Page 14 of 14
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 September 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 0-18398
Southwest Royalties Institutional Income Fund IX-B, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2274633
(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.
<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 note 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
nine month periods ended September 30, 1997 are not necessarily indicative
of the results that may be expected for the full year.
<PAGE>
Southwest Royalties Institutional Income Fund IX-B, L.P.
Balance Sheets
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 9,313 13,489
Receivable from Managing General Partner 7,924 148,536
- --------- ---------
Total current assets 17,237 162,025
--------- ---------
Oil and gas properties - using the
full cost method of accounting 3,286,714 3,286,714
Less accumulated depreciation,
depletion and amortization 2,410,000 2,356,000
--------- ---------
Net oil and gas properties 876,714 930,714
--------- ---------
$ 893,951 1,092,739
========= =========
Liabilities and Partners' Equity
Current liability - Distribution payable $ 404 378
--------- ---------
Partners' equity
General partners (58,760) (44,279)
Limited partners 952,307 1,136,640
--------- ---------
Total partners' equity 893,547 1,092,361
--------- ---------
$ 893,951 1,092,739
========= =========
<PAGE>
Southwest Royalties Institutional Income Fund IX-B, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues
Income from net profits
interests $ 31,799 49,881 258,714 206,627
Interest 280 828 960 3,576
------ ------ ------- -------
32,079 50,709 259,674 210,203
------ ------ ------- -------
Expenses
General and administrative 17,140 17,267 59,488 59,892
Depreciation, depletion and
amortization 16,000 28,000 54,000 84,000
------ ------ ------- -------
33,140 45,267 113,488 143,892
------ ------ ------- -------
Net income (loss) $ (1,061) 5,442 146,186 66,311
====== ====== ======= =======
Net income (loss) allocated to:
Managing General Partner $ 1,345 3,010 18,017 13,528
====== ====== ======= =======
General Partner $ 149 334 2,002 1,503
====== ====== ======= =======
Limited Partners $ (2,555) 2,098 126,167 51,280
====== ====== ======= =======
Per limited partner unit $ (.26) .21 12.90 5.24
====== ====== ======= =======
<PAGE>
Southwest Royalties Institutional Income Fund IX-B, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities
Cash received from income from net
profits interests $ 399,326 219,034
Cash paid to suppliers (59,488) (59,898)
Interest received 960 3,576
------- -------
Net cash provided by operating activities 340,798 162,712
------- -------
Cash flows provided by investing activities
Cash received from sale of oil and gas
properties - 259,892
------- -------
Cash flows used in financing activities
Distributions to partners (344,974) (436,644)
------- -------
Net decrease in cash and cash equivalents (4,176) (14,040)
Beginning of period 13,489 37,215
------- -------
End of period $ 9,313 23,175
======= =======
(continued)
<PAGE>
Southwest Royalties Institutional Income Fund IX-B, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
1997 1996
Reconciliation of net income to net cash
provided by operating activities
Net income $ 146,186 66,311
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and amortization 54,000 84,000
Decrease in receivables 140,612 12,407
Decrease in payables - (6)
------- -------
Net cash provided by operating activities $ 340,798 162,712
======= =======
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional Income Fund IX-B, 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 September 26, 1989, and the offering concluded on March 31,
1990, with total limited partner contributions of $4,891,000.
The Partnership was formed to acquire royalty and net profits 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, 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.
<PAGE>
Results of Operations
A. General Comparison of the Quarters Ended September 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended September 30, 1997 and 1996:
Three Months
Ended Percentage
September 30, Increase
1997 1996 (Decrease)
Average price per barrel of oil $ 17.62 20.66 (15%)
Average price per mcf of gas $ 1.72 1.66 4%
Oil production in barrels 7,000 6,800 3%
Gas production in mcf 46,500 40,200 16%
Income from net profits interests $ 31,799 49,881 (36%)
Partnership distributions $ 87,000 150,000 (42%)
Limited partner distributions $ 78,300 135,000 (42%)
Per unit distribution to limited partners $ 8.00 13.80 (42%)
Number of limited partner units 9,782 9,782
Revenues
The Partnership's income from net profits interests decreased to $31,799
from $49,881 for the quarters ended September 30, 1997 and 1996,
respectively, a decrease of 36%. The principal factors affecting the
comparison of the quarters ended September 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 September 30, 1997 as compared to
the quarter ended September 30, 1996 by 15%, or $3.04 per barrel,
resulting in a decrease of approximately $20,700 in income from net
profits interests. Oil sales represented 61% of total oil and gas
sales during the quarter ended September 30, 1997 as compared to 68%
during the quarter ended September 30, 1996.
The average price for an mcf of gas received by the Partnership
increased during the same period by 4%, or $.06 per mcf, resulting in
an increase of approximately $2,400 in income from net profits
interests.
The net total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$18,300. 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 200 barrels or 3% during the
quarter ended September 30, 1997 as compared to the quarter ended
September 30, 1996, resulting in an increase of approximately $3,500 in
income from net profits interests.
Gas production increased approximately 6,300 mcf or 16% during the same
period, resulting in an increase of approximately $10,800 in income
from net profits interests.
The total increase in income from net profits interests due to the
change in production is approximately $14,300. The increase is
primarily attributable to workovers performed on two wells during the
quarter ended June 30, 1997.
3. Lease operating costs and production taxes were 9% higher, or
approximately $14,000 more during the quarter ended September 30, 1997
as compared to the quarter ended September 30, 1996.
Costs and Expenses
Total costs and expenses decreased to $33,140 from $45,267 for the quarters
ended September 30, 1997 and 1996, respectively, a decrease of 27%. The
decrease is the result of lower general and administrative expense and
depletion expense.
1. General and administrative costs consists 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 September 30, 1997 as
compared to the quarter ended September 30, 1996.
2. Depletion expense decreased to $16,000 for the quarter ended September
30, 1997 from $28,000 for the same period in 1996. This represents a
decrease of 43%. 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 reserves for January 1, 1997 as compared to 1996, the
decline in gross oil and gas revenues and property sales.
<PAGE>
B. General Comparison of the Nine Month Periods Ended September 30, 1997
and 1996
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 1997 and 1996:
Nine Months
Ended Percentage
September 30, Increase
1997 1996 (Decrease)
Average price per barrel of oil $ 18.45 19.23 (4%)
Average price per mcf of gas $ 1.85 1.65 12%
Oil production in barrels 22,400 22,500 -
Gas production in mcf 146,500 121,200 21%
Income from net profits interests $ 258,714 206,627 25%
Partnership distributions $ 345,000 436,668 (21%)
Limited partner distributions $ 310,500 394,868 (21%)
Per unit distribution to limited partners $ 31.74 40.37 (21%)
Number of limited partner units 9,782 9,782
Revenues
The Partnership's income from net profits interests increased to $258,714
from $206,627 for the nine months ended September 30, 1997 and 1996,
respectively, an increase of 25%. The principal factors affecting the
comparison of the nine months ended September 30, 1997 and 1996 are as
follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the nine months ended September 30, 1997 as compared
to the nine months ended September 30, 1996 by 4%, or $.78 per barrel,
resulting in a decrease of approximately $17,600 in income from net
profits interests. Oil sales represented 60% of total oil and gas
sales during the nine months ended September 30, 1997 as compared to
68% during the nine months ended September 30, 1996.
The average price for an mcf of gas received by the Partnership
increased during the same period by 12%, or $.20 per mcf, resulting in
an increase of approximately $24,200 in income from net profits
interests.
The net total increase in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$6,600. 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.
<PAGE>
2. Oil production decreased approximately 100 barrels or less than 1%
during the nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996, resulting in a decrease of
approximately $1,800 in income from net profits interests.
Gas production increased approximately 25,300 mcf or 21% during the
same period, resulting in an increase of approximately $46,800 in
income from net profits interests.
The net total increase in income from net profits interests due to the
change in production is approximately $45,000. The increase in gas
production is primarily attributable to workovers performed on two
wells during the quarter ended June 30, 1997 and the re-opening of a
previously shut-in gas well during the quarter ended December 31, 1996.
3. Lease operating costs and production taxes were less than 1% higher, or
approximately $40 more during the nine months ended September 30, 1997
as compared to the nine months ended September 30, 1996.
Costs and Expenses
Total costs and expenses decreased to $113,488 from $143,892 for the nine
months ended September 30, 1997 and 1996, respectively, a decrease of 21%.
The decrease is the result of lower general and administrative expense and
depletion expense.
1. General and administrative costs consists 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 nine months ended September 30, 1997
as compared to the nine months ended September 30, 1996.
2. Depletion expense decreased to $54,000 for the nine months ended
September 30, 1997 from $84,000 for the same period in 1996. This
represents a decrease of 36%. 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. Two
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 reserves for January 1, 1997 as compared to
1996 and property sales.
<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 $340,800 in
the nine months ended September 30, 1997 as compared to approximately
$162,700 in the nine months ended September 30, 1996. The primary source
of the 1997 cash flow from operating activities was profitable operations.
There were no cash flows provided by investing activities in the nine
months ended September 30, 1997 as compared to approximately $259,900 in
the nine months ended September 30, 1996.
Cash flows used in financing activities were approximately $345,000 in the
nine months ended September 30, 1997 as compared to approximately $436,700
in the nine months ended September 30, 1996. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 1997 were
$345,000 of which $310,500 was distributed to the limited partners and
$34,500 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 1997 was $31.74. Total
distributions during the nine months ended September 30, 1996 were $436,668
of which $394,868 was distributed to the limited partners and $41,800 to
the general partners. The per unit distribution to limited partners during
the nine months ended September 30, 1996 was $40.37.
The source for the 1997 distributions of $345,000 was oil and gas
operations of approximately $340,800, with the balance from available cash
on hand at the beginning of the period. The sources for the 1996
distributions of $436,668 were oil and gas operations of approximately
$162,700 and the sale of oil and gas properties of approximately $259,900,
with the balance from available cash on hand at the beginning of the
period.
Since inception of the Partnership, cumulative monthly cash distributions
of $5,220,206 have been made to the partners. As of September 30, 1997,
$4,735,412 or $484.09 per limited partner unit has been distributed to the
limited partners, representing a 97% return of the capital contributed.
As of September 30, 1997, the Partnership had approximately $16,800 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) 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 Royalties Institutional Income
Fund IX-B, 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: November 15, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at September 30, 1997 (Unaudited) and the Statement of
Operations for the Nine Months Ended September 30, 1997 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,313
<SECURITIES> 0
<RECEIVABLES> 7,924
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,237
<PP&E> 3,286,714
<DEPRECIATION> 2,410,000
<TOTAL-ASSETS> 893,951
<CURRENT-LIABILITIES> 404
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 893,547
<TOTAL-LIABILITY-AND-EQUITY> 893,951
<SALES> 258,714
<TOTAL-REVENUES> 259,674
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 113,488
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 146,186
<INCOME-TAX> 0
<INCOME-CONTINUING> 146,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,186
<EPS-PRIMARY> 12.90
<EPS-DILUTED> 12.90
</TABLE>
