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 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 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 92-A, L.P.
Balance Sheets
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 13,281 7,614
Receivable from Managing
General Partner 57,885 57,194
--------- ---------
Total current assets 71,166 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 598,000 532,000
--------- ---------
Net oil and gas properties 717,532 783,532
--------- ---------
Organization costs, net 10,940 17,492
--------- ---------
$ 799,638 865,832
========= =========
Liabilities and Partners' Equity
Partners' equity:
Investor partners $ 768,613 835,507
Managing General Partner 31,025 30,325
--------- ---------
Total partners' equity 799,638 865,832
--------- ---------
$ 799,638 865,832
========= =========
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Southwest Developmental Drilling Fund 92-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 $ 104,678 93,611 324,425 355,837
Interest 233 234 596 733
------- ------- ------- -------
104,911 93,845 325,021 356,570
------- ------- ------- -------
Expenses
Production 36,118 40,796 118,324 132,137
General and administrative 3,146 3,150 15,839 15,773
Depreciation, depletion and
amortization 23,184 25,184 72,552 91,552
------- ------- ------- -------
62,448 69,130 206,715 239,462
------- ------- ------- -------
Net income $ 42,463 24,715 118,306 117,108
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 7,222 5,488 20,995 22,953
======= ======= ======= =======
Investor partners $ 35,241 19,227 97,311 94,155
======= ======= ======= =======
Per investor partner
unit $ 25.05 13.67 69.16 66.92
======= ======= ======= =======
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Southwest Developmental Drilling Fund 92-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 $ 320,037 364,530
Cash paid to suppliers (130,466) (140,931)
Interest income 596 733
------- -------
Net cash provided by operating
activities 190,167 224,332
------- -------
Cash flows from investing activities:
Additions to oil and gas properties - (12,326)
Cash received from sale of oil
and gas property - 1,500
------- -------
Net cash used in investing activities - (10,826)
------- -------
Cash flows used in financing activities:
Distributions to partners (184,500) (210,000)
------- -------
Net increase in cash and cash equivalents 5,667 3,506
Beginning of period 7,614 10,448
------- -------
End of period $ 13,281 13,954
======= =======
(continued)
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Southwest Developmental Drilling Fund 92-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 $ 118,306 117,108
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 72,552 91,552
(Increase) decrease in receivables (4,388) 8,693
Increase in payables 3,697 6,979
------- -------
Net cash provided by operating
activities $ 190,167 224,332
======= =======
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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 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 $ 22.88 16.42 39%
Average price per mcf of gas $ 2.58 2.69 (4%)
Oil production in barrels 3,500 4,000 (13%)
Gas production in mcf 9,500 10,400 (9%)
Gross oil and gas revenue $ 104,678 93,611 12%
Net oil and gas revenue $ 68,560 52,815 30%
Partnership distributions $ 64,000 77,000 (17%)
Investor partner distributions $ 56,960 68,530 (17%)
Per unit distribution to investor
partners $ 40.48 48.71 (17%)
Number of investor partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues increased to $104,678 from $93,611 for
the quarters ended September 30, 1996 and 1995, respectively, an increase of
12%. 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 39%, or $6.46 per barrel, resulting
in an increase of approximately $25,800 in revenues. Oil sales
represented 77% of total oil and gas sales during the quarter ended
September 30, 1996 as compared to 70% during the quarter ended September
30, 1995.
The average price for an mcf of gas received by the Partnership decreased
during the same period by 4%, or $.11 per mcf, resulting in a decrease of
approximately $1,100 in revenues.
The net total increase in revenues due to the change in prices received
from oil and gas production is approximately $24,700. 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 500 barrels or 13% during the
quarter ended September 30, 1996 as compared to the quarter ended
September 30, 1995, resulting in a decrease of approximately $11,400 in
revenues.
Gas production decreased approximately 900 mcf or 9% during the same
period, resulting in a decrease of approximately $2,300 in revenues.
The total decrease in revenues due to the change in production is
approximately $13,700. The decrease is primarily result of an
anticipated sharp decline on one well following a successful workover.
Costs and Expenses
Total costs and expenses decreased to $62,448 from $69,130 for the quarters
ended September 30, 1996 and 1995, respectively, a decrease of 10%. 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 11% lower, or
approximately $4,700 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
less than 1% or approximately $5 during the quarter ended September 30,
1996 as compared to the quarter ended September 30, 1995.
3. Depletion expense decreased to $21,000 for the quarter ended September
30, 1996 from $23,000 for the same period in 1995. This represents a
decrease of 9%. 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. A contributing factor
to the decline in depletion expense between the comparative periods was
the increase in the price of oil and gas used to determine the
Partnership's reserves for January 1, 1996 as compared to 1995.
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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 $ 21.06 17.64 19%
Average price per mcf of gas $ 2.73 2.70 1%
Oil production in barrels 11,700 15,100 (23%)
Gas production in mcf 28,900 32,900 (12%)
Gross oil and gas revenue $ 324,425 355,837 (9%)
Net oil and gas revenue $ 206,101 223,700 (8%)
Partnership distributions $ 184,500 210,000 (12%)
Investor partner distributions $ 164,205 186,900 (12%)
Per unit distribution to investor
partners $ 116.71 132.84 (12%)
Number of limited partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues decreased to $324,425 from $355,837
for the nine months ended September 30, 1996 and 1995, respectively, a
decrease of 9%. 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 19%, or $3.42 per barrel,
resulting in an increase of approximately $51,600 in revenues. Oil sales
represented 76% of total oil and gas sales during the nine months ended
September 30, 1996 as compared to 75% 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 1%, or $.03 per mcf, resulting in an increase
of approximately $1,000 in revenues.
The total increase in revenues due to the change in prices received from
oil and gas production is approximately $52,600. 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 3,400 barrels or 23% during the
nine months ended September 30, 1996 as compared to the nine months ended
September 30, 1995, resulting in a decrease of approximately $71,600 in
revenues.
Gas production decreased approximately 4,000 mcf or 12% during the same
period, resulting in a decrease of approximately $10,900 in revenues.
The total decrease in revenues due to the change in production is
approximately $82,500. The decrease is primarily a result of an
anticipated sharp decline on one well following as successful workover.
Costs and Expenses
Total costs and expenses decreased to $206,715 from $239,462 for the nine
months ended September 30, 1996 and 1995, respectively, a decrease of 14%.
The decrease is the result of lower lease operating costs and depletion
expense, offset by an increase in general and administrative expense.
1. Lease operating costs and production taxes were 10% lower, or
approximately $13,800 less during the nine months ended September 30,
1996 as compared to the nine months 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 increased less
than 1% or approximately $70 during the nine months ended September 30,
1996 as compared to the nine months ended September 30, 1995.
3. Depletion expense decreased to $66,000 for the nine months ended
September 30, 1996 from $85,000 for the same period in 1995. This
represents a decrease of 22%. 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 declined due to a decline
in production for the nine months ended September 30, 1996 as compared to
the same period for 1995. Depletion reflected a comparable decline.
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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 $190,200 in
the nine months ended September 30, 1996 as compared to approximately
$224,300 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 none in the nine months ended
September 30, 1996 as compared to approximately $10,800 in the nine months
ended September 30, 1995.
Cash flows used in financing activities were approximately $184,500 in the
nine months ended September 30, 1996 as compared to approximately $210,000 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
$184,500 of which $164,205 was distributed to the investor partners and
$20,295 to the general partners. The per unit distribution to investor
partners during the nine months ended September 30, 1996 was $116.71. Total
distributions during the nine months ended September 30, 1995 were $210,000
of which $186,900 was distributed to the investor partners and $23,100 to the
general partners. The per unit distribution to investor partners during the
nine months ended September 30, 1995 was $132.84.
The source for the 1996 distributions of $184,500 was oil and gas operations
of approximately $190,200, resulting in excess cash for contingencies or
subsequent distributions. The sources for the 1995 distributions of $210,000
were oil and gas operations of approximately $224,300 and the sale of oil and
gas properties of approximately $1,500, offset by the additions to oil and
gas properties of approximately $12,300, resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$704,715 have been made to the partners. As of September 30, 1996, $627,572
or $446.04 per investor partner unit has been distributed to the investor
partners, representing a 45% return of the capital contributed.
As of September 30, 1996, the Partnership had approximately $71,200 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 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: 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> 13,281
<SECURITIES> 0
<RECEIVABLES> 57,885
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 71,166
<PP&E> 1,315,532
<DEPRECIATION> 598,000
<TOTAL-ASSETS> 799,638
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 799,638
<TOTAL-LIABILITY-AND-EQUITY> 799,638
<SALES> 324,425
<TOTAL-REVENUES> 325,021
<CGS> 118,324
<TOTAL-COSTS> 118,324
<OTHER-EXPENSES> 88,391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 118,306
<INCOME-TAX> 0
<INCOME-CONTINUING> 118,306
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,306
<EPS-PRIMARY> 69.16
<EPS-DILUTED> 69.16
</TABLE>
