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, 1996
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 0-19601
SOUTHWEST ROYALTIES INSTITUTIONAL 1990-91 INCOME PROGRAM
Southwest Royalties Institutional Income Fund X-B, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2332174
(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.
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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, 1995 which are found in the Registrant's Form 10-K Report
for 1995 filed with the Securities and Exchange Commission. The December 31,
1995 balance sheet included herein has been taken from the Registrant's 1995
Form 10-K Report. Operating results for the three month period ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the full year.
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Southwest Royalties Institutional Income Fund X-B, L.P.
Balance Sheets
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 204,016 242,006
Receivable from Managing General
Partner 108,192 104,790
Other receivable 26 -
--------- ---------
Total current assets 312,234 346,796
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 4,364,603 4,471,954
Less accumulated depreciation,
depletion and amortization 2,562,091 2,518,091
--------- ---------
Net oil and gas properties 1,802,512 1,953,863
--------- ---------
Organization costs, net of amortization - 1,966
--------- ---------
$ 2,114,746 2,302,625
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 6,800 -
Distributions payable - 8
--------- ---------
Total current liabilities 6,800 8
--------- ---------
Partners' equity:
General partners 10,581 18,247
Limited partners 2,097,365 2,284,370
--------- ---------
Total partners' equity 2,107,946 2,302,617
--------- ---------
$ 2,114,746 2,302,625
========= =========
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Southwest Royalties Institutional Income Fund X-B, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Revenues
Income from net profits interests $ 148,491 188,745
Interest income from operations 1,839 460
------- -------
150,330 189,205
------- -------
Expenses
General and administrative 26,983 28,588
Depreciation, depletion and amortization 45,966 78,250
------- -------
72,949 106,838
------- -------
Net income $ 77,381 82,367
======= =======
Net income allocated to:
Managing General Partner $ 11,101 14,456
======= =======
General partner $ 1,233 1,606
======= =======
Limited partners $ 65,047 66,305
======= =======
Per limited partner unit $ 5.82 5.93
======= =======
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Southwest Royalties Institutional Income Fund X-B, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Cash flows from operating activities:
Cash received from net profits
interests $ 144,998 157,451
Cash paid to suppliers (20,183) (20,113)
Interest received 1,839 460
------- -------
Net cash provided by operating
activities 126,654 137,798
------- -------
Cash flows provided by investing activities:
Sale of oil and gas properties 107,416 1
------- -------
Cash flows used in financing activities:
Distributions to partners (272,060) (132,026)
------- -------
Net increase (decrease) in cash (37,990) 5,773
Cash and cash equivalents:
Beginning of period 242,006 21,571
------- -------
End of period $ 204,016 27,344
======= =======
(continued)
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Southwest Royalties Institutional Income Fund X-B, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Reconciliation of net income
to net cash provided by operating
activities:
Net income $ 77,381 82,367
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation, depletion and
amortization 45,966 78,250
Increase in receivables (3,493) (31,294)
Increase in payables 6,800 8,475
------- -------
Net cash provided by operating activities $ 126,654 137,798
======= =======
Supplemental schedule of noncash investing
and financing activities:
Sale of oil and gas properties included
in receivables $ 26 -
======= =======
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional 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 December 1, 1990 as part of a shelf
offering registered under the name Southwest Royalties Institutional 1990-91
Income Program. Minimum capital requirements for the Partnership were met on
March 11, 1991, with the offering of limited partnership interests concluding
September 30, 1991, with total limited partner contributions of $5,590,500.
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 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.
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Results of Operations
A. General Comparison of the Quarters Ended March 31, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1996 and 1995:
Three Months
Ended Percentage
March 31, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 18.03 16.60 9%
Average price per mcf of gas $ 1.85 1.56 19%
Oil production in barrels 15,700 20,800 (25%)
Gas production in mcf 38,200 50,900 (25%)
Income from net profits interests $ 148,491 188,745 (21%)
Partnership distributions $ 272,052 132,000 106%
Limited partner distributions $ 252,052 118,800 112%
Per unit distribution to limited
partners $ 22.54 10.63 112%
Number of limited partner units 11,181 11,181
Revenues
The Partnership's income from net profits interests decreased to $148,491
from $188,745 for the quarters ended March 31, 1996 and 1995, respectively,
a decrease of 21%. The principal factors affecting the comparison of the
quarters ended March 31, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1996 as compared to the
quarter ended March 31, 1995 by 9%, or $1.43 per barrel, resulting in an
increase of approximately $29,700 in income from net profits interests.
Oil sales represented 80% of total oil and gas sales during the quarter
ended March 31, 1996 as compared to 81% during the quarter ended March
31, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 19%, or $.29 per mcf, resulting in an increase
of approximately $14,800 in income from net profits interests.
The total increase in income from net profits interests due to the change
in prices received from oil and gas production is approximately $44,500.
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.
2. Oil production decreased approximately 5,100 barrels or 25% during the
quarter ended March 31, 1996 as compared to the quarter ended March 31,
1995, resulting in a decrease of approximately $92,000 in income from net
profits interests.
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Gas production decreased approximately 12,700 mcf or 25% during the same
period, resulting in a decrease of approximately $23,500 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $115,500. The decrease is a result of
equipment failures and property sales.
3. Lease operating costs and production taxes were 13% lower, or
approximately $31,700 less during the quarter ended March 31, 1996 as
compared to the quarter ended March 31, 1995.
Costs and Expenses
Total costs and expenses decreased to $72,949 from $106,838 for the quarters
ended March 31, 1996 and 1995, respectively, a decrease of 32%. 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 6% or
approximately $1,600 during the quarter ended March 31, 1996 as compared
to the quarter ended March 31, 1995.
2. Depletion expense decreased to $44,000 for the quarter ended March 31,
1996 from $76,000 for the same period in 1995. This represents a decrease
of 42%. Depletion is calculated using the gross 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. Consequently, depletion
will generally fluctuate in direct relation to oil and gas revenues. As
noted above, oil and gas revenues declined due to a decrease in
production for the quarter ended March 31, 1996 as compared to the same
period for 1995. Depletion reflected a comparable decline.
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 $126,700 in
the three months ended March 31, 1996 as compared to approximately $137,800
in the three months ended March 31, 1995. The primary source of the 1996
cash flow from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $107,400 in
the three months ended March 31, 1996 as compared to $1 in the three months
ended March 31, 1995. The principle source of the 1996 cash flow from
investing activities was the sale of oil and gas properties.
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<PAGE>
Cash flows used in financing activities were approximately $272,100 in the
three months ended March 31, 1996 as compared to approximately $132,000 in
the three months ended March 31, 1995. The only use in financing activities
was the distributions to partners.
Total distributions during the three months ended March 31, 1996 were
$272,052 of which $252,052 was distributed to the limited partners and
$20,000 to the general partners. The per unit distribution to limited
partners during the three months ended March 31, 1996 was $22.54. Total
distributions during the three months ended March 31, 1995 were $132,000 of
which $118,800 was distributed to the limited partners and $13,200 to the
general partners. The per unit distribution to limited partners during the
three months ended March 31, 1995 was $10.63.
The sources for the 1996 distributions of $272,052 were oil and gas
operations of approximately $126,700 and the sale of oil and gas properties
of approximately $107,400, with the balance from available cash on hand at
the beginning of the period. The sources for the 1995 distributions of
$132,000 were oil and gas operations of approximately $137,800 and the sale
of oil and gas properties of $1, resulting in excess cash for contingencies
or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$3,292,410 have been made to the partners. As of March 31, 1996, $3,006,797
or $268.92 per limited partner unit has been distributed to the limited
partners, representing a 54% return of the capital contributed.
As of March 31, 1996, the Partnership had approximately $305,400 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) None
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.
PAGE
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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 ROYALTIES INSTITUTIONAL
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: May 11, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet at March 31, 1996 (Unaudited) and the Statement of Operations for the
Three Months Ended March 31, 1996 (Unaudited) and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 204,016
<SECURITIES> 0
<RECEIVABLES> 108,218
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 312,234
<PP&E> 4,364,603
<DEPRECIATION> 2,562,091
<TOTAL-ASSETS> 2,114,746
<CURRENT-LIABILITIES> 6,800
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,107,946
<TOTAL-LIABILITY-AND-EQUITY> 2,114,746
<SALES> 148,491
<TOTAL-REVENUES> 150,330
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 72,949
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 77,381
<INCOME-TAX> 0
<INCOME-CONTINUING> 77,381
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,381
<EPS-PRIMARY> 5.82
<EPS-DILUTED> 5.82
</TABLE>
