Page 15 of 15
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, 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 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 16.
<PAGE>
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 note 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
nine month periods ended September 30, 1997 are not necessarily indicative
of the results that may be expected for the full year.
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Balance Sheets
Restated
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 12,534 72,991
Receivable from Managing General Partner 26,918 60,583
- --------- ---------
Total current assets 39,452 133,574
--------- ---------
Oil and gas properties - using the
full cost method of accounting 1,072,145 1,066,375
Less accumulated depreciation,
depletion and amortization 836,000 802,000
--------- ---------
Net oil and gas properties 236,145 264,375
--------- ---------
Organization costs, net - 1,923
--------- ---------
$ 275,597 399,872
========= =========
Liabilities and Partners' Equity
Current liability - Distribution payable $ 193 -
--------- ---------
Partners' equity
Managing General Partner 22,317 32,057
Investor partners 253,087 367,815
--------- ---------
Total partners' equity 275,404 399,872
--------- ---------
$ 275,597 399,872
========= =========
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
Restated Restated
1997 1996 1997 1996
Revenues
Oil and gas $ 68,128 127,969 237,246 363,492
Interest 357 538 1,675 1,299
------ ------- ------- -------
68,485 128,507 238,921 364,791
------ ------- ------- -------
Expenses
Production 23,192 24,193 72,234 83,847
General and administrative 3,057 3,138 15,232 15,484
Depreciation, depletion and
amortization 13,000 38,923 35,923 110,769
------ ------- ------- -------
39,249 66,254 123,389 210,100
------ ------- ------- -------
Net income $ 29,236 62,253 115,532 154,691
====== ======= ======= =======
Net income allocated to:
Managing General Partner $ 4,646 11,129 16,660 29,200
====== ======= ======= =======
Investor Partners $ 24,590 51,124 98,872 125,491
====== ======= ======= =======
Per investor partner unit $ 21.49 44.67 86.39 109.65
====== ======= ======= =======
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
Restated
1997 1996
Cash flows from operating activities
Cash received from oil and gas sales $ 271,147 330,182
Cash paid to suppliers (87,702) (99,509)
Interest received 1,675 1,299
------- -------
Net cash provided by operating activities 185,120 231,972
------- -------
Cash flows used in investing activities
Additions to oil and gas properties (5,770) (46,330)
------- -------
Cash flows used in financing activities
Distributions to partners (239,807) (175,058)
------- -------
Net increase (decrease) in cash and cash
equivalents (60,457) 10,584
Beginning of period 72,991 51,601
------- -------
End of period $ 12,534 62,185
======= =======
(continued)
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
Restated
1997 1996
Reconciliation of net income to net cash
provided by operating activities
Net income $ 115,532 154,691
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation, depletion and amortization 35,923 110,769
(Increase) decrease in receivables 33,901 (33,310)
Decrease in payables (236) (178)
------- -------
Net cash provided by operating activities $ 185,120 231,972
======= =======
<PAGE>
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.
Based on current conditions, management anticipates performing workovers
during 1997 to enhance production. The Partnership could possibly
experience the following changes; an increase during 1997 and 1998, with a
decrease in 1999 and thereafter, a normal decline.
<PAGE>
Results of Operations
A. General Comparison of the Quarters Ended September 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended September 30, 1997 and 1996:
Three Months
Ended Percentage
September 30, Increase
1997 1996 (Decrease)
Average price per barrel of oil $ 19.17 22.36 (14%)
Average price per mcf of gas $ 2.04 2.29 (11%)
Oil production in barrels 3,000 4,700 (36%)
Gas production in mcf 5,200 9,600 (46%)
Gross oil and gas revenue $ 68,128 127,969 (47%)
Net oil and gas revenue $ 44,936 103,776 (57%)
Partnership distributions $ 76,000 67,000 13%
Investor partner distributions $ 67,640 59,630 13%
Per unit distribution to investor partners $ 59.10 52.10 13%
Number of investor partner units 1,144.5 1,144.5
Revenues
The Partnership's oil and gas revenues decreased to $68,128 from $127,969
for the quarters ended September 30, 1997 and 1996, respectively, a
decrease of 47%. The principal factors affecting the comparison of the
quarters ended September 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 September 30, 1997 as compared to
the quarter ended September 30, 1996 by 14%, or $3.19 per barrel,
resulting in a decrease of approximately $15,000 in revenues. Oil
sales represented 84% of total oil and gas sales during the quarter
ended September 30, 1997 as compared to 83% during the quarter ended
September 30, 1996.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 11%, or $.25 per mcf, resulting in
a decrease of approximately $2,400 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $17,400. 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.
<PAGE>
2. Oil production decreased approximately 1,700 barrels or 36% during the
quarter ended September 30, 1997 as compared to the quarter ended
September 30, 1996, resulting in a decrease of approximately $32,600
in revenues.
Gas production decreased approximately 4,400 mcf or 46% during the same
period, resulting in a decrease of approximately $9,000 in revenues.
The total decrease in revenues due to the change in production is
approximately $41,600. The decline in production is primarily
attributable to the expected sharp natural decline in production
following a successful workover and downtime.
Costs and Expenses
Total costs and expenses decreased to $39,249 from $66,254 for the quarters
ended September 30, 1997 and 1996, respectively, a decrease of 41%. The
decrease is the result of lower lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 4% lower, or
approximately $1,000 less during the quarter ended September 30, 1997 as
compared to the quarter ended September 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
3% or approximately $80 during the quarter ended September 30, 1997 as
compared to the quarter ended September 30, 1996.
3. Depletion expense decreased to $13,000 for the quarter ended September
30, 1997 from $37,000 for the same period in 1996. This represents a
decrease of 65%. 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 used to determine the
Partnership's reserves for January 1, 1997 as compared to 1996 and the
decline in gross oil and gas revenues.
<PAGE>
B. General Comparison of the Nine Month Periods Ended September 30, 1997
and 1996
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 1997 and 1996:
Nine Months
Ended Percentage
September 30, Increase
1997 1996 (Decrease)
Average price per barrel of oil $ 20.52 20.91 (2%)
Average price per mcf of gas $ 2.11 2.31 (9%)
Oil production in barrels 9,900 14,300 (31%)
Gas production in mcf 16,200 28,100 (42%)
Gross oil and gas revenue $ 237,246 363,492 (35%)
Net oil and gas revenue $ 165,012 279,645 (41%)
Partnership distributions $ 240,000 175,000 37%
Investor partner distributions $ 213,600 155,750 37%
Per unit distribution to investor partners $ 186.63 136.09 37%
Number of investor partner units 1,144.5 1,144.5
Revenues
The Partnership's oil and gas revenues decreased to $237,246 from $363,492
for the nine months ended September 30, 1997 and 1996, respectively, a
decrease of 35%. The principal factors affecting the comparison of the
nine months ended September 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the nine months ended September 30, 1997 as compared
to the nine months ended September 30, 1996 by 2%, or $.39 per barrel,
resulting in a decrease of approximately $5,600 in revenues. Oil sales
represented 86% of total oil and gas sales during the nine months ended
September 30, 1997 as compared to 82% during the nine months ended
September 30, 1996.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 9%, or $.20 per mcf, resulting in a
decrease of approximately $5,600 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $11,200. 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.
<PAGE>
2. Oil production decreased approximately 4,400 barrels or 31% during the
nine months ended September 30, 1997 as compared to the nine months
ended September 30, 1996, resulting in a decrease of approximately
$90,300 in revenues.
Gas production decreased approximately 11,900 mcf or 42% during the
same period, resulting in a decrease of approximately $25,100 in
revenues.
The total decrease in revenues due to the change in production is
approximately $115,400. The decline in production is primarily
attributable to the expected sharp natural decline in production
following a successful workover and downtime.
Costs and Expenses
Total costs and expenses decreased to $123,389 from $210,100 for the nine
months ended September 30, 1997 and 1996, respectively, a decrease of 41%.
The decrease is the result of lower lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 14% lower, or
approximately $11,600 less during the nine months ended September 30,
1997 as compared to the nine months ended September 30, 1996. The
decrease is primarily attributable to 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 2%
or approximately $300 during the nine months ended September 30, 1997
as compared to the nine months ended September 30, 1996.
3. Depletion expense decreased to $34,000 for the nine months ended
September 30, 1997 from $105,000 for the same period in 1996. This
represents a decrease of 68%. 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 used to
determine the Partnership's reserves for January 1, 1997 as compared to
1996 and the decline in gross oil and gas revenues.
<PAGE>
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 $185,100 in
the nine months ended September 30, 1997 as compared to approximately
$232,000 in the nine months ended September 30, 1996. The primary source
of the 1997 cash flow from operating activities was profitable operations.
Cash flows used in investing activities were approximately $5,800 in the
nine months ended September 30, 1997 as compared to approximately $46,300
in the nine months ended September 30, 1996. The principle use of the 1997
cash flow from investing activities was the change in oil and gas
properties.
Cash flows used in financing activities were approximately $239,800 in the
nine months ended September 30, 1997 as compared to approximately $175,100
in the nine months ended September 30, 1996. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 1997 were
$240,000 of which $213,600 was distributed to the investor partners and
$26,400 to the Managing General Partner. The per unit distribution to
investor partners during the nine months ended September 30, 1997 was
$186.63. 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 Managing General Partner. The per unit
distribution to investor partners during the nine months ended September
30, 1996 was $136.09.
The source for the 1997 distributions of $240,000 was oil and gas
operations of approximately $185,100, partially offset by the change in oil
and gas properties of approximately $5,800, with the balance from available
cash on hand at the beginning of the period. The source for the 1996
distributions of $175,000 was oil and gas operations of approximately
$232,000, partially offset by the change in oil and gas properties of
approximately $46,300, resulting in excess cash for contingencies or
subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $1,037,240 have been made to the partners. As of September 30, 1997,
$925,055 or $808.26 per investor partner unit has been distributed to the
investor partners, representing an 81% return of the capital contributed.
As of September 30, 1997, the Partnership had approximately $39,300 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.
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Notes to Financial Statements
NOTE A - PRIOR PERIOD ADJUSTMENT
The Managing General Partner, who is a related party, incorrectly billed
the Partnership for property costs as workover expense on one lease during
March 1996. This error resulted in the understatement of previously
reported property costs and the overstatement of depletion expense in the
prior year. The error was corrected in this quarters' 10-Q. The
correction resulted in the following changes to partners' equity as of
December 31, 1996.
Managing
Investor General
Partners Partner
Equity Equity
--------- --------
As previously reported, December 31, 1996 $ 335,760 26,983
Property cost - 1996 41,055 5,074
Depletion expense - 1996 (9,000) -
--------- --------
December 31, 1996, as adjusted $ 367,815 32,057
========= ========
The following schedule shows the effect of the prior period adjustment,
before and after the restatement, to net income for the year ended December
31, 1996 and for the three and nine month periods ended September 30, 1996.
Before After
Prior Period Prior Period
Restatement Restatement
--------- --------
For the year ended December 31, 1996
Net income $ 241,841 278,970
Managing General Partner 33,829 38,903
Investor partners 208,012 240,067
Per investor partner unit 181.75 209.76
For the three months ended September 30, 1996
Net income 67,253 62,253
Managing General Partner 11,129 11,129
Investor partners 56,124 51,124
Per investor partner unit 49.04 44.67
For the nine months ended September 30, 1996
Net income 122,562 154,691
Managing General Partner 24,126 29,200
Investor partners 98,436 125,491
Per investor partner unit 86.01 109.65
<PAGE>
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) No reports on Form 8-K were filed during the quarter for
which this report is filed.
<PAGE>
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, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial infomation extracted from the
Balance Sheet at September 30, 1997 (Unaudited) and the Statement of
Operations for the Nine Months Ended September 30, 1997 (Unaudited) and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,534
<SECURITIES> 0
<RECEIVABLES> 26,918
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,452
<PP&E> 1,072,145
<DEPRECIATION> 836,000
<TOTAL-ASSETS> 275,597
<CURRENT-LIABILITIES> 193
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 275,404
<TOTAL-LIABILITY-AND-EQUITY> 275,597
<SALES> 237,246
<TOTAL-REVENUES> 238,921
<CGS> 72,234
<TOTAL-COSTS> 72,234
<OTHER-EXPENSES> 51,155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 115,532
<INCOME-TAX> 0
<INCOME-CONTINUING> 115,532
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,532
<EPS-PRIMARY> 86.39
<EPS-DILUTED> 86.39
</TABLE>
