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 0-19585
SOUTHWEST OIL & GAS 1990-91 INCOME PROGRAM
Southwest Oil & Gas Income Fund X-B, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2332176
(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 X-B, L.P.
Balance Sheets
June 30, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 9,491 13,682
Receivable from Managing General Partner 100,144 171,297
--------- ---------
Total current assets 109,635 184,979
--------- ---------
Oil and gas properties - using the
full cost method of accounting 4,562,880 4,562,827
Less accumulated depreciation,
depletion and amortization 3,160,604 3,096,604
--------- ---------
Net oil and gas properties 1,402,276 1,466,223
--------- ---------
$ 1,511,911 1,651,202
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 1,086 -
Distributions payable 265 168
--------- ---------
Total current liabilities 1,351 168
--------- ---------
Partners' equity:
General partners 1,232 8,624
Limited partners 1,509,328 1,642,410
--------- ---------
Total partners' equity 1,510,560 1,651,034
--------- ---------
$ 1,511,911 1,651,202
========= =========
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Southwest Oil & Gas Income Fund X-B, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues
Oil and gas $ 305,748 390,300 678,555 736,887
Interest 449 1,078 759 1,726
------- ------- ------- -------
306,197 391,378 679,314 738,613
------- ------- ------- -------
Expenses
Production 195,693 243,707 389,628 430,246
General and administrative 18,756 17,960 45,605 45,772
Depreciation, depletion and
amortization 29,000 49,000 64,000 94,494
------- ------- ------- -------
243,449 310,667 499,233 570,512
------- ------- ------- -------
Net income $ 62,748 80,711 180,081 168,101
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 8,257 11,674 21,967 23,634
======= ======= ======= =======
General Partner $ 918 1,297 2,441 2,626
======= ======= ======= =======
Limited partners $ 53,573 67,740 155,673 141,841
======= ======= ======= =======
Per limited partner unit $ 4.92 6.22 14.30 13.03
======= ======= ======= =======
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Southwest Oil & Gas Income Fund X-B, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Cash from oil and gas sales $ 748,227 691,490
Cash paid to suppliers (432,666) (424,712)
Interest received 759 1,726
------- -------
Net cash provided by operating activities 316,320 268,504
------- -------
Cash flows from investing activities:
Additions to oil and gas properties (2,030) (4,384)
Sale of oil and gas properties 1,977 124,057
------- -------
Net cash provided by (used in) investing
activities (53) 119,673
------- -------
Cash flows used in financing activities:
Distributions to partners (320,458) (400,303)
------- -------
Net decrease in cash and cash equivalents (4,191) (12,126)
Beginning of period 13,682 45,580
------- -------
End of period $ 9,491 33,454
======= =======
(continued)
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Southwest Oil & Gas Income Fund X-B, 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 $ 180,081 168,101
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 64,000 94,494
(Increase) decrease in receivables 69,672 (45,397)
Increase in payables 2,567 51,306
------- -------
Net cash provided by operating activities $ 316,320 268,504
======= =======
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund X-B, L.P. was organized as a Delaware limited
partnership on November 27, 1990. The offering of such limited partnership
interests began on December 1, 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 March 1, 1991, with the offering
of limited partnership interests concluding on September 30, 1991, with total
limited partner contributions of $5,444,500.
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 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 farmout
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 few years to enhance production. The Partnership could
possibly experience the following changes; a slight increase in 1997, another
increase in 1998 and 1999, leveling off in 2000 and beginning a decline in
2001.
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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 $ 17.73 20.20 (12%)
Average price per mcf of gas $ 2.12 2.24 (5%)
Oil production in barrels 13,800 15,800 (13%)
Gas production in mcf 28,800 31,800 (9%)
Gross oil and gas revenue $ 305,748 390,300 (22%)
Net oil and gas revenue $ 110,055 146,593 (25%)
Partnership distributions $ 125,000 210,000 (40%)
Limited partner distributions $ 112,500 189,000 (40%)
Per unit distribution to limited
partners $ 10.33 17.36 (40%)
Number of limited partner units 10,889 10,889
Revenues
The Partnership's oil and gas revenues decreased to $305,748 from $390,300
for the quarters ended June 30, 1997 and 1996, respectively, a decrease of
22%. 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 12%, or $2.47 per barrel, resulting in a
decrease of approximately $39,000 in revenues. Oil sales represented 80%
of total oil and gas sales during the quarter ended June 30, 1997 as
compared to 82% during the quarter ended June 30, 1996.
The average price for an mcf of gas received by the Partnership decreased
during the same period by 5%, or $.12 per mcf, resulting in a decrease of
approximately $3,800 in revenues.
The total decrease in revenues due to the change in prices received from
oil and gas production is approximately $42,800. 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 2,000 barrels or 13% during the
quarter ended June 30, 1997 as compared to the quarter ended June 30,
1996, resulting in a decrease of approximately $35,500 in revenues.
Gas production decreased approximately 3,000 mcf or 9% during the same
period, resulting in a decrease of approximately $6,400 in revenues.
The total decrease in revenues due to the change in production is
approximately $41,900. The decrease is primarily a result of property
sales during 1996 and the loss of gas production on one well. Also
contributing to the production decline is the natural decline of oil and
gas production. Since the Partnership does not drill or purchase oil and
gas properties, it is normal to expect production to continue to decline
over the remaining life of the wells.
Costs and Expenses
Total costs and expenses decreased to $243,449 from $310,667 for the quarters
ended June 30, 1997 and 1996, respectively, a decrease of 22%. The decrease
is the result of lower lease operating costs and depletion expense, offset by
an increase in general and administrative expense.
1. Lease operating costs and production taxes were 20% lower, or
approximately $48,000 less during the quarter ended June 30, 1997 as
compared to the quarter ended June 30, 1996. The decrease is primarily
a result of workover costs incurred in 1996 as compared to 1997.
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 4%
or approximately $800 during the quarter ended June 30, 1997 as compared
to the quarter ended June 30, 1996.
3. Depletion expense decreased to $29,000 for the quarter ended June 30,
1997 from $49,000 for the same period in 1996. This represents a
decrease of 41%. 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 $ 19.50 18.99 3%
Average price per mcf of gas $ 2.27 2.11 8%
Oil production in barrels 28,300 31,700 (11%)
Gas production in mcf 55,700 64,000 (13%)
Gross oil and gas revenue $ 678,555 736,887 (8%)
Net oil and gas revenue $ 288,927 306,641 (6%)
Partnership distributions $ 320,555 400,307 (20%)
Limited partner distributions $ 288,755 360,807 (20%)
Per unit distribution to limited
partners $ 26.52 33.13 (20%)
Number of limited partner units 10,889 10,889
Revenues
The Partnership's oil and gas revenues decreased to $678,555 from $736,887
for the six months ended June 30, 1997 and 1996, respectively, a decrease of
8%. 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 3%, or $.51 per barrel, resulting in an
increase of approximately $16,200 in revenues. Oil sales represented 81%
of total oil and gas sales during the six months ended June 30, 1997 as
compared to 82% 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 8%, or $.16 per mcf, resulting in an increase
of approximately $10,200 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $26,400. 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 3,400 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 $66,300 in revenues.
Gas production decreased approximately 8,300 mcf or 13% during the same
period, resulting in a decrease of approximately $18,800 in revenues.
The total decrease in revenues due to the change in production is
approximately $85,100. The decrease is primarily a result of property
sales during 1996 and the loss of gas production on one well. Also
contributing to the production decline is the natural decline of oil and
gas production. Since the Partnership does not drill or purchase oil and
gas properties, it is normal to expect production to continue to decline
over the remaining life of the wells.
Costs and Expenses
Total costs and expenses decreased to $499,233 from $570,512 for the six
months ended June 30, 1997 and 1996, respectively, a decrease of 12%. The
decrease is primarily the result of lower lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 9% lower, or
approximately $40,600 less during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996. The decrease is
primarily a result of workover costs incurred in 1996 as compared to
1997.
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 less
than 1% or approximately $200 during the six months ended June 30, 1997
as compared to the six months ended June 30, 1996.
3. Depletion expense decreased to $64,000 for the six months ended June 30,
1997 from $93,000 for the same period in 1996. This represents a
decrease of 31%. 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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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 $316,300 in
the six months ended June 30, 1997 as compared to approximately $268,500 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
$(50) in the six months ended June 30, 1997 as compared to approximately
$119,700 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 $320,500 in the
six months ended June 30, 1997 as compared to approximately $400,300 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 $320,555
of which $288,755 was distributed to the limited partners and $31,800 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1997 was $26.52. Total distributions during the
six months ended June 30, 1996 were $400,307 of which $360,807 was
distributed to the limited partners and $39,500 to the general partners. The
per unit distribution to limited partners during the six months ended June
30, 1996 was $33.13.
The source for the 1997 distributions of $320,555 was oil and gas operations
of approximately $316,300, offset by the net change in oil and gas properties
of approximately $50, with the balance from available cash on hand at the
beginning of the period. The sources for the 1996 distributions of $400,307
were oil and gas operations of approximately $268,500 and the net change in
oil and gas properties of approximately $119,700, with the balance from
available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$4,172,793 have been made to the partners. As of June 30, 1997, $3,773,568
or $346.55 per limited partner unit has been distributed to the limited
partners, representing a 69% return of the capital contributed.
As of June 30, 1997, the Partnership had approximately $108,300 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 X-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: 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 Statement 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> 9,491
<SECURITIES> 0
<RECEIVABLES> 100,144
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 109,635
<PP&E> 4,562,880
<DEPRECIATION> 3,160,604
<TOTAL-ASSETS> 1,511,911
<CURRENT-LIABILITIES> 1,351
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,510,560
<TOTAL-LIABILITY-AND-EQUITY> 1,511,911
<SALES> 678,555
<TOTAL-REVENUES> 679,314
<CGS> 389,628
<TOTAL-COSTS> 389,628
<OTHER-EXPENSES> 109,605
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 180,081
<INCOME-TAX> 0
<INCOME-CONTINUING> 180,081
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 180,081
<EPS-PRIMARY> 14.30
<EPS-DILUTED> 14.30
</TABLE>
