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 0-20299
SOUTHWEST OIL & GAS 1990-91 INCOME PROGRAM
Southwest Oil & Gas Income Fund X-C, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2374445
(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-C, L.P.
Balance Sheets
June 30, December 31,
1997 1996
--------- ----------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 158,270 207,773
Receivable from Managing General Partner 123,983 180,257
--------- ---------
Total current assets 282,253 388,030
--------- ---------
Oil and gas properties - using the
full cost method of accounting 2,417,634 2,412,011
Less accumulated depreciation,
depletion and amortization 1,699,496 1,644,496
--------- ---------
Net oil and gas properties 718,138 767,515
--------- ---------
$ 1,000,391 1,155,545
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 513 -
Distributions payable 90 91
--------- ---------
Total current liabilities 603 91
--------- ---------
Partners' equity:
General partners 6,797 16,864
Limited partners 992,991 1,138,590
--------- ---------
Total partners' equity 999,788 1,155,454
--------- ---------
$ 1,000,391 1,155,545
========= =========
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Southwest Oil & Gas Income Fund X-C, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues
Oil and gas $ 292,075 399,414 628,416 656,677
Interest 1,950 2,279 3,664 3,084
------- ------- ------- -------
294,025 401,693 632,080 659,761
------- ------- ------- -------
Expenses
Production 163,474 160,852 327,458 333,150
General and administrative 9,470 10,410 25,788 26,220
Depreciation, depletion and
amortization 26,000 48,620 55,000 80,240
------- ------- ------- -------
198,944 219,882 408,246 439,610
------- ------- ------- -------
Net income $ 95,081 181,811 223,834 220,151
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 10,897 20,739 25,095 27,035
======= ======= ======= =======
General Partner $ 1,211 2,304 2,788 3,004
======= ======= ======= =======
Limited Partners $ 82,973 158,768 195,951 190,112
======= ======= ======= =======
Per limited partner unit $ 13.28 25.42 31.37 30.44
======= ======= ======= =======
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Southwest Oil & Gas Income Fund X-C, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Cash received from sale of oil and gas $ 694,625 636,314
Cash paid to suppliers (362,668) (364,828)
Interest received 3,664 3,084
------- -------
Net cash provided by operating activities 335,621 274,570
------- -------
Cash flows from investing activities:
Additions to oil and gas properties (8,313) (2,070)
Cash received from sale of oil and gas
properties 2,690 225,694
------- -------
Net cash provided by (used in) investing
activities: (5,623) 223,624
------- -------
Cash flows used in financing activities:
Distributions to partners (379,501) (273,036)
------- -------
Net increase (decrease) in cash and cash
equivalents (49,503) 225,158
Beginning of period 207,773 34,680
------- -------
End of period $ 158,270 259,838
======= =======
(continued)
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Southwest Oil & Gas Income Fund X-C, 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 $ 223,834 220,151
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 55,000 80,240
(Increase) decrease in receivables 66,209 (20,363)
Decrease in payables (9,422) (5,458)
------- -------
Net cash provided by operating activities $ 335,621 274,570
======= =======
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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-C, L.P. was organized as a Delaware limited
partnership on September 20, 1991. The offering of such limited partnership
interests began October 1, 1991 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 January 13, 1992 and the
offering concluded on April 30, 1992 with total limited partner contributions
of $3,123,000.
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 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 1997 to enhance production. The Partnership could possibly experience
the following changes; a little less than normal decline in 1997, with no
decline in 1998 and thereafter, experience a low decline.
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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 $ 18.00 19.04 (5%)
Average price per mcf of gas $ 2.05 2.39 (14%)
Oil production in barrels 12,300 15,600 (21%)
Gas production in mcf 34,500 42,700 (19%)
Gross oil and gas revenue $ 292,075 399,414 (27%)
Net oil and gas revenue $ 128,601 238,562 (46%)
Partnership distributions $ 188,000 142,952 32%
Limited partner distributions $ 169,200 131,452 29%
Per unit distribution to limited
partners $ 27.09 21.05 29%
Number of limited partner units 6,246 6,246
Revenues
The Partnership's oil and gas revenues decreased to $292,075 from $399,414
for the quarters ended June 30, 1997 and 1996, respectively, a decrease of
27%. 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 5%, or $1.04 per barrel, resulting in a
decrease of approximately $16,200 in revenues. Oil sales represented 76%
of total oil and gas sales during the quarter ended June 30, 1997 as
compared to 74% 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 14%, or $.34 per mcf, resulting in a decrease
of approximately $14,500 in revenues.
The total decrease in revenues due to the change in prices received from
oil and gas production is approximately $30,700. 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 3,300 barrels or 21% during the
quarter ended June 30, 1997 as compared to the quarter ended June 30,
1996, resulting in a decrease of approximately $59,400 in revenues.
Gas production decreased approximately 8,200 mcf or 19% during the same
period, resulting in a decrease of approximately $16,800 in revenues.
The total decrease in revenues due to the change in production is
approximately $76,200. The decline in production is primarily
attributable to the accrual effect in the second quarter of 1996. The
estimates made, for the quarter ended June 30, 1996, overstated actual
production received thus skewing the comparative quarters of 1996 and
1997. When comparing the quarter ended June 30, 1997 to the actual
production in the quarter ended June 30, 1996, oil production declined
400 barrels or 4% and gas production increased 1,100 mcf or 4%.
Costs and Expenses
Total costs and expenses decreased to $198,944 from $219,882 for the quarters
ended June 30, 1997 and 1996, respectively, a decrease of 10%. The decrease
is the result of lower general and administrative expense and depletion
expense, partially offset by an increase in lease operating costs.
1. Lease operating costs and production taxes were 2% higher, or
approximately $2,600 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 decreased 9%
or approximately $900 during the quarter ended June 30, 1997 as compared
to the quarter ended June 30, 1996.
3. Depletion expense decreased to $26,000 for the quarter ended June 30,
1997 from $47,000 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 decrease 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 $ 19.70 18.61 6%
Average price per mcf of gas $ 2.40 2.27 6%
Oil production in barrels 23,600 26,800 (12%)
Gas production in mcf 68,100 70,000 (3%)
Gross oil and gas revenue $ 628,416 656,677 (4%)
Net oil and gas revenue $ 300,958 323,527 (7%)
Partnership distributions $ 379,500 272,952 39%
Limited partner distributions $ 341,550 251,952 36%
Per unit distribution to limited
partners $ 54.68 40.34 36%
Number of limited partner units 6,246 6,246
Revenues
The Partnership's oil and gas revenues decreased to $628,416 from $656,677
for the six months ended June 30, 1997 and 1996, respectively, a decrease 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 6%, or $1.09 per barrel, resulting in
an increase of approximately $29,200 in revenues. Oil sales represented
74% of total oil and gas sales during the six months ended June 30, 1997
as compared to 76% 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 6%, or $.13 per mcf, resulting in an increase
of approximately $9,100 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $38,300. 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.
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<PAGE>
2. Oil production decreased approximately 3,200 barrels or 12% during the
six months ended June 30, 1997 as compared to the six months ended June
30, 1996, resulting in a decrease of approximately $63,000 in revenues.
Gas production decreased approximately 1,900 mcf or 3% during the same
period, resulting in a decrease of approximately $4,600 in revenues.
The total decrease in revenues due to the change in production is
approximately $67,600. The decline in production is primarily
attributable to property sales in 1996 and the natural decline in 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 $408,246 from $439,610 for the six
months ended June 30, 1997 and 1996, respectively, a decrease of 7%. The
decrease is the result of a decline in lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 2% lower, or
approximately $5,700 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 2%
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 $55,000 for the six months ended June 30,
1997 from $77,000 for the same period in 1996. This represents a
decrease of 29%. 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 decrease 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 $335,600 in
the six months ended June 30, 1997 as compared to approximately $274,600 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
$(5,600) in the six months ended June 30, 1997 as compared to approximately
$223,600 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 $379,500 in the
six months ended June 30, 1997 as compared to approximately $273,000 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 $379,500
of which $341,550 was distributed to the limited partners and $37,950 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1997 was $54.68. Total distributions during the
six months ended June 30, 1996 were $272,952 of which $251,952 was
distributed to the limited partners and $21,000 to the general partners. The
per unit distribution to limited partners during the six months ended June
30, 1996 was $40.34.
The source for the 1997 distributions of $379,500 was oil and gas operations
of approximately $335,600, partially offset by the net change in oil and gas
properties of approximately $5,600, with the balance from available cash on
hand at the beginning of the period. The sources for the 1996 distributions
of $272,952 were oil and gas operations of approximately $274,600 and the net
change in oil and gas properties of approximately $223,600, resulting in
excess cash for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$2,385,318 have been made to the partners. As of June 30, 1997, $2,163,794
or $346.43 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 $281,700 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-C, 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> 158,270
<SECURITIES> 0
<RECEIVABLES> 123,983
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 282,253
<PP&E> 2,417,634
<DEPRECIATION> 1,699,496
<TOTAL-ASSETS> 1,000,391
<CURRENT-LIABILITIES> 603
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 999,788
<TOTAL-LIABILITY-AND-EQUITY> 1,000,391
<SALES> 628,416
<TOTAL-REVENUES> 632,080
<CGS> 327,458
<TOTAL-COSTS> 327,458
<OTHER-EXPENSES> 80,788
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 223,834
<INCOME-TAX> 0
<INCOME-CONTINUING> 223,834
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223,834
<EPS-PRIMARY> 31.37
<EPS-DILUTED> 31.37
</TABLE>
