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 33-38511
SOUTHWEST DEVELOPMENTAL DRILLING PROGRAM 1991-92
Southwest Developmental Drilling Fund 91-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2387814
(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 Developmental Drilling Fund 91-A, L.P.
Balance Sheets
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 62,185 51,601
Receivable from Managing
General Partner 61,187 27,699
--------- ---------
Total current assets 123,372 79,300
--------- ---------
Oil and gas properties - using the
full cost method of accounting 1,020,246 1,020,045
Less accumulated depreciation,
depletion and amortization 826,000 735,000
--------- ---------
Net oil and gas properties 194,246 285,045
--------- ---------
Organization costs, net 3,846 9,615
--------- ---------
$ 321,464 373,960
========= =========
Liabilities and Partners' Equity
Current liability - Distribution payable $ - 58
--------- ---------
Partners' equity:
Managing General Partner 25,860 20,984
Investor partners 295,604 352,918
--------- ---------
Total partners' equity 321,464 373,902
--------- ---------
$ 321,464 373,960
========= =========
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Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues
Oil and gas $ 127,969 60,379 363,492 207,845
Interest 538 250 1,299 671
------- ------- ------- -------
128,507 60,629 364,791 208,516
------- ------- ------- -------
Expenses
Production 24,193 45,202 129,976 99,876
General and administrative 3,138 3,174 15,484 15,722
Depreciation, depletion and
amortization 33,923 19,923 96,769 66,769
------- ------- ------- -------
61,254 68,299 242,229 182,367
------- ------- ------- -------
Net income (loss) $ 67,253 (7,670) 122,562 26,149
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 11,129 1,348 24,126 10,221
======= ======= ======= =======
Investor Partners $ 56,124 (9,018) 98,436 15,928
======= ======= ======= =======
Per investor partner
unit $ 49.04 (7.88) 86.01 13.92
======= ======= ======= =======
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Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Cash received from oil and gas sales $ 330,182 226,765
Cash paid to suppliers (145,638) (114,915)
Interest received 1,299 671
------- -------
Net cash provided by operating
activities 185,843 112,521
------- -------
Cash flows from investing activities:
Additions of oil and gas properties (201) (4,336)
Sale of oil and gas properties - 1,659
------- -------
Net cash used in investing activities (201) (2,677)
------- -------
Cash flows used in financing activities:
Distributions to partners (175,058) (95,942)
------- -------
Net increase in cash and cash equivalents 10,584 13,902
Beginning of period 51,601 17,587
------- -------
End of period $ 62,185 31,489
======= =======
(continued)
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Southwest Developmental Drilling Fund 91-A, 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 $ 122,562 26,149
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 96,769 66,769
(Increase) decrease in receivables (33,310) 18,920
Increase (decrease) in payables (178) 683
------- -------
Net cash provided by operating
activities $ 185,843 112,521
======= =======
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Developmental Drilling Fund 91-A, L.P. was organized as a Delaware
limited partnership on January 7, 1991. The offering of such limited and
general partner interests began September 17, 1991 as part of a shelf
offering registered under the name Southwest Developmental Drilling Program
1991-92. Minimum capital requirements for the partnership were met on April
22, 1992, with the offering of limited and general partner interests
concluding April 30, 1992, with total investor partner contributions of
$1,144,500. The Managing General Partner made a contribution to the capital
of the Partnership at the conclusion of its offering period in an amount
equal to 1% of its net capital contributions. The Managing General Partner's
contribution was $9,800. The total capital contributions are $1,154,300.
The Partnership was formed to engage primarily in the business of drilling
developmental and exploratory wells, to produce and market crude oil and
natural gas produced from such properties, to distribute any net proceeds
from operations to the general and investor partners and to the extent
necessary, acquire leases which contain drilling prospects. Net revenues
will not be reinvested in other revenue producing assets except to the extent
that performance of remedial work is needed to improve a well's producing
capabilities. The economic life of the Partnership thus depends on the
period over which the Partnership's oil and gas reserves are economically
recoverable.
The Partnership has expended its capital and acquired leasehold interests and
completed drilling operations. 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, increases and decreases in 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 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 $ 22.36 16.65 34%
Average price per mcf of gas $ 2.29 1.94 18%
Oil production in barrels 4,700 3,000 57%
Gas production in mcf 9,600 5,600 71%
Gross oil and gas revenue $ 127,969 60,379 112%
Net oil and gas revenue $ 103,776 15,177 584%
Partnership distributions $ 67,000 15,000 347%
Investor partner distributions $ 59,630 13,350 347%
Per unit distribution to investor
partners $ 52.10 11.66 347%
Number of investor partner units 1,144.5 1,144.5
Revenues
The Partnership's oil and gas revenues increased to $127,969 from $60,379 for
the quarters ended September 30, 1996 and 1995, respectively, an increase of
112%. 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 34%, or $5.71 per barrel, resulting
in an increase of approximately $17,100 in revenues. Oil sales
represented 83% 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 18%, or $.35 per mcf, resulting in an increase
of approximately $2,000 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $19,100. 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 increased approximately 1,700 barrels or 57% during the
quarter ended September 30, 1996 as compared to the quarter ended
September 30, 1995, resulting in an increase of approximately $38,000 in
revenues.
Gas production increased approximately 4,000 mcf or 71% during the same
period, resulting in an increase of approximately $9,200 in revenues.
The total increase in revenues due to the change in production is
approximately $47,200. The increase is primarily a result of a
successful workover.
Costs and Expenses
Total costs and expenses decreased to $61,254 from $68,299 for the quarters
ended September 30, 1996 and 1995, respectively, a decrease of 10%. The
decrease is the result of lower lease operating costs and general and
administrative expense, offset by an increase in depletion expense.
1. Lease operating costs and production taxes were 46% lower, or
approximately $21,000 less during the quarter ended September 30, 1996 as
compared to the quarter ended September 30, 1995. The decrease is a
result of workover costs incurred in 1995.
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 1%
or approximately $40 during the quarter ended September 30, 1996 as
compared to the quarter ended September 30, 1995.
3. Depletion expense increased to $32,000 for the quarter ended September
30, 1996 from $18,000 for the same period in 1995. This represents an
increase of 78%. 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 increased due to an increase in price
and production for the quarter ended September 30, 1996 as compared to
the same period for 1995. Depletion reflected a comparable increase.
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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 $ 20.91 17.72 18%
Average price per mcf of gas $ 2.31 1.84 26%
Oil production in barrels 14,300 10,000 43%
Gas production in mcf 28,100 17,100 64%
Gross oil and gas revenue $ 363,492 207,845 75%
Net oil and gas revenue $ 233,516 107,969 116%
Partnership distributions $ 175,000 96,000 82%
Investor partner distributions $ 155,750 85,440 82%
Per unit distribution to investor
partners $ 136.09 74.65 82%
Number of investor partner units 1,144.5 1,144.5
Revenues
The Partnership's oil and gas revenues increased to $363,492 from $207,845
for the nine months ended September 30, 1996 and 1995, respectively, an
increase of 75%. 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 $3.19 per barrel,
resulting in an increase of approximately $31,900 in revenues. Oil sales
represented 82% of total oil and gas sales during the nine months ended
September 30, 1996 as compared to 85% 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 26%, or $.47 per mcf, resulting in an increase
of approximately $8,000 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $39,900. 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 increased approximately 4,300 barrels or 43% during the
nine months ended September 30, 1996 as compared to the nine months ended
September 30, 1995, resulting in an increase of approximately $89,900 in
revenues.
Gas production increased approximately 11,000 mcf or 64% during the same
period, resulting in an increase of approximately $25,400 in revenues.
The total increase in revenues due to the change in production is
approximately $115,300. The increase is primarily a result of a
successful workover.
Costs and Expenses
Total costs and expenses increased to $242,229 from $182,367 for the nine
months ended September 30, 1996 and 1995, respectively, an increase of 33%.
The increase is the result of higher lease operating costs and depletion
expense, offset by a decrease in general and administrative expense.
1. Lease operating costs and production taxes were 30% higher, or
approximately $30,100 more during the nine months ended September 30,
1996 as compared to the nine months ended September 30, 1995. The
increase is a result of workover costs incurred in 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 $200 during the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995.
3. Depletion expense increased to $91,000 for the nine months ended
September 30, 1996 from $61,000 for the same period in 1995. This
represents an increase of 49%. 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 increased due to an
increase in price and production for the nine months ended September 30,
1996 as compared to the same period for 1995. Depletion reflected a
comparable increase.
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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 $185,800 in
the nine months ended September 30, 1996 as compared to approximately
$112,500 in the nine months ended September 30, 1995. The primary source of
the 1996 cash flow from operating activities was profitable operations.
Cash flows used in investing activities were approximately $200 in the nine
months ended September 30, 1996 as compared to approximately $2,700 in the
nine months ended September 30, 1995. The principle use of the 1996 cash
flow from investing activities was the additions to oil and gas properties.
Cash flows used in financing activities were approximately $175,100 in the
nine months ended September 30, 1996 as compared to approximately $95,900 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
$175,000 of which $155,750 was distributed to the investor partners and
$19,250 to the general partners. The per unit distribution to investor
partners during the nine months ended September 30, 1996 was $136.09. Total
distributions during the nine months ended September 30, 1995 were $96,000 of
which $85,440 was distributed to the investor partners and $10,560 to the
general partners. The per unit distribution to investor partners during the
nine months ended September 30, 1995 was $74.65.
The source for the 1996 distributions of $175,000 was oil and gas operations
of approximately $185,800, offset by additions to oil and gas properties of
approximately $200, resulting in excess cash for contingencies or subsequent
distributions. The sources for the 1995 distributions of $96,000 were oil
and gas operations of approximately $112,500 and the sale of oil and gas
properties of approximately $1,700, offset by additions to oil and gas
properties of approximately $4,300, resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$719,240 have been made to the partners. As of September 30, 1996, $642,035
or $560.97 per investor partner unit has been distributed to the investor
partners, representing a 56% return of the capital contributed.
As of September 30, 1996, the Partnership had approximately $123,400 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) 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 DEVELOPMENTAL
DRILLING FUND 91-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: 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> 62,185
<SECURITIES> 0
<RECEIVABLES> 61,187
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 123,372
<PP&E> 1,020,246
<DEPRECIATION> 826,000
<TOTAL-ASSETS> 321,464
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 321,464
<TOTAL-LIABILITY-AND-EQUITY> 321,464
<SALES> 363,492
<TOTAL-REVENUES> 364,791
<CGS> 129,976
<TOTAL-COSTS> 129,976
<OTHER-EXPENSES> 112,253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 122,562
<INCOME-TAX> 0
<INCOME-CONTINUING> 122,562
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122,562
<EPS-PRIMARY> 86.01
<EPS-DILUTED> 86.01
</TABLE>
