Page 3 of 13
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, 1998
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 13.
<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 notes thereto for
the year ended December 31, 1997 which are found in the Registrant's Form
10-K Report for 1997 filed with the Securities and Exchange Commission.
The December 31, 1997 balance sheet included herein has been taken from the
Registrant's 1997 Form 10-K Report. Operating results for the three month
period ended March 31, 1998 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
March 31, December 31,
1998 1997
--------- ------------
(unaudited)
Assets
Current assets:
Cash and equivalents $ 4,618 3,477
Receivable from Managing General Partner 11,336 17,702
--------- ---------
Total current assets 15,954 21,179
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 1,094,807 1,075,744
Less accumulated depreciation,
depletion and amortization 872,000 860,000
--------- ---------
Net oil and gas properties 222,807 215,744
--------- ---------
$ 238,761 236,923
========= =========
Liabilities and Partners' Equity
Current liability - Distribution payable $ 511 347
--------- ---------
Partners' equity:
Managing General Partner 22,190 20,686
Investor partners 216,060 215,890
--------- ---------
Total partners' equity 238,250 236,576
--------- ---------
$ 238,761 236,923
========= =========
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Revenues
Oil and gas $ 50,233 91,575
Interest 21 715
------- -------
50,254 92,290
------- -------
Expenses
Production 18,510 21,353
General and administrative 9,570 8,683
Depreciation, depletion and amortization 12,000 12,923
------- -------
40,080 42,959
------- -------
Net income $ 10,174 49,331
======= =======
Net income allocated to:
Managing General Partner $ 2,439 6,848
======= =======
Investor partners $ 7,735 42,483
======= =======
Per investor partner unit $ 6.76 37.12
======= =======
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 55,112 114,305
Cash paid to suppliers (26,592) (28,430)
Interest received 21 715
------- -------
Net cash provided by operating activities 28,541 86,590
------- -------
Cash flows used in investing activities:
Additions to oil and gas properties (19,064) -
------- -------
Cash flows used in financing activities:
Distributions to partners (8,336) (84,390)
------- -------
Net increase in cash and cash equivalents 1,141 2,200
Beginning of period 3,477 72,991
------- -------
End of period $ 4,618 75,191
======= =======
(continued)
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Reconciliation of net income to
net cash provided by operating activities:
Net income $ 10,174 49,331
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation, depletion and amortization 12,000 12,923
Decrease in receivables 4,879 22,730
Increase in payables 1,488 1,606
------ -------
Net cash provided by operating activities $ 28,541 86,590
======= =======
<PAGE>
Southwest Developmental Drilling Fund 91-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Developmental Drilling Fund 91-A, L.P. was organized under
the laws of the state of Delaware on January 7, 1991 for the purpose
of drilling developmental and exploratory wells and to produce and
market crude oil and natural gas produced from such properties for a
term of 50 years, unless terminated at an earlier date as provided for
in the Partnership Agreement. The Partnership sells its oil and gas
production to a variety of purchasers with the prices it receives
being dependent upon the oil and gas economy. Southwest Royalties,
Inc. serves as the Managing General Partner. Revenues, costs and
expenses are allocated as follows:
Managing
General Investor
Partner Partners
-------- --------
Interest income on capital contributions - 100%
Oil and gas sales* 11% 89%
All other revenues* 11% 89%
Organization and offering costs (1) - 100%
Syndication costs - 100%
Amortization of organization costs - 100%
Lease acquisition costs 1% 99%
Gain/loss on property disposition* 11% 89%
Operating and administrative costs*(2) 11% 89%
Depreciation, depletion and amortization
of oil and gas properties - 100%
Intangible drilling and development costs - 100%
All other costs* 11% 89%
*After the Investor Partners have received distributions totaling 150%
of their capital contributions, the allocation will change to 15%
Managing General Partner and 85% Investor Partners.
(1) All organization costs in excess of 4% of initial capital
contributions will be paid by the Managing General Partner and will be
treated as a capital contribution. The Partnership paid the Managing
General Partner an amount equal to 4% of initial capital contributions
for such organization costs.
(2) Administrative costs in any year which exceed 2% of capital
contributions shall be paid by the Managing General Partner and will
be treated as a capital contribution.
2. Summary of Significant Accounting Policies
The interim financial information as of March 31, 1998, and for the
three months ended March 31, 1998, is unaudited. Certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q pursuant to the rules
and regulations of the Securities and Exchange Commission. However,
in the opinion of management, these interim financial statements
include all the necessary adjustments to fairly present the results of
the interim periods and all such adjustments are of a normal recurring
nature. The interim consolidated financial statements should be read
in conjunction with the audited financial statements for the year
ended December 31, 1997.
<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.
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 a normal decline, for
the life of these properties.
<PAGE>
Results of Operations
A. General Comparison of the Quarters Ended March 31, 1998 and 1997
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1998 and 1997:
Three Months
Ended Percentage
March 31, Increase
1998 1997 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 13.85 23.11 (40%)
Average price per mcf of gas $ 1.93 2.00 (4%)
Oil production in barrels 2,900 3,400 (15%)
Gas production in mcf 5,200 6,500 (20%)
Gross oil and gas revenue $ 50,233 91,575 (46%)
Net oil and gas revenue $ 31,723 70,222 (55%)
Partnership distributions $ 8,500 84,500 (90%)
Investor partner distributions $ 7,565 75,205 (90%)
Per unit distribution to investor
partners $ 6.61 65.71 (90%)
Number of investor partner units 1,144.5 1,144.5
Revenues
The Partnership's oil and gas revenues decreased to $50,233 from $91,575
for the quarters ended March 31, 1998 and 1997, respectively, a decrease of
46%. The principal factors affecting the comparison of the quarters ended
March 31, 1998 and 1997 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended March 31, 1998 as compared to the
quarter ended March 31, 1997 by 40%, or $9.26 per barrel, resulting in
a decrease of approximately $31,500 in revenues. Oil sales represented
80% of total oil and gas sales during the quarter ended March 31, 1998
as compared to 86% during the quarter ended March 31, 1997.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 4%, or $.07 per mcf, resulting in a
decrease of approximately $460 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $31,960. 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 500 barrels or 15% during the
quarter ended March 31, 1998 as compared to the quarter ended March 31,
1997, resulting in a decrease of approximately $6,900 in revenues.
Gas production decreased approximately 1,300 mcf or 20% during the same
period, resulting in a decrease of approximately $2,500 in revenues.
The total decrease in revenues due to the change in production is
approximately $9,400. The decrease is attributable to normal decline.
Costs and Expenses
Total costs and expenses decreased to $40,080 from $42,959 for the quarters
ended March 31, 1998 and 1997, respectively, a decrease of 7%. The
decrease is the result of lower lease operating costs and depletion
expense, partially offset by an increase in general and administrative
expense.
1. Lease operating costs and production taxes were 14% lower, or
approximately $2,800 less during the quarter ended March 31, 1998 as
compared to the quarter ended March 31, 1997. The decrease is
primarily attributable to workover costs incurred on one lease during
the first quarter of 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 increased
11% or approximately $900 during the quarter ended March 31, 1998 as
compared to the quarter ended March 31, 1997.
3. Depletion expense increased to $12,000 for the quarter ended March 31,
1998 from $11,000 for the same period in 1997. This represents an
increase of 9%. 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.
<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 $28,500 in
the quarter ended March 31, 1998 as compared to approximately $86,600 in
the quarter ended March 31, 1997. The primary source of the 1998 cash flow
from operating activities was profitable operations.
Cash flows used in investing activities in the quarter ended March 31, 1998
were approximately $19,000. There were no cash flow used in investing
activities in the quarter ended March 31, 1997.
Cash flows used in financing activities were approximately $8,300 in the
quarter ended March 31, 1998 as compared to approximately $84,400 in the
quarter ended March 31, 1997. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 1998 were $8,500 of
which $7,565 was distributed to the investor partners and $935 to the
Managing General Partner. The per unit distribution to investor partners
during the quarter ended March 31, 1998 was $6.61. Total distributions
during the quarter ended March 31, 1997 were $84,500 of which $75,205 was
distributed to the investor partners and $9,295 to the Managing General
Partner. The per unit distribution to investor partners during the quarter
ended March 31, 1997 was $65.71.
The primary source for the 1998 distributions of $8,300 was oil and gas
operations of approximately $28,500. The source for the 1997 distributions
of $84,500 was oil and gas operations of approximately $86,600, resulting
in excess cash for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions
of $1,095,740 have been made to the partners. As of March 31, 1998,
$977,120 or $853.75 per investor partner unit has been distributed to the
investor partners, representing a 86% return of the capital contributed.
As of March 31, 1998, the Partnership had approximately $15,400 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.
<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) Reports on Form 8-K:
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: May 15, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at March 31, 1998 (Unaudited) and the Statement of Operations
for the Three Months Ended March 31, 1998 (Unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,618
<SECURITIES> 0
<RECEIVABLES> 11,336
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,954
<PP&E> 1,094,807
<DEPRECIATION> 872,000
<TOTAL-ASSETS> 238,761
<CURRENT-LIABILITIES> 511
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 238,250
<TOTAL-LIABILITY-AND-EQUITY> 238,761
<SALES> 50,233
<TOTAL-REVENUES> 50,254
<CGS> 18,510
<TOTAL-COSTS> 18,510
<OTHER-EXPENSES> 21,570
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,174
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,174
<EPS-PRIMARY> 6.76
<EPS-DILUTED> 6.76
</TABLE>
