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, 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 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, 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 six month periods
ended June 30, 1997 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,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 6,399 17,730
Receivable from Managing General Partner 40,369 53,520
--------- ---------
Total current assets 46,768 71,250
--------- ---------
Oil and gas properties - using the
full cost method of accounting 1,315,532 1,315,532
Less accumulated depreciation,
depletion and amortization 630,000 601,000
--------- ---------
Net oil and gas properties 685,532 714,532
--------- ---------
Organization costs, net 4,388 8,756
--------- ---------
$ 736,688 794,538
========= =========
Liabilities and Partners' Equity
Current liability - Accounts payable $ 342 -
--------- ---------
Partners' equity:
Investor partners 708,044 763,505
Managing General Partner 28,302 31,033
--------- ---------
Total partners' equity 736,346 794,538
--------- ---------
$ 736,688 794,538
========= =========
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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,
1997 1996 1997 1996
Revenues
Oil and gas $ 90,067 111,861 179,186 219,746
Interest 151 235 317 363
------- ------- ------- -------
90,218 112,096 179,503 220,109
------- ------- ------- -------
Expenses
Production 30,624 41,768 66,588 82,206
General and administrative 3,612 3,781 12,239 12,691
Depreciation, depletion and
amortization 16,184 25,184 33,368 49,368
------- ------- ------- -------
50,420 70,733 112,195 144,265
------- ------- ------- -------
Net income $ 39,798 41,363 67,308 75,844
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 6,158 7,321 11,074 13,773
======= ======= ======= =======
Investor partners $ 33,640 34,042 56,234 62,071
======= ======= ======= =======
Per investor partner unit $ 23.91 24.19 39.97 44.12
======= ======= ======= =======
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Cash received from oil and gas sales $ 196,811 219,906
Cash paid to suppliers (82,959) (90,913)
Interest income 317 363
------- -------
Net cash provided by operating activities 114,169 129,356
------- -------
Cash flows used in financing activities:
Distributions to partners (125,500) (120,500)
------- -------
Net increase (decrease) in cash and cash
equivalents (11,331) 8,856
Beginning of period 17,730 7,614
------- -------
End of period $ 6,399 16,470
======= =======
(continued)
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Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1997 1996
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 67,308 75,844
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 33,368 49,368
Decrease in receivables 17,625 160
Increase (decrease) in payables (4,132) 3,984
------- -------
Net cash provided by operating activities $ 114,169 129,356
======= =======
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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.
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 the Partnership could
possibly experience a normal decline of 5% to 7% a year. There are no
current plans to perform any workovers in the future.
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Results of Operations
A. General Comparison of the Quarters Ended June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1997 and 1996:
Three Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.76 21.56 (8%)
Average price per mcf of gas $ 2.96 2.88 3%
Oil production in barrels 3,300 3,900 (15%)
Gas production in mcf 8,400 9,700 (13%)
Gross oil and gas revenue $ 90,067 111,861 (19%)
Net oil and gas revenue $ 59,443 70,093 (15%)
Partnership distributions $ 54,500 60,500 (10%)
Investor partner distributions $ 48,505 53,845 (10%)
Per unit distribution to investor
partners $ 34.47 38.27 (10%)
Number of investor partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues decreased to $90,067 from $111,861 for
the quarters ended June 30, 1997 and 1996, respectively, a decrease of 19%.
The principal factors affecting the comparison of the quarters ended June 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 June 30, 1997 as compared to the
quarter ended June 30, 1996 by 8%, or $1.80 per barrel, resulting in a
decrease of approximately $7,000 in revenues. Oil sales represented 72%
of total oil and gas sales during the quarter ended June 30, 1997 as
compared to 75% during the quarter ended June 30, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 3%, or $.08 per mcf, resulting in an increase
of approximately $800 in revenues.
The net total decrease in revenues due to the change in prices received
from oil and gas production is approximately $6,200. 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.
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2. Oil production decreased approximately 600 barrels or 15% during the
quarter ended June 30, 1997 as compared to the quarter ended June 30,
1996, resulting in a decrease of approximately $11,900 in revenues.
Gas production decreased approximately 1,300 mcf or 13% during the same
period, resulting in a decrease of approximately $3,800 in revenues.
The total decrease in revenues due to the change in production is
approximately $15,700. The decline in production is primarily
attributable to the expected sharp decline following a successful
workover and downtime due to mechanical problems.
Costs and Expenses
Total costs and expenses decreased to $50,420 from $70,733 for the quarters
ended June 30, 1997 and 1996, respectively, a decrease of 29%. The decrease
is primarily the result of lower lease operating costs, general and
administrative expense and depletion expense.
1. Lease operating costs and production taxes were 27% lower, or
approximately $11,100 less during the quarter ended June 30, 1997 as
compared to the quarter ended June 30, 1996. The decline is primarily
attributable to workover cost 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 4%
or approximately $200 during the quarter ended June 30, 1997 as compared
to the quarter ended June 30, 1996.
3. Depletion expense decreased to $14,000 for the quarter ended June 30,
1997 from $23,000 for the same period in 1996. This represents a
decrease of 39%. 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
decline in oil and gas revenues and the increase in the price of oil used
to determine the Partnership's reserves for January 1, 1997 as compared
to 1996.
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B. General Comparison of the Six Month Periods Ended June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1997 and 1996:
Six Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 21.50 20.28 6%
Average price per mcf of gas $ 2.45 2.80 (13%)
Oil production in barrels 6,500 8,200 (21%)
Gas production in mcf 16,100 19,400 (17%)
Gross oil and gas revenue $ 179,186 219,746 (18%)
Net oil and gas revenue $ 112,598 137,540 (18%)
Partnership distributions $ 125,500 120,500 4%
Investor partner distributions $ 111,695 107,245 4%
Per unit distribution to investor
partners $ 79.39 76.22 4%
Number of limited partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues decreased to $179,186 from $219,746
for the six months ended June 30, 1997 and 1996, respectively, a decrease of
18%. The principal factors affecting the comparison of the six months ended
June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1997 as compared to the
six months ended June 30, 1996 by 6%, or $1.22 per barrel, resulting in
an increase of approximately $10,000 in revenues. Oil sales represented
78% of the total oil and gas sales during the six months ended June 30,
1997 as compared to 75% during the six months ended June 30, 1996.
The average price for an mcf of gas received by the Partnership decreased
during the same period by 13%, or $.35 per mcf, resulting in a decrease
of approximately $6,800 in revenues.
The net total increase in revenues due to the change in prices received
from oil and gas production is approximately $3,200. 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.
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2. Oil production decreased approximately 1,700 barrels or 21% during the
six months ended June 30, 1997 as compared to the six months ended June
30, 1996, resulting in a decrease of approximately $36,600 in revenues.
Gas production decreased approximately 3,300 mcf or 17% during the same
period, resulting in a decrease of approximately $8,100 in revenues.
The total decrease in revenues due to the change in production is
approximately $44,700. The decline in production is primarily
attributable to the expected sharp decline following a successful
workover and downtime due to mechanical problems.
Costs and Expenses
Total costs and expenses decreased to $112,195 from $144,265 for the six
months ended June 30, 1997 and 1996, respectively, a decrease of 22%. The
decrease is primarily the result of a decline in lease operating costs,
depletion expense and general and administrative expense.
1. Lease operating costs and production taxes were 19% lower, or
approximately $15,600 less during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996. The decline is primarily
attributable to workover cost 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 4%
or approximately $500 during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996.
3. Depletion expense decreased to $29,000 for the six months ended June 30,
1997 from $45,000 for the same period in 1996. This represents a
decrease of 36%. 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
decline in oil and gas revenues and the increase in the price of oil used
to determine the Partnership's reserves for January 1, 1997 as compared
to 1996.
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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 $114,200 in
the six months ended June 30, 1997 as compared to approximately $129,400 in
the six months ended June 30, 1996. The primary source of the 1997 cash flow
from operating activities was profitable operations.
Cash flows used in financing activities were $125,500 in the six months ended
June 30, 1997 as compared to $120,500 in the six months ended June 30, 1996.
The only use in financing activities was the distributions to partners.
Total distributions during the six months ended June 30, 1997 were $125,500
of which $111,695 was distributed to the investor partners and $13,805 to the
Managing General Partner. The per unit distribution to investor partners
during the six months ended June 30, 1997 was $79.39. 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.
The source for the 1997 distributions of $125,500 was oil and gas operations
of approximately $114,200, with the balance from available cash on hand at
the beginning of the period. 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.
Since inception of the Partnership, cumulative monthly cash distributions of
$895,715 have been made to the partners. As of June 30, 1997, $797,562 or
$566.85 per investor partner unit has been distributed to the investor
partners, representing a 57% return of the capital contributed.
As of June 30, 1997, the Partnership had approximately $46,400 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.
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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) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
On June 12, 1997, the Partnership filed Form 8-K and on June
24, 1997, the Partnership filed Form 8-K Amended, with
respect to Item 4, Changes in Registrant's Certifying
Accountant.
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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 15, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1997 (Unaudited) and the Statement of Operations
for the Six Months Ended June 30, 1997 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,399
<SECURITIES> 0
<RECEIVABLES> 40,369
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,768
<PP&E> 1,315,532
<DEPRECIATION> 630,000
<TOTAL-ASSETS> 736,688
<CURRENT-LIABILITIES> 342
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 736,346
<TOTAL-LIABILITY-AND-EQUITY> 736,688
<SALES> 179,186
<TOTAL-REVENUES> 179,503
<CGS> 66,588
<TOTAL-COSTS> 66,588
<OTHER-EXPENSES> 45,607
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 67,308
<INCOME-TAX> 0
<INCOME-CONTINUING> 67,308
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,308
<EPS-PRIMARY> 39.97
<EPS-DILUTED> 39.97
</TABLE>
