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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 0-18996
SOUTHWEST OIL & GAS 1990-91 INCOME PROGRAM
Southwest Oil & Gas Income Fund X-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2310854
(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 13.
<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 X-A, L.P.
Balance Sheets
March 31, December 31,
1998 1997
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 484 4,408
Receivable from Managing General Partner 13,953 40,311
--------- ---------
Total current assets 14,437 44,719
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 3,940,793 3,936,664
Less accumulated depreciation,
depletion and amortization 3,548,000 3,534,000
--------- ---------
Net oil and gas properties 392,793 402,664
--------- ---------
$ 407,230 447,383
========= =========
Liabilities and Partners' Equity
Current liability - Distributions payable $ 1,066 759
--------- ---------
Partners' equity:
General partners (14,295) (11,649)
Limited partners 420,459 458,273
--------- ---------
Total partners' equity 406,164 446,624
--------- ---------
$ 407,230 447,383
========= =========
<PAGE>
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Revenues
Oil and gas $ 96,809 142,622
Interest 33 212
Miscellaneous income - 1,650
------- -------
96,842 144,484
------- -------
Expenses
Production 85,285 105,605
General and administrative 28,017 27,749
Depreciation, depletion and amortization 14,000 10,000
------- -------
127,302 143,354
------- -------
Net income (loss) $ (30,460) 1,130
======= =======
Net income (loss) allocated to:
Managing General Partner $ (1,481) 1,002
======= =======
General partner $ (165) 111
======= =======
Limited partners $ (28,814) 17
======= =======
Per limited partner unit $ (2.75) -
======= =======
<PAGE>
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Cash flows from operating activities:
Cash received from sales of oil and gas $ 120,431 204,130
Cash paid to suppliers (110,566) (117,486)
Interest received 33 212
-------- --------
Net cash provided by operating activities 9,898 86,856
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (4,129) (2,042)
Sale of oil and gas properties - 4,978
-------- --------
Net cash provided by (used in) investing
activities (4,129) 2,936
-------- --------
Cash flows used in financing activities:
Distributions to partners (9,693) (87,274)
-------- --------
Net increase (decrease) in cash and cash
equivalents (3,924) 2,518
Beginning of period 4,408 8,919
-------- --------
End of period $ 484 11,437
========
========
(continued)
<PAGE>
Southwest Oil & Gas Income Fund X-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Reconciliation of net income (loss) to net
cash provided by operating activities:
Net income (loss) $ (30,460) 1,130
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization 14,000 10,000
Decrease in receivables 23,622 59,858
Increase in payables 2,736 15,868
------ -------
Net cash provided by operating activities $ 9,898 86,856
====== =======
<PAGE>
Southwest Oil & Gas Income Fund X-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Oil and Gas Income Fund X-A, L.P. was organized under the
laws of the state of Delaware on January 29, 1990, for the purpose of
acquiring producing oil and gas properties and to produce and market
crude oil and natural gas produced from such properties for a term of
50 years, unless terminated at an earlier date as provided for in the
Partnership Agreement. The Partnership sells its oil and gas
production to a variety of purchasers with the prices it receives
being dependent upon the oil and gas economy. Southwest Royalties,
Inc. serves as the Managing General Partner and H. H. Wommack, III, as
the individual general partner. Revenues, costs, and expenses are
allocated as follows:
Limited General
Partners Partners
-------- --------
Interest income on capital contributions 100% -
Oil and gas sales 90% 10%
All other revenues 90% 10%
Organization and offering costs (1) 100% -
Syndication costs 100% -
Amortization of organization costs 100% -
Property acquisition costs 100% -
Gain/loss on property disposition 90% 10%
Operating and administrative costs (2) 90% 10%
Depreciation, depletion and amortization
of oil and as properties 100% -
All other costs 90% 10%
(1) All organization costs in excess of 3% of initial capital
contributions will be paid by the Managing General Partner and
will be treated as a capital contribution. The Partnership paid
the Managing General Partner an amount equal to 3% of initial
capital contributions for such organization costs.
(2) Administrative costs in any year which exceed 2% of capital
contributions shall be paid by the Managing General Partner and
will be treated as a capital contribution.
2. Summary of Significant Accounting Policies
The interim financial information as of March 31, 1998, and for the
three months ended March 31, 1998, is unaudited. Certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q pursuant to the rules
and regulations of the Securities and Exchange Commission. However,
in the opinion of management, these interim financial statements
include all the necessary adjustments to fairly present the results of
the interim periods and all such adjustments are of a normal recurring
nature. The interim consolidated financial statements should be read
in conjunction with the audited financial statements for the year
ended December 31, 1997.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund X-A, L.P. was organized as a Delaware
limited partnership on January 29, 1990. The offering of such limited
partnership interests began on May 11, 1990 as part of a shelf offering
registered under the name Southwest Oil & Gas 1990-91 Income Program.
Minimum capital requirements for the Partnership were met on August 15,
1990, with the offering of limited partnership interests concluding on
November 30, 1990, with total limited partner contributions of $5,242,000.
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 will not be 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 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 $ 13.64 19.56 (31%)
Average price per mcf of gas $ 1.61 2.51 (36%)
Oil production in barrels 6,400 6,200 4%
Gas production in mcf 5,900 8,500 (31%)
Gross oil and gas revenue $ 96,809 142,622 (33%)
Net oil and gas revenue $ 11,524 37,017 (69%)
Partnership distributions $ 10,000 87,000 (89%)
Limited partner distributions $ 9,000 78,300 (89%)
Per unit distribution to limited
partners $ .86 7.47 (89%)
Number of limited partner units 10,484 10,484
Revenues
The Partnership's oil and gas revenues decreased to $96,809 from $142,622
for the quarters ended March 31, 1998 and 1997, respectively, a decrease of
33%. 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 31%, or $5.92 per barrel, resulting in
a decrease of approximately $36,700 in revenues. Oil sales represented
90% of total oil and gas sales during the quarter ended March 31, 1998
as compared to 85% 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 36%, or $.90 per mcf, resulting in
a decrease of approximately $7,600 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $44,300. 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 4% during the
quarter ended March 31, 1998 as compared to the quarter ended March 31,
1997, resulting in an increase of approximately $2,700 in revenues.
Gas production decreased approximately 2,600 mcf or 31% during the same
period, resulting in a decrease of approximately $4,200 in revenues.
The total net decrease in revenues due to the change in production is
approximately $1,500.
Costs and Expenses
Total costs and expenses decreased to $127,302 from $143,354 for the
quarters ended March 31, 1998 and 1997, respectively, a decrease of 12%.
The decrease is the result of lower lease operating costs partially offset
by higher general and administrative expense and depletion expense.
1. Lease operating costs and production taxes were 20% lower, or
approximately $20,300 less during the quarter ended March 31, 1998 as
compared to the quarter ended March 31, 1997. The decrease is
primarily attributable to the farm-out agreement, which lowered the
Partnership's working interest, on the Ballard Grayburg San Andres
Unit.
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 $270 during the quarter ended March 31, 1998 as
compared to the quarter ended March 31, 1997.
3. Depletion expense increased to $14,000 for the quarter ended March 31,
1998 from $10,000 for the same period in 1997. This represents an
increase of 40%. 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 increase of depletion expense between the comparative
periods were a decrease in oil and gas revenue and the decrease in the
price of oil 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, other than the ones noted above, nor does it anticipate any such
change.
Cash flows provided by operating activities were approximately $9,900 in
the quarter ended March 31, 1998 as compared to approximately $86,900 in
the quarter ended March 31, 1997. The primary source of the 1998 cash flow
from operating activities was profitable operations.
Cash flows provided by or (used in) investing activities were approximately
$(4,100) in the quarter ended March 31, 1998 as compared to approximately
$2,900 in the quarter ended March 31, 1997. The principle use of the 1998
cash flow from investing activities was additions to oil and gas
properties.
Cash flows used in financing activities were approximately $9,700 in the
quarter ended March 31, 1998 as compared to approximately $87,300 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 $10,000 of
which $9,000 was distributed to the limited partners and $1,000 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1998 was $.86. Total distributions during the
quarter ended March 31, 1997 were $87,000 of which $78,300 was distributed
to the limited partners and $8,700 to the general partners. The per unit
distribution to limited partners during the quarter ended March 31, 1997
was $7.47.
The sources for the 1998 distributions of $9,700 were oil and gas
operations of approximately $9,900, offset by the additions to oil and gas
properties of approximately $4,100. The sources for the 1997 distributions
of $87,000 were oil and gas operations of approximately $86,900 and the
sale of oil and gas properties of approximately $5,000, offset by the
additions to oil and gas properties of approximately $2,000, resulting in
excess cash for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $2,671,706 have been made to the partners. As of March 31, 1998,
$2,455,004 or $234.17 per limited partner unit has been distributed to the
limited partners, representing a 47% return of the capital contributed.
As of March 31, 1998, the Partnership had approximately $13,370 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 X-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> 484
<SECURITIES> 0
<RECEIVABLES> 13,953
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,437
<PP&E> 3,940,793
<DEPRECIATION> 3,548,000
<TOTAL-ASSETS> 407,230
<CURRENT-LIABILITIES> 1,066
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 406,164
<TOTAL-LIABILITY-AND-EQUITY> 407,230
<SALES> 96,809
<TOTAL-REVENUES> 96,842
<CGS> 85,285
<TOTAL-COSTS> 85,285
<OTHER-EXPENSES> 42,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (30,460)
<INCOME-TAX> 0
<INCOME-CONTINUING> (30,460)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,460)
<EPS-PRIMARY> (2.75)
<EPS-DILUTED> (2.75)
</TABLE>
