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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, 1998
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.
<PAGE>
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, 1997 which are found in the Registrant's Form
10-K Report for 1997 filed with the Securities and Exchange Commission.
The December 31, 1997 balance sheet included herein has been taken from the
Registrant's 1997 Form 10-K Report. Operating results for the three month
period ended March 31, 1998 are not necessarily indicative of the results
that may be expected for the full year.
<PAGE>
Southwest Oil & Gas Income Fund IX-A, L.P.
Balance Sheets
March 31, December 31,
1998 1997
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 10,410 23,277
Receivable from Managing General Partner 54,033 82,547
--------- ---------
Total current assets 64,443 105,824
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 3,406,706 3,380,439
Less accumulated depreciation,
depletion and amortization 2,596,000 2,571,000
--------- ---------
Net oil and gas properties 810,706 809,439
--------- ---------
$ 875,149 915,263
========= =========
Liabilities and Partners' Equity
Current liability:
Distributions payable $ 622 160
--------- ---------
Partners' equity:
General partners (55,329) (53,771)
Limited partners 929,856 968,874
--------- ---------
Total partners' equity 874,527 915,103
--------- ---------
$ 875,149 915,263
========= =========
<PAGE>
Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Revenues
Oil and gas $ 200,542 293,123
Interest 246 432
------- -------
200,788 293,555
------- -------
Expenses
Production 124,065 158,290
General and administrative 27,799 26,995
Depreciation, depletion and amortization 25,000 20,000
------- -------
176,864 205,285
------- -------
Net income $ 23,924 88,270
======= =======
Net income allocated to:
Managing General Partner $ 4,403 9,744
======= =======
General partner $ 489 1,083
======= =======
Limited partners $ 19,032 77,443
======= =======
Per limited partner unit $ 1.82 7.41
======= =======
<PAGE>
Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 239,486 389,123
Cash paid to suppliers (162,293) (171,748
Interest received 246 432
-------- -------
Net cash provided by operating activities 77,439 217,807
-------- -------
Cash flows from investing activities:
Additions to oil and gas properties (26,268) (1,450)
Sale of oil and gas properties - 3,188
-------- -------
Net cash provided by (used in) investing
activities (26,268) 1,738
-------- -------
Cash flows used in financing activities:
Distributions to partners (64,038) (191,484)
-------- -------
Net (decrease) increase in cash and cash equivalents (12,867)
28,061
Beginning of period 23,277 10,813
-------- -------
End of period $ 10,410 38,874
======== =======
(continued)
<PAGE>
Southwest Oil & Gas Income Fund IX-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 23,924 88,270
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 25,000 20,000
Decrease in receivables 38,944 96,000
Increase (decrease) in payables (10,429) 13,537
------- -------
Net cash provided by operating activities $ 77,439 217,807
======= =======
<PAGE>
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 year to enhance production. The Partnership may undergo an
increase in 1998. Thereafter, the Partnership could possibly experience a
normal decline of 8% to 10% per year.
<PAGE>
Results of Operations
A. General Comparison of the Quarters Ended March 31, 1998 and 1997
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1998 and 1997:
Three Months
Ended Percentage
March 31, Increase
1998 1997 (Decrease)
---- ---- ----------
Average price per barrel of oil $14.14 20.03 (30%)
Average price per mcf of gas $ 1.61 2.07 (23%)
Oil production in barrels 9,150 9,000 2%
Gas production in mcf 44,260 54,400 (19%)
Gross oil and gas revenue $200,542 293,123 (32%)
Net oil and gas revenue $76,477 134,833 (44%)
Partnership distributions $64,500 191,500 (67%)
Limited partner distributions $58,050 172,350 (67%)
Per unit distribution to limited
partners $ 5.55 16.49 (67%)
Number of limited partner units 10,453 10,453
Revenues
The Partnership's oil and gas revenues decreased to $200,542 from $293,123
for the quarters ended March 31, 1998 and 1997, respectively, a decrease of
32%. The principal factors affecting the comparison of the quarters ended
March 31, 1998 and 1997 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended March 31, 1998 as compared to the
quarter ended March 31, 1997 by 30%, or $5.89 per barrel, resulting in
a decrease of approximately $53,000 in revenues. Oil sales represented
65% of total oil and gas sales during the quarter ended March 31, 1998
as compared to 62% during the quarter ended March 31, 1997.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 23%, or $.46 per mcf, resulting in
a decrease of approximately $25,000 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $78,000. 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 increased approximately 150 barrels or 2% during the
quarter ended March 31, 1998 as compared to the quarter ended March 31,
1997, resulting in an increase of approximately $2,100 in revenues.
Gas production decreased approximately 10,140 mcf or 19% during the
same period, resulting in a decrease of approximately $16,300 in
revenues.
The net total decrease in revenues due to the change in production is
approximately $14,200. The decrease in gas production is primarily a
result of one well which experienced down time in 1997 and since then
production has declined.
Costs and Expenses
Total costs and expenses decreased to $176,864 from $205,285 for the
quarters ended March 31, 1998 and 1997, respectively, a decrease of 14%.
The decrease is the result of lower lease operating costs partially offset
by an increase in general and administrative expense and depletion expense.
1. Lease operating costs and production taxes were 22% lower, or
approximately $34,200 less during the quarter ended March 31, 1998 as
compared to the quarter ended March 31, 1997. The decrease of lease
operating costs is the result of pulling expenses incurred in 1997 on
two wells not incurred in 1998.
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 3%
or approximately $800 during the quarter ended March 31, 1998 as
compared to the quarter ended March 31, 1997.
3. Depletion expense increased to $25,000 for the quarter ended March 31,
1998 from $20,000 for the same period in 1997. This represents an
increase of 25%. 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 increase in depletion expense between the comparative
periods was the decrease in the price of oil and gas used to determine
the Partnership's reserves for January 1, 1998 as compared to 1997.
<PAGE>
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 $77,400 in
the quarter ended March 31, 1998 as compared to approximately $217,800 in
the quarter ended March 31, 1997. The primary source of the 1998 cash flow
from operating activities was profitable operations.
Cash flows (used in) or provided by investing activities were approximately
$(26,300) in the quarter ended March 31, 1998 as compared to approximately
$1,700 in the quarter ended March 31, 1997. The principle use of the 1998
cash flow from investing activities were additions to oil and gas
properties.
Cash flows used in financing activities were approximately $64,000 in the
quarter ended March 31, 1998 as compared to approximately $191,500 in the
quarter ended March 31, 1997. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 1998 were $64,500 of
which $58,050 was distributed to the limited partners and $6,450 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1998 was $5.55. 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.
The sources for the 1998 distributions of $64,500 were oil and gas
operations of approximately $77,400 offset by additions to oil and gas
properties of approximately $26,300. 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.
Since inception of the Partnership, cumulative monthly cash distributions
of $5,712,518 have been made to the partners. As of March 31, 1998,
$5,194,600 or $496.95 per limited partner unit has been distributed to the
limited partners, representing a 99% return of the capital contributed.
As of March 31, 1998, the Partnership had approximately $63,800 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>
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>
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, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at March 31, 1998 (Unaudited) and the Statement of Operations
for the Three Months Ended March 31, 1998 (Unaudited) and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 10,410
<SECURITIES> 0
<RECEIVABLES> 54,033
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 64,443
<PP&E> 3,406,706
<DEPRECIATION> 2,596,000
<TOTAL-ASSETS> 875,149
<CURRENT-LIABILITIES> 622
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 874,527
<TOTAL-LIABILITY-AND-EQUITY> 875,149
<SALES> 200,542
<TOTAL-REVENUES> 200,788
<CGS> 124,065
<TOTAL-COSTS> 124,065
<OTHER-EXPENSES> 52,799
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 23,924
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,924
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,924
<EPS-PRIMARY> 1.82
<EPS-DILUTED> 1.82
</TABLE>
