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 June 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 92-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2387816
(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 six month periods
ended June 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 92-A, L.P.
Balance Sheets
June 30, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 16,470 7,614
Receivable from Managing
General Partner 53,050 57,194
--------- ---------
Total current assets 69,520 64,808
--------- ---------
Oil and gas properties - using the
full cost method of accounting 1,315,532 1,315,532
Less accumulated depreciation,
depletion and amortization 577,000 532,000
--------- ---------
Net oil and gas properties 738,532 783,532
--------- ---------
Organization costs, net 13,124 17,492
--------- ---------
$ 821,176 865,832
========= =========
Liabilities and Partners' Equity
Partners' equity:
Investor partners 790,333 835,507
Managing General Partner 30,843 30,325
--------- ---------
Total partners' equity 821,176 865,832
--------- ---------
$ 821,176 865,832
========= =========
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues
Oil and gas $ 111,861 128,229 219,746 262,226
Interest 235 279 363 499
------- ------- ------- -------
112,096 128,508 220,109 262,725
------- ------- ------- -------
Expenses
Production 41,768 44,346 82,206 91,340
General and administrative 3,781 4,238 12,691 12,624
Depreciation, depletion and
amortization 25,184 32,184 49,368 66,368
------- ------- ------- -------
70,733 80,768 144,265 170,332
------- ------- ------- -------
Net income $ 41,363 47,740 75,844 92,393
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 7,321 8,792 13,773 17,464
======= ======= ======= =======
Investor partners $ 34,042 38,948 62,071 74,929
======= ======= ======= =======
Per investor partner
unit $ 24.19 27.68 44.12 53.25
======= ======= ======= =======
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Cash received from oil and gas sales $ 219,906 247,438
Cash paid to suppliers (90,913) (97,433)
Interest income 363 499
------- -------
Net cash provided by operating
activities 129,356 150,504
------- -------
Cash flows from investing activities:
Additions to oil and gas properties - (12,149)
Cash received from sale of oil
and gas property - 1,500
------- -------
Net cash used in investing activities - (10,649)
------- -------
Cash flows used in financing
activities:
Distributions to partners (120,500) (133,000)
------- -------
Net increase in cash and cash equivalents 8,856 6,855
Beginning of period 7,614 10,448
------- -------
End of period $ 16,470 17,303
======= =======
(continued)
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1996 1995
Reconciliation of net income to
net cash provided by operating
activities:
Net income $ 75,844 92,393
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 49,368 66,368
(Increase) decrease in receivables 160 (14,788)
Increase in payables 3,984 6,531
------- -------
Net cash provided by operating
activities $ 129,356 150,504
======= =======
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Developmental Drilling Fund 92-A, L.P. (the Partnership) was
organized as a Delaware limited partnership on May 5, 1992. The offering of
limited and general partner interests began August 11, 1992 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 December 28, 1992, with the offering of limited and general partner
interests concluding December 31, 1992, with total investor partner
contributions of $1,407,000, representing 1,407 interests ($1,000 per
interest). The Managing General Partner made a contribution to the capital
of the Partnership at the conclusion of the offering period in an amount
equal to 1% of its net capital contributions. The Managing General Partner
contribution was $12,030, for total capital contributions of $1,419,030.
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 limited 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 June 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1996 and 1995:
Three Months
Ended Percentage
June 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 21.56 18.54 16%
Average price per mcf of gas $ 2.88 2.58 12%
Oil production in barrels 3,900 5,300 (26%)
Gas production in mcf 9,700 11,800 (18%)
Gross oil and gas revenue $ 111,861 128,229 (13%)
Net oil and gas revenue $ 70,093 83,883 (16%)
Partnership distributions $ 60,500 66,000 (8%)
Investor partner distributions $ 53,845 58,740 (8%)
Per unit distribution to investor
partners $ 38.27 41.75 (8%)
Number of investor partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues decreased to $111,861 from $128,229
for the quarters ended June 30, 1996 and 1995, respectively, a decrease of
13%. The principal factors affecting the comparison of the quarters ended
June 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 June 30, 1996 as compared to the
quarter ended June 30, 1995 by 16%, or $3.02 per barrel, resulting in an
increase of approximately $16,000 in revenues. Oil sales represented 75%
of total oil and gas sales during the quarter ended June 30, 1996 as
compared to 76% during the quarter ended June 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 12%, or $.30 per mcf, resulting in an increase
of approximately $3,500 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $19,500. 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.
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2. Oil production decreased approximately 1,400 barrels or 26% during the
quarter ended June 30, 1996 as compared to the quarter ended June 30,
1995, resulting in a decrease of approximately $30,200 in revenues.
Gas production decreased approximately 2,100 mcf or 18% during the same
period, resulting in a decrease of approximately $6,000 in revenues.
The total decrease in revenues due to the change in production is
approximately $36,200. The decrease is primarily a result of an
anticipated sharp decline on one well following a successful workover.
Costs and Expenses
Total costs and expenses decreased to $70,733 from $80,768 for the quarters
ended June 30, 1996 and 1995, respectively, a decrease of 12%. 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 6% lower, or
approximately $2,600 less during the quarter ended June 30, 1996 as
compared to the quarter ended June 30, 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 11%
or approximately $500 during the quarter ended June 30, 1996 as compared
to the quarter ended June 30, 1995.
3. Depletion expense decreased to $23,000 for the quarter ended June 30,
1996 from $30,000 for the same period in 1995. This represents a
decrease of 23%. 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.
Two 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 and the decrease in oil and gas revenue.
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B. General Comparison of the Six Month Periods Ended June 30, 1996 and 1995
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1996 and 1995:
Six Months
Ended Percentage
June 30, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 20.28 18.08 12%
Average price per mcf of gas $ 2.80 2.71 3%
Oil production in barrels 8,200 11,100 (26%)
Gas production in mcf 19,400 22,500 (14%)
Gross oil and gas revenue $ 219,746 262,226 (16%)
Net oil and gas revenue $ 137,540 170,886 (20%)
Partnership distributions $ 120,500 133,000 (9%)
Investor partner distributions $ 107,245 118,370 (9%)
Per unit distribution to investor
partners $ 76.22 84.13 (9%)
Number of limited partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues decreased to $219,746 from $262,226
for the six months ended June 30, 1996 and 1995, respectively, a decrease of
16%. The principal factors affecting the comparison of the six months ended
June 30, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995 by 12%, or $2.20 per barrel, resulting in
an increase of approximately $24,400 in revenues. Oil sales represented
75% of the total oil and gas sales during the six months ended June 30,
1996 as compared to 77% during the six months ended June 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 3%, or $.09 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 $26,400. 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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<PAGE>
2. Oil production decreased approximately 2,900 barrels or 26% during the
six months ended June 30, 1996 as compared to the six months ended June
30, 1995, resulting in a decrease of approximately $58,800 in revenues.
Gas production decreased approximately 3,100 mcf or 14% during the same
period, resulting in a decrease of approximately $8,700 in revenues.
The total decrease in revenues due to the change in production is
approximately $67,500. The decrease is primarily a result of an
anticipated sharp decline on one well following a successful workover.
Costs and Expenses
Total costs and expenses decreased to $144,265 from $170,332 for the six
months ended June 30, 1996 and 1995, respectively, a decrease of 15%. The
decrease is the result of a decline in lease operating costs and depletion
expense, offset by higher general and administrative expense.
1. Lease operating costs and production taxes were 10% lower, or
approximately $9,100 less during the six months ended June 30, 1996 as
compared to the six months ended June 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 increased 1%
or approximately $100 during the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995.
3. Depletion expense decreased to $45,000 for the six months ended June 30,
1996 from $62,000 for the same period in 1995. This represents a
decrease of 27%. 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.
Two 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 and the decrease in oil and gas revenue.
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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 $129,400 in
the six months ended June 30, 1996 as compared to approximately $150,500 in
the six months ended June 30, 1995. The primary source of the 1996 cash flow
from operating activities was profitable operations.
Cash flows used in investing activities were none in the six months ended
June 30, 1996 as compared to approximately $10,600 in the six months ended
June 30, 1995.
Cash flows used in financing activities were approximately $120,500 in the
six months ended June 30, 1996 as compared to approximately $133,000 in the
six months ended June 30, 1995. The only use in financing activities was the
distributions to partners.
Total distributions during the six months ended June 30, 1996 were $120,500
of which $107,245 was distributed to the investor partners and $13,255 to the
Managing General Partner. The per unit distribution to investor partners
during the six months ended June 30, 1996 was $76.22. Total distributions
during the six months ended June 30, 1995 were $133,000 of which $118,370 was
distributed to the investor partners and $14,630 to the Managing General
Partner. The per unit distribution to investor partners during the six
months ended June 30, 1995 was $84.13.
The source for the 1996 distributions of $120,500 was oil and gas operations
of approximately $129,400, resulting in excess cash for contingencies or
subsequent distributions. The sources for the 1995 distributions of $133,000
were oil and gas operations of approximately $150,500 and the sale of oil and
gas properties of $1,500, offset by the addition to oil and gas properties of
approximately $12,500, resulting in excess cash for contingencies or
subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$640,715 have been made to the partners. As of June 30, 1996, $570,612 or
$405.55 per investor partner unit has been distributed to the investor
partners, representing a 41% return of the capital contributed.
As of June 30, 1996, the Partnership had approximately $69,500 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.
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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 92-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: August 12, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet at June 30, 1996 (Unaudited) and the Statement of Operations for the Six
Months Ended June 30, 1996 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 16,470
<SECURITIES> 0
<RECEIVABLES> 53,050
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 69,520
<PP&E> 1,315,532
<DEPRECIATION> 577,000
<TOTAL-ASSETS> 821,176
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 821,176
<TOTAL-LIABILITY-AND-EQUITY> 821,176
<SALES> 219,746
<TOTAL-REVENUES> 220,109
<CGS> 82,206
<TOTAL-COSTS> 82,206
<OTHER-EXPENSES> 62,059
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 75,844
<INCOME-TAX> 0
<INCOME-CONTINUING> 75,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,844
<EPS-PRIMARY> 44.12
<EPS-DILUTED> 44.12
</TABLE>
