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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 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 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 92-A, L.P.
Balance Sheets
March 31, December 31,
1998 1997
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 4,984 7,887
Receivable from Managing General Partner 18,278 36,334
--------- ---------
Total current assets 23,262 44,221
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 1,315,359 1,315,352
Less accumulated depreciation,
depletion and amortization 692,000 677,000
--------- ---------
Net oil and gas properties 623,359 638,352
--------- ---------
$ 646,621 682,573
========= =========
Liabilities and Partners' Equity
Current liability - Accounts payable $ 85 98
--------- ---------
Partners' equity:
Managing General Partner 620,810 654,446
Investor partners 25,726 28,029
--------- ---------
Total partners' equity 646,536 682,475
--------- ---------
$ 646,621 682,573
========= =========
<PAGE>
Southwest Developmental Drilling Fund 92-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Revenues
Oil and gas $ 59,954 89,119
Interest 160 166
------- -------
60,114 89,285
------- -------
Expenses
Production 31,018 35,964
General and administrative 9,535 8,628
Depreciation, depletion and amortization 15,000 17,184
------- -------
55,553 61,776
------- -------
Net income $ 4,561 27,509
======= =======
Net income allocated to:
Managing General Partner $ 2,152 4,916
======= =======
Investor partners $ 2,409 22,593
======= =======
Per investor partner unit $ 1.72 16.06
======= =======
<PAGE>
Southwest Developmental Drilling Fund 92-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 $ 71,010 108,034
Cash paid to suppliers (33,552) (44,937)
Interest income 160 166
------- -------
Net cash provided by operating activities 37,618 63,263
------- -------
Cash flows used in investing activities:
Additions to oil and gas properties (8) -
------- -------
Cash flows used in financing activities:
Distribution to investor partners (40,513) (71,000)
------- -------
Net decrease in cash and cash equivalents (2,903) (7,737)
Beginning of period 7,887 17,730
------- -------
End of period $ 4,984 9,993
======= =======
(continued)
<PAGE>
Southwest Developmental Drilling Fund 92-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 $ 4,561 27,509
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 15,000 17,184
Decrease in receivables 11,056 18,915
Increase (decrease) in payables 7,001 (345)
------- -------
Net cash provided by operating activities $ 37,618 63,263
======= =======
<PAGE>
Southwest Developmental Drilling Fund 92-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Developmental Drilling Fund 92-A, L.P. was organized under
the laws of the state of Delaware on May 5, 1992, for the purpose of
engaging primarily in the business of drilling developmental and
exploratory wells, to produce and market crude oil and natural gas
produced from such properties, and acquire leases which contain
drilling prospects. The activities of the Partnership should continue
for a term of 50 years, unless terminated at an earlier date as
provided for in the Partnership Agreement. The Partnership
anticipates selling 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 General
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 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.
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.
<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 $ 14.65 24.05 (39%)
Average price per mcf of gas $ 1.88 1.97 (5%)
Oil production in barrels 3,260 3,100 6%
Gas production in mcf 6,500 7,400 (13%)
Gross oil and gas revenue $ 59,954 89,119 (33%)
Net oil and gas revenue $ 28,936 53,155 (46%)
Partnership distributions $ 40,500 71,000 (43%)
Limited partner distributions $ 36,045 63,190 (43%)
Per unit distribution to limited
partners $ 25.62 44.91 (43%)
Number of limited partner units 1,407 1,407
Revenues
The Partnership's oil and gas revenues decreased to $59,954 from $89,119
for the quarters ended March 31, 1998 and 1997, respectively, a decrease of
33%. 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 39%, or $9.40 per barrel, resulting in
a decrease of approximately $29,100 in revenues. Oil sales represented
80% of total oil and gas sales during the quarter ended March 31, 1998
as compared to 84% 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 5%, or $.09 per mcf, resulting in a
decrease of approximately $700 in revenues.
The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $29,800. 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 increased approximately 160 barrels or 6% during the
quarter ended March 31, 1998 as compared to the quarter ended March 31,
1997, resulting in an increase of approximately $2,300 in revenues.
Gas production decreased approximately 900 mcf or 13% during the same
period, resulting in a decrease of approximately $1,700 in revenues.
The net total increase in revenues due to the change in production is
approximately $600.
Costs and Expenses
Total costs and expenses decreased to $55,553 from $61,776 for the quarters
ended March 31, 1998 and 1997, respectively, a decrease of 10%. The
decrease is the result of lower lease operating costs and depletion expense
partially offset by general and administrative expense.
1. Lease operating costs and production taxes were 14% lower, or
approximately $4,900 less during the quarter ended March 31, 1998 as
compared to the quarter ended March 31, 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 remained $15,000 for the quarter ended March 31, 1998
and $15,000 for the same period in 1997. 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 $37,600 in
the quarter ended March 31, 1998 as compared to approximately $63,300 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 financing activities were $40,500 in the quarter ended
March 31, 1998 as compared to $71,000 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 $40,500 of
which $36,045 was distributed to the investor partners and $4,455 to the
Managing General Partner. The per unit distribution to investor partners
during the quarter ended March 31, 1998 was $25.62. Total distributions
during the quarter ended March 31, 1997 were $71,000 of which $63,190 was
distributed to the investor partners and $7,810 to the Managing General
Partner. The per unit distribution to investor partners during the quarter
ended March 31, 1997 was $44.91.
The source for the 1998 distributions of $40,500 was oil and gas operations
of approximately $37,600, with the balance from available cash on hand at
the beginning of the period. The source for the 1997 distributions of
$71,000 was oil and gas operations of approximately $63,300, with the
balance from available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions
of $1,016,215 have been made to the partners. As of March 31, 1998,
$904,807 or $643.08 per investor partner unit has been distributed to the
investor partners, representing a 65% return of the capital contributed.
As of March 31, 1998, the Partnership had approximately $23,200 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.
<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 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 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> 4,984
<SECURITIES> 0
<RECEIVABLES> 18,278
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,262
<PP&E> 1,315,359
<DEPRECIATION> 692,000
<TOTAL-ASSETS> 646,621
<CURRENT-LIABILITIES> 85
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 646,536
<TOTAL-LIABILITY-AND-EQUITY> 646,621
<SALES> 59,954
<TOTAL-REVENUES> 60,114
<CGS> 31,018
<TOTAL-COSTS> 31,018
<OTHER-EXPENSES> 24,535
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,561
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,561
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,561
<EPS-PRIMARY> 1.72
<EPS-DILUTED> 1.72
</TABLE>
