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, 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 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, 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 and nine month periods
ended September 30, 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
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 27,951 242,006
Receivable from Managing
General Partner 108,364 104,790
--------- ---------
Total current assets 136,315 346,796
--------- ---------
Oil and gas properties - using the
full cost method of accounting 4,347,397 4,471,954
Less accumulated depreciation,
depletion and amortization 2,654,091 2,518,091
--------- ---------
Net oil and gas properties 1,693,306 1,953,863
--------- ---------
Organization costs, net - 1,966
--------- ---------
$ 1,829,621 2,302,625
========= =========
Liabilities and Partners' Equity
Current liability - Distributions payable $ 39 8
--------- ---------
Partners' equity:
General partners (7,999) 18,247
Limited partners 1,837,581 2,284,370
--------- ---------
Total partners' equity 1,829,582 2,302,617
--------- ---------
$ 1,829,621 2,302,625
========= =========
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Southwest Royalties Institutional Income Fund X-B, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues
Income from net profits
interests $ 115,734 122,412 396,672 451,294
Interest 602 615 4,027 1,759
------- ------- ------- -------
116,336 123,027 400,699 453,053
------- ------- ------- -------
Expenses
General and administrative 18,192 17,888 63,155 64,545
Depreciation, depletion and
amortization 45,000 69,250 137,966 219,750
------- ------- ------- -------
63,192 87,138 201,121 284,295
------- ------- ------- -------
Net income $ 53,144 35,889 199,578 168,758
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 8,833 9,463 30,379 34,966
======= ======= ======= =======
General Partner $ 981 1,051 3,375 3,885
======= ======= ======= =======
Limited Partners $ 43,330 25,375 165,824 129,907
======= ======= ======= =======
Per limited partner
unit $ 3.88 2.27 14.83 11.62
======= ======= ======= =======
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Southwest Royalties Institutional Income Fund X-B, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Cash received from income from net
profits interests $ 393,007 475,887
Cash paid to suppliers (63,155) (65,196)
Interest received 4,027 1,759
------- -------
Net cash provided by operating
activities 333,879 412,450
------- -------
Cash flows provided by investing activities:
Cash received from sale of oil
and gas property interest 124,648 1
------- -------
Cash flows used in financing activities:
Distributions to partners (672,582) (379,024)
------- -------
Net increase (decrease) in cash and
cash equivalents (214,055) 33,427
Beginning of period 242,006 21,571
------- -------
End of period $ 27,951 54,998
======= =======
(continued)
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Southwest Royalties Institutional Income Fund X-B, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
1996 1995
Reconciliation of net income to
net cash provided by operating
activities:
Net income $ 199,578 168,758
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 137,966 219,750
(Increase) decrease in receivables (3,665) 24,593
Decrease in payables - (651)
------- -------
Net cash provided by operating
activities $ 333,879 412,450
======= =======
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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 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.
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Results of Operations
A. General Comparison of the Quarters Ended September 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended September 30, 1996 and 1995:
Three Months
Ended Percentage
September 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 20.45 15.98 28%
Average price per mcf of gas $ 2.11 1.49 42%
Oil production in barrels 14,000 19,400 (28%)
Gas production in mcf 34,000 44,700 (24%)
Income from net profits interests $ 115,734 122,412 (5%)
Partnership distributions $ 150,000 129,000 16%
Limited partner distributions $ 135,000 116,100 16%
Per unit distribution to limited
partners $ 12.07 10.38 16%
Number of limited partner units 11,181 11,181
Revenues
The Partnership's income from net profits interests decreased to $115,734
from $122,412 for the quarters ended September 30, 1996 and 1995,
respectively, a decrease of 5%. The principal factors affecting the
comparison of the quarters ended September 30, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended September 30, 1996 as compared to the
quarter ended September 30, 1995 by 28%, or $4.47 per barrel, resulting
in an increase of approximately $86,700 in income from net profits
interests. Oil sales represented 80% of total oil and gas sales during
the quarter ended September 30, 1996 as compared to 82% during the
quarter ended September 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 42%, or $.62 per mcf, resulting in an increase
of approximately $27,700 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 $114,400.
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 5,400 barrels or 28% during the
quarter ended September 30, 1996 as compared to the quarter ended
September 30, 1995, resulting in a decrease of approximately $110,400 in
income from net profits interests.
Gas production decreased approximately 10,700 mcf or 24% during the same
period, resulting in a decrease of approximately $22,600 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $133,000. The decrease is primarily
attributable to property sales.
3. Lease operating costs and production taxes were 5% lower, or
approximately $12,500 less during the quarter ended September 30, 1996 as
compared to the quarter ended September 30, 1995.
Costs and Expenses
Total costs and expenses decreased to $63,192 from $87,138 for the quarters
ended September 30, 1996 and 1995, respectively, a decrease of 27%. The
decrease is the result of lower depletion expense, offset by an increase in
general and administrative 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 increased 2%
or approximately $300 during the quarter ended September 30, 1996 as
compared to the quarter ended September 30, 1995.
2. Depletion expense decreased to $45,000 for the quarter ended September
30, 1996 from $67,000 for the same period in 1995. This represents a
decrease of 33%. 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. Three factors that
attributed 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, 1996 as compared to 1995, the
increase in property sales and the decrease in oil and gas revenues.
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B. General Comparison of the Nine Month Periods Ended September 30, 1996 and
1995
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 1996 and 1995:
Nine Months
Ended Percentage
September 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.67 16.65 18%
Average price per mcf of gas $ 2.09 1.48 41%
Oil production in barrels 44,500 59,700 (25%)
Gas production in mcf 103,600 133,500 (22%)
Income from net profits interests $ 396,672 451,294 (12%)
Partnership distributions $ 672,613 379,000 77%
Limited partner distributions $ 612,613 341,100 80%
Per unit distribution to limited
partners $ 54.79 30.51 80%
Number of limited partner units 11,181 11,181
Revenues
The Partnership's income from net profits interests decreased to $396,672
from $451,294 for the nine months ended September 30, 1996 and 1995,
respectively, a decrease of 12%. The principal factors affecting the
comparison of the nine months ended September 30, 1996 and 1995 are as
follows:
1. The average price for a barrel of oil received by the Partnership
increased during the nine months ended September 30, 1996 as compared to
the nine months ended September 30, 1995 by 18%, or $3.02 per barrel,
resulting in an increase of approximately $180,300 in income from net
profits interests. Oil sales represented 80% of total oil and gas sales
during the nine months ended September 30, 1996 as compared to 83% during
the nine months ended September 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 41%, or $.61 per mcf, resulting in an increase
of approximately $81,400 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 $261,700.
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 15,200 barrels or 25% during the
nine months ended September 30, 1996 as compared to the nine months ended
September 30, 1995, resulting in a decrease of approximately $299,000 in
income from net profits interests.
Gas production decreased approximately 29,900 mcf or 22% during the same
period, resulting in a decrease of approximately $62,500 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $361,500. The decrease is primarily
attributable to property sales.
3. Lease operating costs and production taxes were 6% lower, or
approximately $45,400 less during the nine months ended September 30,
1996 as compared to the nine months ended September 30, 1995.
Costs and Expenses
Total costs and expenses decreased to $201,121 from $284,295 for the nine
months ended September 30, 1996 and 1995, respectively, a decrease of 29%.
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 2%
or approximately $1,400 during the nine months ended September 30, 1996
as compared to the nine months ended September 30, 1995.
2. Depletion expense decreased to $136,000 for the nine months ended
September 30, 1996 from $213,000 for the same period in 1995. This
represents a decrease of 36%. 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. Three factors
that attributed 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, 1996 as compared to
1995, the increase in property sales and the decrease in oil and gas
reserves.
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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 $333,900 in
the nine months ended September 30, 1996 as compared to approximately
$412,500 in the nine months ended September 30, 1995. The primary source of
the 1996 cash flow from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $124,600 in
the nine months ended September 30, 1996 as compared to approximately $1 in
the nine months ended September 30, 1995. The principle source of the 1996
cash flow from investing activities was the sale of oil and gas properties.
Cash flows used in financing activities were approximately $672,600 in the
nine months ended September 30, 1996 as compared to approximately $379,000 in
the nine months ended September 30, 1995. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 1996 were
$672,613 of which $612,613 was distributed to the limited partners and
$60,000 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 1996 was $54.79. Total
distributions during the nine months ended September 30, 1995 were $379,000
of which $341,100 was distributed to the limited partners and $37,900 to the
general partners. The per unit distribution to limited partners during the
nine months ended September 30, 1995 was $30.51.
The sources for the 1996 distributions of $672,613 were oil and gas
operations of approximately $333,900 and the sale of oil and gas properties
of approximately $124,600, with the balance from available cash on hand at
the beginning of the period. The source for the 1995 distributions of
$379,000 was oil and gas operations of approximately $412,500, resulting in
excess cash for contingencies and subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$3,692,971 have been made to the partners. As of September 30, 1996,
$3,367,358 or $301.17 per limited partner unit has been distributed to the
limited partners, representing a 60% return of the capital contributed.
As of September 30, 1996, the Partnership had approximately $136,300 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) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which
this report is filed.
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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: November 15, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet at September 30, 1996 (Unaudited) and the Statement of Operations for the
Nine Months Ended September 30, 1996 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 27,951
<SECURITIES> 0
<RECEIVABLES> 108,364
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 136,315
<PP&E> 4,347,397
<DEPRECIATION> 2,654,091
<TOTAL-ASSETS> 1,829,621
<CURRENT-LIABILITIES> 39
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,829,582
<TOTAL-LIABILITY-AND-EQUITY> 1,829,621
<SALES> 396,672
<TOTAL-REVENUES> 400,699
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 201,121
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 199,578
<INCOME-TAX> 0
<INCOME-CONTINUING> 199,578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 199,578
<EPS-PRIMARY> 14.83
<EPS-DILUTED> 14.83
</TABLE>
