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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 June 30, 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 0-20298
SOUTHWEST ROYALTIES INSTITUTIONAL 1990-91 INCOME PROGRAM
Southwest Royalties Institutional Income Fund X-C, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2374449
(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.
<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 and
six month periods ended June 30, 1998 are not necessarily indicative of the
results that may be expected for the full year.
<PAGE>
Southwest Royalties Institutional Income Fund X-C, L.P.
Balance Sheets
June 30, December 31,
1998 1997
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 5,539 20,066
Receivable from Managing General Partner 52,032 105,891
--------- ---------
Total current assets 57,571 125,957
--------- ---------
Oil and gas properties - using the
full cost method of accounting 2,244,628 2,244,628
Less accumulated depreciation,
depletion and amortization 1,764,479 1,703,479
--------- ---------
Net oil and gas properties 480,149 541,149
--------- ---------
$ 537,720 667,106
========= =========
Liabilities and Partners' Equity
Partners' equity:
General partners $ (25,624) (18,785)
Limited partners 563,344 685,891
--------- ---------
Total partners' equity 537,720 667,106
--------- ---------
$ 537,720 667,106
========= =========
<PAGE>
Southwest Royalties Institutional Income Fund X-C, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues
Income from net profits
interests $ 22,618 101,923 50,233 230,393
Interest 193 1,064 593 2,359
------- ------- ------- -------
22,811 102,987 50,826 232,752
------- ------- ------- -------
Expenses
General and administrative 12,236 9,653 29,213 25,211
Depreciation, depletion and
amortization 32,000 22,000 61,000 46,000
------- ------- ------- -------
44,236 31,653 90,213 71,211
------- ------- ------- -------
Net income (loss) $ (21,425) 71,334 (39,387) 161,541
======= ======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 952 8,400 1,945 18,679
======= ======= ====== =======
General Partner $ 106 933 216 2,075
======= ======= ======= =======
Limited Partners $ (22,483) 62,001 (41,548) 140,787
======= ======= ======= =======
Per limited partner unit $ (3.76) 10.36 (6.94) 23.53
======= ======= ======= =======
<PAGE>
Southwest Royalties Institutional Income Fund X-C, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Cash received from income from net profits
interests $ 92,344 259,782
Cash paid to suppliers (17,465) (25,096)
Interest received 593 2,359
------- -------
Net cash provided by operating activities 75,472 237,045
------- -------
Cash flows used in financing activities:
Distributions to partners (89,999) (356,500)
------- -------
Net decrease in cash and cash equivalents (14,527) (119,455)
Beginning of period 20,066 170,421
------- -------
End of period $ 5,539 50,966
======= =======
(continued)
<PAGE>
Southwest Royalties Institutional Income Fund X-C, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1998 1997
Reconciliation of net income (loss) to net
cash provided by operating activities:
Net income (loss) $ (39,387) 161,541
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 61,000 46,000
Decrease in receivables 42,111 29,389
Increase in payables 11,748 115
------- -------
Net cash provided by operating activities $ 75,472 237,045
======= =======
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
Southwest Royalties Institutional Income Fund X-C, L.P. was organized as a
Delaware limited partnership on September 20, 1991. The offering of such
limited partnership interests began October 1, 1991 as part of a shelf
offering registered under the name Southwest Royalties Institutional 1990-
91 Income Program. Minimum capital requirements for the Partnership were
met on January 28, 1992, with the offering of limited partnership interests
concluding April 30, 1992, with 340 limited partners purchasing 5,983 units
for $2,991,500.
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 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 farmout 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 does not anticipate performing
workovers during 1998. The Partnership could possibly experience a low
decline.
Oil and Gas Properties
Oil and gas properties are accounted for at cost under the full-cost
method. Under this method, all productive and nonproductive costs incurred
in connection with the acquisition, exploration and development of oil and
gas reserves are capitalized. Gain or loss on the sale of oil and gas
properties is not recognized unless significant oil and gas reserves are
involved.
The Partnership's policy for depreciation, depletion and amortization of
oil and gas properties is computed under the units of revenue method.
Under the units of revenue method, depreciation, depletion and amortization
is computed on the basis of current gross revenues from production in
relation to future gross revenues, based on current prices, from estimated
production of proved oil and gas reserves.
Should the net capitalized costs exceed the estimated present value of oil
and gas reserves, discounted at 10%, such excess costs would be charged to
current expense. As of June 30, 1998, the net capitalized costs did not
exceed the estimated present value of oil and gas reserves. A continuation
of the oil price environment experienced during the first half of 1998 will
have an adverse affect on the Company's revenues and operating cash flow.
Also, further declines in oil prices could result in additional decreases
in the carrying value of the Company's oil and gas properties.
<PAGE>
Results of Operations
A. General Comparison of the Quarters Ended June 30, 1998 and 1997
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1998 and 1997:
Three Months
Ended Percentage
June 30, Increase
1998 1997 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 10.86 17.95 (40%)
Average price per mcf of gas $ 2.03 2.16 (6%)
Oil production in barrels 10,300 11,900 (13%)
Gas production in mcf 15,200 19,400 (22%)
Income from net profits interests $ 22,618 101,923 (78%)
Partnership distributions $ 12,000 174,000 (93%)
Limited partner distributions $ 10,800 156,600 (93%)
Per unit distribution to limited
partners $ 1.81 26.17 (93%)
Number of limited partner units 5,983 5,983
Revenues
The Partnership's income from net profits interests decreased to $22,618
from $101,923 for the quarters ended June 30, 1998 and 1997, respectively,
a decrease of 78%. The principal factors affecting the comparison of the
quarters ended June 30, 1998 and 1997 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended June 30, 1998 as compared to the
quarter ended June 30, 1997 by 40%, or $7.09 per barrel, resulting in a
decrease of approximately $84,371 in income from net profits interests.
Oil sales represented 78% of total oil and gas sales during the
quarters ended June 30, 1998 as compared to 84% during the quarter
ended June 30, 1997.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 6%, or $.13 per mcf, resulting in a
decrease of approximately $2,520 in income from net profits interests.
The total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$86,891. 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 decreased approximately 1,600 barrels or 13% during the
quarter ended June 30, 1998 as compared to the quarter ended June 30,
1997, resulting in a decrease of approximately $17,376 in income from
net profits interests.
Gas production decreased approximately 4,200 mcf or 22% during the same
period, resulting in a decrease of approximately $8,526 in income from
net profits interests.
The total decrease in income from net profits interests due to the
change in production is approximately $25,902. The decrease is
primarily attributable to natural decline.
3. Lease operating costs and production taxes were 22% lower, or
approximately $33,565 less during the quarter ended June 30, 1998 as
compared to the quarter ended June 30, 1997.
Costs and Expenses
Total costs and expenses increased to $44,236 from $31,653 for the quarters
ended June 30, 1998 and 1997, respectively, an increase of 40%. The
increase is the result of higher depletion expense and general and
administrative 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
27% or approximately $2,583 during the quarter ended June 30, 1998 as
compared to the quarter ended June 30, 1997. Increase in general and
administrative costs are the result of higher accounting fees due to
the necessity of contracting out preparation of tax depletion and K-1
schedules.
2. Depletion expense increased to $32,000 for the quarter ended June 30,
1998 from $22,000 for the same period in 1997. This represents an
increase of 45%. 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 increase in depletion expense between the comparative
periods were the decrease in the price of oil and gas used to determine
the Partnership's reserves for January 1, 1998 as compared to 1997.
<PAGE>
B. General Comparison of the Six Month Periods Ended June 30, 1998 and
1997
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1998 and 1997:
Six Months
Ended Percentage
June 30, Increase
1998 1997 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 11.75 19.56 (40%)
Average price per mcf of gas $ 1.79 2.35 (24%)
Oil production in barrels 21,900 22,600 (3%)
Gas production in mcf 33,900 37,800 (10%)
Income from net profits interests $ 50,233 230,393 (78%)
Partnership distributions $ 90,000 356,500 (75%)
Limited partner distributions $ 81,000 320,850 (75%)
Per unit distribution to limited
partners $ 13.54 53.63 (75%)
Number of limited partner units 5,983 5,983
Revenues
The Partnership's income from net profits interests decreased to $50,233
from $230,393 for the six months ended June 30, 1998 and 1997,
respectively, a decrease of 78%. The principal factors affecting the
comparison of the six months ended June 30, 1998 and 1997 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the six months ended June 30, 1998 as compared to the
six months ended June 30, 1997 by 40%, or $7.81 per barrel, resulting
in a decrease of approximately $176,506 in income from net profits
interests. Oil sales represented 81% of total oil and gas sales during
the six months ended June 30, 1998 as compared to 83% during the six
months ended June 30, 1997.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 24%, or $.56 per mcf, resulting in
a decrease of approximately $21,168 in income from net profits
interests.
The total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$197,674. 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 decreased approximately 700 barrels or 3% during the six
months ended June 30, 1998 as compared to the six months ended June 30,
1997, resulting in a decrease of approximately $8,225 in income from
net profits interests.
Gas production decreased approximately 3,900 mcf or 10% during the same
period, resulting in a decrease of approximately $6,981 in income from
net profits interests.
The total decrease in income from net profits interests due to the
change in production is approximately $15,206.
3. Lease operating costs and production taxes were 11% lower, or
approximately $32,693 less during the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997.
Costs and Expenses
Total costs and expenses increased to $90,213 from $71,211 for the six
months ended June 30, 1998 and 1997, respectively, an increase of 27%. The
increase is the result of an increase in 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
16% or approximately $4,002 during the six months ended June 30, 1998
as compared to the six months ended June 30, 1997.
2. Depletion expense increased to $61,000 for the six months ended June
30, 1998 from $46,000 for the same period in 1997. This represents an
increase of 33%. 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 increase in depletion expense between the comparative
periods were the decrease in the price of oil and gas used to determine
the Partnership's reserves for January 1, 1998 as compared to 1997.
<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 $75,500 in
the six months ended June 30, 1998 as compared to approximately $237,000 in
the six months ended June 30, 1997. The primary source of the 1998 cash
flow from operating activities was profitable operations.
Cash flows used in financing activities were $90,000 in the six months
ended June 30, 1998 as compared to approximately $356,500 in the six months
ended June 30, 1997. The only use in financing activities was the
distributions to partners.
Total distributions during the six months ended June 30, 1998 were $90,000
of which $81,000 was distributed to the limited partners and $9,000 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1998 was $13.54. Total distributions during the
six months ended June 30, 1997 were $356,500 of which $320,850 was
distributed to the limited partners and $35,650 to the general partners.
The per unit distribution to limited partners during the six months ended
June 30, 1997 was $53.63.
The sources for the 1998 distributions of $90,000 were oil and gas
operations of approximately $75,500, with the balance from available cash
on hand at the beginning of the period. The source for the 1997
distributions of $356,500 was oil and gas operations of approximately
$237,000, with the balance from available cash on hand at the beginning of
the period.
Since inception of the Partnership, cumulative monthly cash distributions
of $2,547,468 have been made to the partners. As of June 30, 1998,
$2,304,578 or $385.19 per limited partner unit has been distributed to the
limited partners, representing a 77% return of the capital contributed.
As of June 30, 1998, the Partnership had approximately $57,571 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.
Information Systems for the Year 2000
The Managing General Partner provides all data processing needs of the
Partnership. The Managing General Partner has reviewed and evaluated its
information systems to determine if its systems accurately process data
referencing the year 2000. Primarily all necessary programming
modifications to correct year 2000 referencing in the Managing General
Partners internal accounting and operating systems have been made to-date.
However the Managing General Partner has not completed its evaluation of
its vendors and suppliers systems to determine the effect, if any, the non-
compliance of such systems would have on the operation of the Managing
General Partnership or the operations 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 ended June 30, 1998.
<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 ROYALTIES INSTITUTIONAL
INCOME FUND X-C, 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, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1998 (Unaudited) and the Statement of Operatoins
for the Six Months Ended June 30, 1998 (Unaudited) and is qualified in its
entirety by references to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,539
<SECURITIES> 0
<RECEIVABLES> 52,032
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,571
<PP&E> 2,244,628
<DEPRECIATION> 1,764,479
<TOTAL-ASSETS> 537,720
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 537,720
<TOTAL-LIABILITY-AND-EQUITY> 537,720
<SALES> 50,233
<TOTAL-REVENUES> 50,826
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 90,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (39,387)
<INCOME-TAX> 0
<INCOME-CONTINUING> (39,387)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,387)
<EPS-PRIMARY> (6.94)
<EPS-DILUTED> (6.94)
</TABLE>
