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 33-47668-01
SOUTHWEST ROYALTIES INSTITUTIONAL 1992-93 INCOME PROGRAM
Southwest Royalties Institutional Income Fund XI-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2427297
(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 Royalties Institutional Income Fund XI-A, L.P.
Balance Sheets
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 18,552 73,533
Receivable from Managing
General Partner 131,905 74,521
--------- ---------
Total current assets 150,457 148,054
--------- ---------
Oil and gas properties - using the
full cost method of accounting 2,150,198 2,156,397
Less accumulated depreciation,
depletion and amortization 485,000 315,000
--------- ---------
Net oil and gas properties 1,665,198 1,841,397
--------- ---------
Organization costs, net 11,643 20,608
--------- ---------
$ 1,827,298 2,010,059
========= =========
Liabilities and Partners' Equity
Partners' equity:
General partners $ (3,086) (3,600)
Limited partners 1,830,384 2,013,659
--------- ---------
Total partners' equity 1,827,298 2,010,059
--------- ---------
$ 1,827,298 2,010,059
========= =========
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Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Revenues
Income from net profits
interests $ 85,587 79,539 327,272 282,860
Interest 558 1,080 1,785 3,906
Miscellaneous income 41,666 - 41,666 -
------- ------- ------- -------
127,811 80,619 370,723 286,766
------- ------- ------- -------
Expenses
General and administrative 10,795 10,519 39,416 39,600
Depreciation, depletion and
amortization 55,123 53,580 177,283 178,740
------- ------- ------- -------
65,918 64,099 216,699 218,340
------- ------- ------- -------
Net income $ 61,893 16,520 154,024 68,426
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 6,782 6,309 26,068 22,245
======= ======= ======= =======
General Partner $ 754 701 2,896 2,472
======= ======= ======= =======
Limited Partners $ 54,357 9,510 125,060 43,709
======= ======= ======= =======
Per limited partner
unit $ 10.03 1.76 23.08 8.07
======= ======= ======= =======
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Southwest Royalties Institutional Income Fund XI-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Cash received from income from net
profits interests $ 311,554 276,760
Cash paid to suppliers (39,416) (39,600)
Interest received 1,785 3,970
------- -------
Net cash provided by operating
activities 273,923 241,130
------- -------
Cash flows from investing activities:
Cash received from sale of oil
and gas property interest 6,199 129,574
Additions to oil and gas properties - (92,313)
Refund of organization costs 1,682 -
------- -------
Net cash provided by investing
activities 7,881 37,261
------- -------
Cash flows used in financing activities:
Distributions to partners (336,785) (301,971)
------- -------
Net decrease in cash and cash equivalents (54,981) (23,580)
Beginning of period 73,533 154,502
------- -------
End of period $ 18,552 130,922
======= =======
(continued)
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Southwest Royalties Institutional Income Fund XI-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 $ 154,024 68,426
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 177,283 178,740
Increase in receivables (57,384) (6,036)
------- -------
Net cash provided by operating
activities $ 273,923 241,130
======= =======
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional Income Fund XI-A, L.P. (the Partnership)
was organized as a Delaware limited partnership on May 5, 1992. The offering
of such limited partnership interests began August 20, 1992, as part of a
shelf offering registered under the name Southwest Royalties Institutional
1992-93 Income Program. Minimum capital requirements for the Partnership
were met on December 10, 1992 and the offering concluding April 30, 1993 with
total limited partner contributions of $2,709,000.
The Partnership was formed to acquire royalty and net profits interests in
producing oil and gas properties, to produce and market crude oil and natural
gas produced from such properties, and to distribute the net proceeds from
operations to the limited and general partners. Net revenues from producing
oil and gas properties will not be reinvested in other revenue producing
assets except to the extent that production facilities and wells are improved
or reworked or where methods are employed to improve or enable more efficient
recovery of oil and gas reserves.
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, 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>
<PAGE>
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 $ 21.11 16.08 31%
Average price per mcf of gas $ 1.84 1.59 16%
Oil production in barrels 5,000 4,700 6%
Gas production in mcf 50,500 60,400 (16%)
Income from net profits interests $ 85,587 79,539 8%
Partnership distributions $ 124,682 133,000 (6%)
Limited partner distributions $ 112,382 119,700 (6%)
Per unit distribution to limited
partners $ 20.74 22.09 (6%)
Number of limited partner units 5,418 5,418
Revenues
The Partnership's income from net profits interests increased to $85,587 from
$79,539 for the quarters ended September 30, 1996 and 1995, respectively, an
increase of 8%. 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 31%, or $5.03 per barrel, resulting
in an increase of approximately $23,600 in income from net profits
interests. Oil sales represented 53% of total oil and gas sales during
the quarter ended September 30, 1996 as compared to 44% during the
quarter ended September 30, 1995.
The average price for an mcf of gas received by the Partnership increased
during the same period by 16%, or $.25 per mcf, resulting in an increase
of approximately $15,100 in income from net profits interests.
The total increase in income from net profits interests due to the change
in prices received from oil and gas production is approximately $38,700.
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 increased approximately 300 barrels or 6% during the
quarter ended September 30, 1996 as compared to the quarter ended
September 30, 1995, resulting in an increase of approximately $6,300 in
income from net profits interests.
Gas production decreased approximately 9,900 mcf or 16% during the same
period, resulting in a decrease of approximately $18,200 in income from
net profits interests.
The net total decrease in income from net profits interests due to the
change in production is approximately $11,900. The decrease in gas
production is a result of property sales and surface problems.
3. Lease operating costs and production taxes were 23% higher, or
approximately $21,300 more during the quarter ended September 30, 1996 as
compared to the quarter ended September 30, 1995. The increase is a
result of workover costs incurred in 1996.
Costs and Expenses
Total costs and expenses increased to $65,918 from $64,099 for the quarters
ended September 30, 1996 and 1995, respectively, an increase of 3%. The
increase is the result of higher general and administrative expense and
depletion expense.
1. General and administrative costs consists of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs increased 3%
or approximately $300 during the quarter ended September 30, 1996 as
compared to the quarter ended September 30, 1995.
2. Depletion expense increased to $53,000 for the quarter ended September
30, 1996 from $51,000 for the same period in 1995. This represents an
increase of 4%. 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 increased due to an increase in price
and production for the quarter ended September 30, 1996 as compared to
the same period for 1995. Depletion reflected a comparable increase.
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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 $ 21.01 16.94 24%
Average price per mcf of gas $ 2.08 1.57 32%
Oil production in barrels 15,000 15,900 (6%)
Gas production in mcf 152,000 193,400 (21%)
Income from net profits interests $ 327,272 282,860 16%
Partnership distributions $ 336,785 301,805 12%
Limited partner distributions $ 308,335 274,905 12%
Per unit distribution to limited
partners $ 56.91 50.74 12%
Number of limited partner units 5,418 5,418
Revenues
The Partnership's income from net profits interests increased to $327,272
from $282,860 for the nine months ended September 30, 1996 and 1995,
respectively, an increase of 16%. 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 24%, or $4.07 per barrel,
resulting in an increase of approximately $64,700 in income from net
profits interests. Oil sales represented 50% of total oil and gas sales
during the nine months ended September 30, 1996 as compared to 47% 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 32%, or $.51 per mcf, resulting in an increase
of approximately $98,600 in income from net profits interests.
The total increase in income from net profits interests due to the change
in prices received from oil and gas production is approximately $163,300.
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 900 barrels or 6% during the nine
months ended September 30, 1996 as compared to the nine months ended
September 30, 1995, resulting in a decrease of approximately $18,900 in
income from net profits interests.
Gas production decreased approximately 41,400 mcf or 21% during the same
period, resulting in a decrease of approximately $86,100 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $105,000. The decrease is primarily a
result of property sales and surface problems.
3. Lease operating costs and production taxes were 5% higher, or
approximately $14,800 more during the nine months ended September 30,
1996 as compared to the nine months ended September 30, 1995.
Costs and Expenses
Total costs and expenses decreased to $216,699 from $218,340 for the nine
months ended September 30, 1996 and 1995, respectively, a decrease of 1%.
The decrease is the result of lower general and administrative expense and
depletion expense.
1. General and administrative costs consists 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 $200 during the nine months ended September 30,
1996 as compared to the nine months ended September 30, 1995.
2. Depletion expense decreased to $170,000 for the nine months ended
September 30, 1996 from $171,000 for the same period in 1995. This
represents a decrease of 1%. 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.
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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 $273,900 in
the nine months ended September 30, 1996 as compared to approximately
$241,100 in the nine months ended September 30, 1995. The primary source of
the 1996 cash flow from operating activities was profitable operations.
Cash flows provided by investing activities were approximately $7,900 in the
nine months ended September 30, 1996 as compared to approximately $37,300 in
the nine months ended September 30, 1995. The principle sources of the 1996
cash flows from investing activities were the sales of oil and gas properties
and the refund of organization costs.
Cash flows used in financing activities were approximately $336,800 in the
nine months ended September 30, 1996 as compared to approximately $302,000 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
$336,785 of which $308,335 was distributed to the limited partners and
$28,450 to the general partners. The per unit distribution to limited
partners during the nine months ended September 30, 1996 was $56.91. Total
distributions during the nine months ended September 30, 1995 were $301,805
of which $274,905 was distributed to the limited partners and $26,900 to the
general partners. The per unit distribution to limited partners during the
nine months ended September 30, 1995 was $50.74.
The source for the 1996 distributions of $336,785 were oil and gas operations
of approximately $273,900, the sale of oil and gas properties of
approximately $6,200, and the refund of organization costs of approximately
$1,700, with the balance. The sources for the 1995 distributions of $301,805
were oil and gas operations of approximately $241,100, the sale of oil and
gas properties of approximately $129,600, offset by additions to oil an gas
properties of approximately $92,300, with the balance from available cash on
hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$873,492 have been made to the partners. As of September 30, 1996, $802,142
or $148.05 per limited partner unit has been distributed to the limited
partners, representing a 30% return of the capital contributed.
As of September 30, 1996, the Partnership had approximately $150,500 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) 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 ROYALTIES INSTITUTIONAL
INCOME FUND XI-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> 18,552
<SECURITIES> 0
<RECEIVABLES> 131,905
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 150,457
<PP&E> 2,150,198
<DEPRECIATION> 485,000
<TOTAL-ASSETS> 1,827,298
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,827,298
<TOTAL-LIABILITY-AND-EQUITY> 1,827,298
<SALES> 327,272
<TOTAL-REVENUES> 370,723
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 216,699
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 154,024
<INCOME-TAX> 0
<INCOME-CONTINUING> 154,024
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 154,024
<EPS-PRIMARY> 23.08
<EPS-DILUTED> 23.08
</TABLE>
