16.49 8.18 102%
Number of limited partner units 10,453 10,453
Revenues
The Partnership's oil and gas revenues increased to $293,123 from $240,891
for the quarters ended March 31, 1997 and 1996, respectively, an increase of
22%. 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 $3.15 per barrel, resulting in an
increase of approximately $33,100 in revenues. Oil sales represented 62%
of total oil and gas sales during the quarter ended March 31, 1997 as
compared to 74% 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 33%, or $.51 per mcf, resulting in an increase
of approximately $20,500 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $53,600. 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 1,500 barrels or 14% during the
quarter ended March 31, 1997 as compared to the quarter ended March 31,
1996, resulting in a decrease of approximately $30,000 in revenues.
Gas production increased approximately 14,200 mcf or 35% during the same
period, resulting in an increase of approximately $29,400 in revenues.
The net total decrease in revenues due to the change in production is
approximately $600. The decrease in oil production is primarily a result
of the sale of two leases during the first quarter of 1996 and the
increase in gas production is due to the re-opening of a previously shut-
in gas well.
Costs and Expenses
Total costs and expenses decreased to $205,285 from $221,910 for the quarters
ended March 31, 1997 and 1996, 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 6% lower, or
approximately $10,100 less during the quarter ended March 31, 1997 as
compared to the quarter ended March 31, 1996.
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 2%
or approximately $500 during the quarter ended March 31, 1997 as compared
to the quarter ended March 31, 1996.
3. Depletion expense decreased to $20,000 for the quarter ended March 31,
1997 from $26,000 for the same period in 1996. This represents a
decrease of 23%. 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. A contributing factor
to the decline depletion expense was between the comparative periods was
the increase in the price of oil and gas used to determine the
Partnership's reserves for January 1, 1997 as compared to 1996.
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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 $217,800 in
the quarter ended March 31, 1997 as compared to approximately $67,700 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 investing activities were approximately $1,700 in the
quarter ended March 31, 1997 as compared to approximately $259,100 in the
quarter ended March 31, 1996. The principle source of the 1997 cash flow
from investing activities was the sale of oil and gas properties, partially
offset by the additions to oil and gas properties.
Cash flows used in financing activities were approximately $191,500 in the
quarter ended March 31, 1997 as compared to approximately $91,900 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 $191,500 of
which $172,350 was distributed to the limited partners and $19,150 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1997 was $16.49. Total distributions during the
quarter ended March 31, 1996 were $91,509 of which $85,509 was distributed to
the limited partners and $6,000 to the general partners. The per unit
distribution to limited partners during the quarter ended March 31, 1996 was
$8.18.
The sources for the 1997 distributions of $191,500 were oil and gas
operations of approximately $217,800 and the sale of oil and gas properties
of approximately $3,200, offset by additions to oil and gas properties of
approximately $1,500, resulting in excess cash for contingencies or
subsequent distributions. The sources for the 1996 distributions of $91,509
were oil and gas operations of approximately $67,700 and the sale of oil and
gas properties of approximately $265,300, offset by additions to oil and gas
properties of approximately $6,200, resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$5,397,518 have been made to the partners. As of March 31, 1997, $4,911,100
or $469.83 per limited partner unit has been distributed to the limited
partners, representing a 94% return of the capital contributed.
As of March 31, 1997, the Partnership had approximately $109,900 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.
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
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> 38,874
<SECURITIES> 0
<RECEIVABLES> 77,313
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 116,187
<PP&E> 3,362,432
<DEPRECIATION> 2,470,000
<TOTAL-ASSETS> 1,008,619
<CURRENT-LIABILITIES> 6,307
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,002,312
<TOTAL-LIABILITY-AND-EQUITY> 1,008,619
<SALES> 293,123
<TOTAL-REVENUES> 293,555
<CGS> 158,290
<TOTAL-COSTS> 158,290
<OTHER-EXPENSES> 46,995
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 88,270
<INCOME-TAX> 0
<INCOME-CONTINUING> 88,270
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,270
<EPS-PRIMARY> 7.41
<EPS-DILUTED> 7.41
</TABLE>
