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, 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 33-47668-02
SOUTHWEST ROYALTIES INSTITUTIONAL 1992-93 INCOME PROGRAM
Southwest Royalties Institutional Income Fund XI-B, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2427289
(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, 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 month period ended
March 31, 1997 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-B, L.P.
Balance Sheets
March 31, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 24,462 20,225
Receivable from Managing General
Partner 56,341 79,012
Other receivable 46,522 57,669
Distribution receivable - 70
--------- ---------
Total current assets 127,325 156,976
--------- ---------
Oil and gas properties - using the
full-cost method of accounting 2,008,569 2,008,569
Less accumulated depreciation,
depletion and amortization 538,000 502,000
--------- ---------
Net oil and gas properties 1,470,569 1,506,569
--------- ---------
Organization costs, net of amortization 12,502 14,362
--------- ---------
$ 1,610,396 1,677,907
========= =========
Liabilities and Partners' Equity
Current liabilities:
Accounts payable $ 4,400 -
Distribution payable 6 -
-------- ---------
Total current liabilities 4,406 -
--------- ---------
Partners' equity:
General partners 12,442 15,847
Limited partners 1,593,548 1,662,060
--------- ---------
Total partners' equity 1,605,990 1,677,907
--------- ---------
$ 1,610,396 1,677,907
========= =========
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Southwest Royalties Institutional Income Fund XI-B, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Revenues
Net profits interests $ 70,958 80,578
Interest income from operations 223 35
Interest income on capital contributions - 642
Miscellaneous income 6,353 -
------- -------
77,534 81,255
------- -------
Expenses
General and administrative 17,091 17,488
Depreciation, depletion and amortization 37,860 47,305
------- -------
54,951 64,793
------- -------
Net income $ 22,583 16,462
======= =======
Net income allocated to:
Managing General Partner $ 5,440 5,681
======= =======
General partner $ 605 631
======= =======
Limited partners $ 16,538 10,150
======= =======
Per limited partner unit $ 3.41 2.09
======= =======
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Southwest Royalties Institutional Income Fund XI-B, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Cash received from oil and gas sales $ 111,129 54,613
Cash paid to suppliers (12,691) (12,188)
Interest received 223 677
------- -------
Net cash provided by operating activities 98,661 43,102
------- -------
Cash flows used in financing activities:
Distributions to partners (94,424) (43,140)
------- -------
Net increase (decrease) in cash and
cash equivalents 4,237 (38)
Beginning of period 20,225 96,063
------- -------
End of period $ 24,462 96,025
======= =======
(continued)
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Southwest Royalties Institutional Income Fund XI-B, L.P.
Statements of Cash Flows, continued
(unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 22,583 16,462
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion, depreciation and amortization 37,860 47,305
(Increase) decrease in receivables 33,818 (25,965)
Increase in payables 4,400 5,300
------- -------
Net cash provided by operating activities $ 98,661 43,102
======= =======
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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-B, L.P. was organized as a
Delaware limited partnership on August 13, 1993. The offering of such
limited partnership interests began October 25, 1993, 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 8, 1993, with the offering of limited partnership interests
concluding August 20, 1994, with total limited partner contributions of
$2,425,500.
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 any net proceeds from
operations to the general and limited partners. Net revenues from producing
oil and gas properties will not be reinvested in other revenue producing
assets except to the extent that producing facilities and wells are reworked
or where methods are employed to improve or enable more efficient recovery of
oil and gas reserves. The economic life of the Partnership will thus depend
on the period over which the Partnership's oil and gas reserves are
economically recoverable.
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.
Based on current conditions, management anticipates performing workovers
during the next four years to enhance production. The Partnership could
possibly experience a slight increase during that time and thereafter, could
possibly experience a normal decline.
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Results of Operations
A. General Comparison of the Quarters Ended March 31, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended March 31, 1997 and 1996:
Three Months
Ended Percentage
March 31, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 23.28 18.07 29%
Average price per mcf of gas $ 2.42 1.85 31%
Oil production in barrels 3,200 5,100 (37%)
Gas production in mcf 26,600 34,300 (22%)
Income from net profits interests $ 70,958 80,578 (12%)
Partnership distributions $ 94,500 43,138 119%
Limited partner distributions $ 85,050 38,888 119%
Per unit distribution to limited
partners $ 17.53 8.02 119%
Number of limited partner units 4,851 4,851
Revenues
The Partnership's income from net profits interests decreased to $70,958 from
$80,578 for the quarters ended March 31, 1997 and 1996, respectively, a
decrease of 12%. The principal factors affecting the comparison of the
quarters ended March 31, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 1997 as compared to the
quarter ended March 31, 1996 by 29%, or $5.21 per barrel, resulting in an
increase of approximately $26,600 in income from net profits interests.
Oil sales represented 54% of total oil and gas sales during the quarter
ended March 31, 1997 as compared to 59% during the quarter ended March
31, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 31%, or $.57 per mcf, resulting in an increase
of approximately $19,600 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 $46,200.
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 1,900 barrels or 37% during the
quarter ended March 31, 1997 as compared to the quarter ended March 31,
1996, resulting in a decrease of approximately $44,200 in income from net
profits interests.
Gas production decreased approximately 7,700 mcf or 22% during the same
period, resulting in a decrease of approximately $18,600 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $62,800. The decrease is primarily a
result of a sharp natural decline on one lease and downtime due to
mechanical problems.
3. Lease operating costs and production taxes were 10% lower, or
approximately $7,300 less during the quarter ended March 31, 1997 as
compared to the quarter ended March 31, 1996. The decrease is primarily
a result of workover costs incurred on one lease during the first quarter
of 1996 as compared to the same period in 1997.
Costs and Expenses
Total costs and expenses decreased to $54,951 from $64,793 for the quarters
ended March 31, 1997 and 1996, respectively, a decrease of 15%. 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 2%
or approximately $400 during the quarter ended March 31, 1997 as compared
to the quarter ended March 31, 1996.
2. Depletion expense decreased to $36,000 for the quarter ended March 31,
1997 from $46,000 for the same period in 1996. This represents a
decrease of 22%. 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
decrease in gross oil and gas revenue 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 $98,700 in the
quarter ended March 31, 1997 as compared to approximately $43,100 in the
quarter ended March 31, 1996. The primary source of the 1997 cash flow from
operating activities was profitable operations.
Cash flows used in financing activities were approximately $94,400 in the
quarter ended March 31, 1997 as compared to approximately $43,100 in the
quarter ended March 31, 1996. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 1997 were $94,500 of
which $85,050 was distributed to the limited partners and $9,450 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 1997 was $17.53. Total distributions during the
quarter ended March 31, 1996 were $43,138 of which $38,888 was distributed to
the limited partners and $4,250 to the general partners. The per unit
distribution to limited partners during the quarter ended March 31, 1996 was
$8.02.
The source for the 1997 distributions of $94,500 was oil and gas operations
of approximately $98,700, resulting in excess cash for contingencies or
subsequent distributions. The source for the 1996 distributions of $43,138
was oil and gas operations of approximately $43,100, with the balance from
available cash on hand at the beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions of
$724,839 have been made to the partners. As of March 31, 1997, $666,213 or
$137.34 per limited partner unit has been distributed to the limited
partners, representing a 27% return of the capital contributed.
As of March 31, 1997, the Partnership had approximately $122,900 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:
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-B, 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, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at March 31, 1997 (Unaudited) and the Statement of Operations
for the Three Months Ended March 31, 1997 (Unaudited) and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 24,462
<SECURITIES> 0
<RECEIVABLES> 102,863
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 127,325
<PP&E> 2,008,569
<DEPRECIATION> 538,000
<TOTAL-ASSETS> 1,610,396
<CURRENT-LIABILITIES> 4,406
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,605,990
<TOTAL-LIABILITY-AND-EQUITY> 1,610,396
<SALES> 70,958
<TOTAL-REVENUES> 77,534
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 54,951
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 22,583
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,583
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,583
<EPS-PRIMARY> 3.41
<EPS-DILUTED> 3.41
</TABLE>
