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, 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 12.
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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 month period ended
March 31, 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
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 7,945 7,614
Receivable from Managing General
Partner 59,427 57,194
--------- ---------
Total current assets 67,372 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 554,000 532,000
--------- ---------
Net oil and gas properties 761,532 783,532
--------- ---------
Organization costs, net of
amortization 15,308 17,492
--------- ---------
$ 844,212 865,832
========= =========
Liabilities and Partners' Equity
Current liability - Accounts payable 3,900 -
--------- ---------
Partners' equity:
Managing General Partner 30,178 30,325
Investor partners 810,134 835,507
--------- ---------
Total partners' equity 840,312 865,832
--------- ---------
$ 844,212 865,832
========= =========
PAGE
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Revenues
Oil and gas revenue $ 107,885 133,998
Interest income from operations 128 220
------- -------
108,013 134,218
------- -------
Expenses
Production 40,438 46,994
General and administrative 8,911 8,385
Depreciation, depletion and
amortization 24,184 34,184
------- -------
73,533 89,563
------- -------
Net income $ 34,480 44,655
======= =======
Net income allocated to:
Managing General Partner $ 6,453 8,673
======= =======
Investor partners $ 28,027 35,982
======= =======
Per investor partner unit $ 19.92 25.57
======= =======
PAGE
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 105,029 123,845
Cash paid to suppliers (44,826) (48,505)
Interest income 128 220
------- -------
Net cash provided by operating
activities 60,331 75,560
------- -------
Cash flows used in investing activities:
Additions to oil and gas properties - (5,471)
------- -------
Cash flows used in financing activities:
Distribution to investor partners (60,000) (67,000)
------- -------
Net increase in cash 331 3,089
Cash and cash equivalents:
Beginning of period 7,614 10,448
------- -------
End of period $ 7,945 13,537
======= =======
(continued)
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
Reconciliation of net income to
net cash provided by operating
activities:
Net income $ 34,480 44,655
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion and
amortization 24,184 34,184
Increase in accounts receivable (2,856) (10,153)
Increase in accounts payable 4,523 6,874
------- -------
Net cash provided by operating
activities $ 60,331 75,560
======= =======
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<PAGE>
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" or
"Registrant") 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. 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.
PAGE
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Results of Operations
A. General Comparison of the Quarters Ended March 31, 1996 and 1995
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1996 and 1995.
Three Months
Ended Percentage
March 31, Increase
1996 1995 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.11 17.67 8%
Average price per mcf of gas $ 2.72 2.85 (5%)
Oil production in barrels 4,300 5,900 (27%)
Gas production in mcf 9,700 10,700 (9%)
Gross oil and gas revenue $ 107,885 133,998 (19%)
Net oil and gas revenue $ 67,447 87,004 (22%)
Partnership distributions $ 60,000 67,000 (10%)
Limited partner distributions $ 53,400 59,630 (10%)
Per unit distribution to limited
partners $ 37.95 42.38 (10%)
Number of limited partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues decreased to $107,885 from $133,998
for the quarters ended March 31, 1996 and 1995, respectively, a decrease of
19%. The principal factors affecting the comparison of the quarters ended
March 31, 1996 and 1995 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1996 as compared to the
quarter ended March 31, 1995 by 8%, or $1.44 per barrel, resulting in an
increase of approximately $8,500 in revenues. Oil sales represented 76%
of total oil and gas sales during the quarter ended March 31, 1996 as
compared to 77% during the quarter ended March 31, 1995.
The average price for an mcf of gas received by the Partnership decreased
during the same period by 5%, or $.13 per mcf, resulting in a decrease of
approximately $1,400 in revenues.
The net total increase in revenues due to the change in prices received
from oil and gas production is approximately $7,100. 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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<PAGE>
2. Oil production decreased approximately 1,600 barrels or 27% during the
quarter ended March 31, 1996 as compared to the quarter ended March 31,
1995, resulting in a decrease of approximately $30,600 in revenues.
Gas production decreased approximately 1,100 mcf or 9% during the same
period, resulting in a decrease of approximately $3,000 in revenues.
The total decrease in revenues due to the change in production is
approximately $33,600. The decrease is a result of an anticipated sharp
decline on one well following a successful workover.
Costs and Expenses
Total costs and expenses decreased to $73,533 from $89,563 for the quarters
ended March 31, 1996 and 1995, respectively, a decrease of 18%. 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 14% lower, or
approximately $6,600 less during the quarter ended March 31, 1996 as
compared to the quarter ended March 31, 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 6%
or approximately $500 during the quarter ended March 31, 1996 as compared
to the quarter ended March 31, 1995.
3. Depletion expense decreased to $22,000 for the quarter ended March 31,
1996 from $32,000 for the same period in 1995. This represents a
decrease of 31%. 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 decrease in
production for the quarter ended March 31, 1996 as compared to the same
period for 1995. Depletion reflected a comparable decline.
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 $60,300 in the
three months ended March 31, 1996 as compared to approximately $75,600 in the
three months ended March 31, 1995. The primary source of the 1996 cash flow
from operating activities was profitable operations.
<PAGE>
<PAGE>
Cash flows used in investing activities were none in the three months ended
March 31, 1996 as compared to approximately $5,500 in the three months ended
March 31, 1995.
Cash flows used in financing activities were approximately $60,000 in the
three months ended March 31, 1996 as compared to approximately $67,000 in the
three months ended March 31, 1995. The only use in financing activities was
the distributions to partners.
Total distributions during the three months ended March 31, 1996 were $60,000
of which $53,400 was distributed to the limited partners and $6,600 to the
general partners. The per unit distribution to limited partners during the
three months ended March 31, 1996 was $37.95. Total distributions during the
three months ended March 31, 1995 were $67,000 of which $59,630 was
distributed to the limited partners and $7,370 to the general partners. The
per unit distribution to limited partners during the three months ended March
31, 1995 was $42.38.
The source for the 1996 distributions of $60,000 was oil and gas operations
of approximately $60,300, resulting in excess cash for contingencies or
subsequent distributions. The source for the 1995 distributions of $67,000
was oil and gas operations of approximately $75,600, offset by additions to
oil and gas properties of approximately $5,500, resulting in excess cash for
contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$580,215 have been made to the partners. As of March 31, 1996, $516,767 or
$367.28 per limited partner unit has been distributed to the limited
partners, representing a 37% return of the capital contributed.
As of March 31, 1996, the Partnership had approximately $63,500 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.
PAGE
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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.
PAGE
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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: May 11, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet at March 31, 1996 (Unaudited) and the Statement of Operations for the
Three Months Ended March 31, 1996 (Unaudited) and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,945
<SECURITIES> 0
<RECEIVABLES> 59,427
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 67,372
<PP&E> 1,315,532
<DEPRECIATION> 554,000
<TOTAL-ASSETS> 844,212
<CURRENT-LIABILITIES> 3,900
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 840,312
<TOTAL-LIABILITY-AND-EQUITY> 844,212
<SALES> 107,885
<TOTAL-REVENUES> 108,013
<CGS> 40,438
<TOTAL-COSTS> 40,438
<OTHER-EXPENSES> 33,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 34,480
<INCOME-TAX> 0
<INCOME-CONTINUING> 34,480
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,480
<EPS-PRIMARY> 19.92
<EPS-DILUTED> 19.92
</TABLE>
