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, 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 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, 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 and six month periods
ended June 30, 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
June 30, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 3,094 10,813
Receivable from Managing General Partner 92,200 180,600
--------- ---------
Total current assets 95,294 191,413
--------- ---------
Oil and gas properties - using the
full cost method of accounting 3,372,059 3,364,170
Less accumulated depreciation,
depletion and amortization 2,487,000 2,450,000
--------- ---------
Net oil and gas properties 885,059 914,170
--------- ---------
$ 980,353 1,105,583
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 1,207 -
Distributions payable 123 41
--------- ---------
Total current liabilities 1,330 41
--------- ---------
Partners' equity:
General partners (55,779) (46,827)
Limited partners 1,034,802 1,152,369
--------- ---------
Total partners' equity 979,023 1,105,542
--------- ---------
$ 980,353 1,105,583
========= =========
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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,
1997 1996 1997 1996
Revenues
Oil and gas $ 259,571 290,842 552,694 531,733
Interest 328 1,879 760 2,799
------- ------- ------- -------
259,899 292,721 553,454 534,532
------- ------- ------- -------
Expenses
Production 154,056 151,396 312,346 319,771
General and administrative 19,131 19,026 46,127 46,561
Depreciation, depletion and
amortization 17,000 31,000 37,000 57,000
------- ------- ------- -------
190,187 201,422 395,473 423,332
------- ------- ------- -------
Net income $ 69,712 91,299 157,981 111,200
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 7,804 11,007 17,548 15,138
======= ======= ======= =======
General Partner $ 867 1,223 1,950 1,682
======= ======= ======= =======
Limited partners $ 61,041 79,069 138,483 94,380
======= ======= ======= =======
Per limited partner unit $ 5.84 7.56 13.25 9.03
======= ======= ======= =======
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Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Cash received from oil and gas sales $ 635,746 537,488
Cash paid to suppliers (351,918) (375,010)
Interest received 760 2,799
-------- --------
Net cash provided by operating activities 284,588 165,277
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (11,433) (6,248)
Sale of oil and gas properties 3,544 269,194
-------- --------
Net cash provided by (used in) investing
activities (7,889) 262,946
-------- --------
Cash flows used in financing activities:
Distributions to partners (284,418) (327,154)
-------- --------
Net increase (decrease) in cash and cash
equivalents (7,719) 101,069
Beginning of period 10,813 36,949
-------- --------
End of period $ 3,094 138,018
======== ========
(continued)
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Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1997 1996
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 157,981 111,200
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 37,000 57,000
Decrease in receivables 83,052 5,755
Increase (decrease) in payables 6,555 (8,678)
------- -------
Net cash provided by operating activities $ 284,588 165,277
======= =======
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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 June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1997 and 1996:
Three Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.75 21.08 (11%)
Average price per mcf of gas $ 1.94 1.75 11%
Oil production in barrels 8,700 9,600 (9%)
Gas production in mcf 49,800 50,300 (1%)
Gross oil and gas revenue $ 259,571 290,842 (11%)
Net oil and gas revenue $ 105,515 139,446 (24%)
Partnership distributions $ 93,000 235,000 (60%)
Limited partner distributions $ 83,700 211,500 (60%)
Per unit distribution to limited
partners $ 8.01 20.23 (60%)
Number of limited partner units 10,453 10,453
Revenues
The Partnership's oil and gas revenues decreased to $259,571 from $290,842
for the quarters ended June 30, 1997 and 1996, respectively, a decrease of
11%. The principal factors affecting the comparison of the quarters ended
June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended June 30, 1997 as compared to the
quarter ended June 30, 1996 by 11%, or $2.33 per barrel, resulting in a
decrease of approximately $22,400 in revenues. Oil sales represented 63%
of total oil and gas sales during the quarter ended June 30, 1997 as
compared to 70% during the quarter ended June 30, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 11%, or $.19 per mcf, resulting in an increase
of approximately $9,600 in revenues.
The net total decrease in revenues due to the change in prices received
from oil and gas production is approximately $12,800. 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.
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2. Oil production decreased approximately 900 barrels or 9% during the
quarter ended June 30, 1997 as compared to the quarter ended June 30,
1996, resulting in a decrease of approximately $16,900 in revenues.
Gas production decreased approximately 500 mcf or 1% during the same
period, resulting in a decrease of approximately $1,000 in revenues.
The total decrease in revenues due to the change in production is
approximately $17,900.
Costs and Expenses
Total costs and expenses decreased to $190,187 from $201,422 for the quarters
ended June 30, 1997 and 1996, respectively, a decrease of 6%. The decrease
is the result of lower depletion expense, partially offset by an increase in
lease operating costs and general and administrative expense.
1. Lease operating costs and production taxes were 2% higher, or
approximately $2,700 more during the quarter ended June 30, 1997 as
compared to the quarter ended June 30, 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 increased 1%
or approximately $100 during the quarter ended June 30, 1997 as compared
to the quarter ended June 30, 1996.
3. Depletion expense decreased to $17,000 for the quarter ended June 30,
1997 from $31,000 for the same period in 1996. This represents a
decrease of 45%. 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 January 1, 1997 as compared to 1996 and the decline in oil
and gas revenues.
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B. General Comparison of the Six Month Periods Ended June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1997 and 1996:
Six Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.08 18.88 1%
Average price per mcf of gas $ 1.93 1.67 16%
Oil production in barrels 18,000 20,200 (11%)
Gas production in mcf 108,700 90,500 20%
Gross oil and gas revenue $ 552,694 531,733 4%
Net oil and gas revenue $ 240,348 211,962 13%
Partnership distributions $ 284,500 326,509 (13%)
Limited partner distributions $ 256,050 297,009 (14%)
Per unit distribution to limited
partners $ 24.50 28.41 (14%)
Number of limited partner units 10,453 10,453
Revenues
The Partnership's oil and gas revenues increased to $552,694 from $531,733
for the six months ended June 30, 1997 and 1996, respectively, an increase of
4%. The principal factors affecting the comparison of the six months ended
June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1997 as compared to the
six months ended June 30, 1996 by 1%, or $.20 per barrel, resulting in an
increase of approximately $4,000 in revenues. Oil sales represented 62%
of total oil and gas sales during the six months ended June 30, 1997 as
compared to 72% during the six months ended June 30, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 16%, or $.26 per mcf, resulting in an increase
of approximately $23,500 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $27,500. 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 2,200 barrels or 11% during the
six months ended June 30, 1997 as compared to the six months ended June
30, 1996, resulting in a decrease of approximately $42,000 in revenues.
Gas production increased approximately 18,200 mcf or 20% during the same
period, resulting in an increase of approximately $35,100 in revenues.
The net total decrease in revenues due to the change in production is
approximately $6,900. 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 $395,473 from $423,332 for the six
months ended June 30, 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 2% lower, or
approximately $7,400 less during the six months ended June 30, 1997 as
compared to the six months ended June 30, 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 1%
or approximately $400 during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996.
3. Depletion expense decreased to $37,000 for the six months ended June 30,
1997 from $57,000 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. A contributing factor
to the decline in depletion expense 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 $284,600 in
the six months ended June 30, 1997 as compared to approximately $165,300 in
the six months ended June 30, 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
$(7,900) in the six months ended June 30, 1997 as compared to approximately
$262,900 in the six months ended June 30, 1996. The principle use of the
1997 cash flow from investing activities was the additions to oil and gas
properties, partially offset by the sale of oil and gas properties.
Cash flows used in financing activities were approximately $284,400 in the
six months ended June 30, 1997 as compared to approximately $327,200 in the
six months ended June 30, 1996. The only use in financing activities was the
distributions to partners.
Total distributions during the six months ended June 30, 1997 were $284,500
of which $256,050 was distributed to the limited partners and $28,450 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1997 was $24.50. 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.
The source for the 1997 distributions of $284,500 was oil and gas operations
of approximately $284,600, partially offset by the net change in oil and gas
properties of approximately $7,900, with the balance from available cash on
hand at the beginning of the period. The sources for the 1996 distributions
of $326,509 were oil and gas operations of approximately $165,300 and the net
change in oil and gas properties of approximately $262,900, resulting in
excess cash for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$5,490,518 have been made to the partners. As of June 30, 1997, $4,994,800
or $477.83 per limited partner unit has been distributed to the limited
partners, representing a 96% return of the capital contributed.
As of June 30, 1997, the Partnership had approximately $94,000 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.
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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:
On June 12, 1997, the Partnership filed Form 8-K and on June
24, 1997, the Partnership filed Form 8-K Amended, with
respect to Item 4, Changes in Registrant's Certifying
Accountant.
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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: August 15, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1997 (Unaudited) and the Statements of Operations
for the Six Months Ended June 30, 1997 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,094
<SECURITIES> 0
<RECEIVABLES> 92,200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 95,294
<PP&E> 3,372,059
<DEPRECIATION> 2,487,000
<TOTAL-ASSETS> 980,353
<CURRENT-LIABILITIES> 1,330
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 979,023
<TOTAL-LIABILITY-AND-EQUITY> 980,353
<SALES> 552,694
<TOTAL-REVENUES> 553,454
<CGS> 312,346
<TOTAL-COSTS> 312,346
<OTHER-EXPENSES> 83,127
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 157,981
<INCOME-TAX> 0
<INCOME-CONTINUING> 157,981
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157,981
<EPS-PRIMARY> 13.25
<EPS-DILUTED> 13.25
</TABLE>
