Page 6 of 17
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, 2000
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 33-47667-01
SOUTHWEST OIL & GAS 1992-93 INCOME PROGRAM
Southwest Oil and Gas Income Fund XI-A, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2427267
(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 17.
<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 note thereto for
the year ended December 31, 1999 which are found in the Registrant's Form
10-K Report for 1999 filed with the Securities and Exchange Commission.
The December 31, 1999 balance sheet included herein has been taken from the
Registrant's 1999 Form 10-K Report. Operating results for the three and
nine month periods ended September 30, 2000 are not necessarily indicative
of the results that may be expected for the full year.
<PAGE>
Southwest Oil and Gas Income Fund XI-A, L.P.
Balance Sheets
September 30, December 31,
2000 1999
------------- ------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 26,623 10,337
Receivable from Managing General Partner 49,238 25,237
--------- ---------
Total current assets 75,861 35,574
--------- ---------
Oil and gas properties - using the
full cost method of accounting 1,036,218 1,017,632
Less accumulated depreciation,
depletion and amortization 766,555 751,555
--------- ---------
Net oil and gas properties 269,663 266,077
--------- ---------
$ 345,524 301,651
========= =========
Liabilities and Partners' Equity
Partners' equity
General partners $ (2,209) (8,096)
Limited partners 347,733 309,747
--------- ---------
Total partners' equity 345,524 301,651
--------- ---------
$ 345,524 301,651
========= =========
<PAGE>
Southwest Oil and Gas Income Fund XI-A, L.P.
Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues
Oil and gas $ 80,199 63,793 216,226 147,972
Interest 291 209 746 743
------- ------- ------- -------
80,490 64,002 216,972 148,715
------- ------- ------- -------
Expenses
Production 10,106 28,783 80,096 82,470
General and administrative 4,209 3,604 13,003 15,917
Depreciation, depletion and
amortization 6,000 5,000 15,000 22,000
------- ------- ------- -------
20,315 37,387 108,099 120,387
------- ------- ------- -------
Net income $ 60,175 26,615 108,873 28,328
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 5,956 2,845 11,148 4,530
======= ======= ======= =======
General Partner $ 662 316 1,239 503
======= ======= ======= =======
Limited Partners $ 53,557 23,454 96,486 23,295
======= ======= ======= =======
Per limited partner unit $ 18.99 8.31 34.20 8.26
======= ======= ======= =======
<PAGE>
Southwest Oil and Gas Income Fund XI-A, L.P.
Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
2000 1999
---- ----
Cash flows from operating activities
Cash received from oil and gas sales $ 194,354 129,005
Cash paid to suppliers (95,228) (76,884)
Interest received 746 743
------- -------
Net cash provided by operating activities 99,872 52,864
------- -------
Cash flows from investing activities
Additions of oil and gas properties (18,586) (234)
------- -------
Cash flows used in financing activities
Distributions to partners (65,000) (74,407)
------- -------
Net increase (decrease) in cash and cash equivalents 16,286
(21,777)
Beginning of period 10,337 34,874
------- -------
End of period $ 26,623 13,097
======= =======
(continued)
<PAGE>
Southwest Oil and Gas Income Fund XI-A, L.P.
Statements of Cash Flows, continued
(unaudited)
Nine Months Ended
September 30,
2000 1999
---- ----
Reconciliation of net income to net
cash provided by operating activities
Net income $ 108,873 28,328
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation, depletion and amortization 15,000 22,000
Increase in receivables (21,872) (18,967)
(Decrease) increase in payables (2,129) 21,503
------- -------
Net cash provided by operating activities $ 99,872 52,864
======= =======
<PAGE>
Southwest Oil & Gas Income Fund XI-A, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Oil & Gas Income Fund XI-A, L.P. was organized under the
laws of the state of Delaware on May 5, 1992, for the purpose of
acquiring producing oil and gas properties and to produce and market
crude oil and natural gas produced from such properties for a term of
50 years, unless terminated at an earlier date as provided for in the
Partnership Agreement. The Partnership will sell 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 and H. H. Wommack, III, as
the individual general partner. Partnership profits and losses, as
well as all items of income, gain, loss, deduction, or credit, will be
credited or charged as follows:
Limited General
Partners Partners (1)
-------- --------
Organization and offering expenses (2) 100% -
Acquisition costs 100% -
Operating costs 90% 10%
Administrative costs (3) 90% 10%
Direct costs 90% 10%
All other costs 90% 10%
Interest income earned on capital
contributions 100% -
Oil and gas revenues 90% 10%
Other revenues 90% 10%
Amortization 100% -
Depletion allowances 100% -
(1) H.H. Wommack, III, President of the Managing General
Partner, is an additional general partner in the Partnership and
has a one percent interest in the Partnership. Mr. Wommack is
the majority stockholder of the Managing General Partner whose
continued involvement in Partnership management is important to
its operations. Mr. Wommack, as a general partner, shares also
in Partnership liabilities.
(2) Organization and Offering Expenses (including all cost of
selling and organizing the offering) include a payment by the
Partnership of an amount equal to three percent (3%) of Capital
Contributions for reimbursement of such expenses. All
Organization Costs (which excludes sales commissions and fees) in
excess of three percent (3%) of Capital Contributions with
respect to the Partnership will be allocated to and paid by the
Managing General Partner.
(3) Administrative Costs will be paid from the Partnership's
revenues; however; Administrative Costs in the Partnership year
in excess of two percent (2%) of Capital Contributions shall be
allocated to and paid by the Managing General Partner.
<PAGE>
Southwest Oil and Gas Income Fund XI-A, L.P.
Note to Financial Statements
2. Summary of Significant Accounting Policies
The interim financial information as of September 30, 2000, and for
the three and nine months ended September 30, 2000, 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, 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Oil & Gas Income Fund XI-A, L.P. 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 Oil & Gas 1992-93 Income Program.
Minimum capital requirements for the Partnership were met on March 17,
1993, with the offering of limited partnership interests concluding April
30, 1993. At the conclusion of the offering of limited partnership
interests, 122 limited partners had purchased 2,821 units for $1,410,500.
The Partnership was formed to acquire 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.
Management does not anticipate performing workovers during the next year.
The Partnership could possibly experience a 10%-12% 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. For the nine months ended September 30, 2000, the net
capitalized costs did not exceed the estimated present value.
<PAGE>
Results of Operations
A. General Comparison of the Quarters Ended September 30, 2000 and 1999
The following table provides certain information regarding performance
factors for the quarters ended September 30, 2000 and 1999:
Three Months
Ended Percentage
September 30, Increase
2000 1999 (Decrease)
---- ---- ---------
Average price per barrel of oil $ 30.29 20.11 51%
Average price per mcf of gas $ 4.53 2.52 80%
Oil production in barrels 1,030 1,410 (27%)
Gas production in mcf 11,300 14,080 (20%)
Gross oil and gas revenue $ 80,199 63,793 26%
Net oil and gas revenue $ 70,093 35,010 100%
Partnership distributions $ 35,000 20,000 75%
Limited partner distributions $ 31,500 18,000 75%
Per unit distribution to limited partners $ 11.17 6.38 75%
Number of limited partner units 2,821 2,821
Revenues
The Partnership's oil and gas revenues increased to $80,199 from $63,793
for the quarters ended September 30, 2000 and 1999, respectively, an
increase of 26%. The principal factors affecting the comparison of the
quarters ended September 30, 2000 and 1999 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended September 30, 2000 as compared to
the quarter ended September 30, 1999 by 51%, or $10.18 per barrel,
resulting in an increase of approximately $14,400 in revenues. Oil
sales represented 38% of total oil and gas sales during the quarter
ended September 30, 2000 as compared to 44% during the quarter ended
September 30, 1999.
The average price for an mcf of gas received by the Partnership
increased during the same period by 80%, or $2.01 per mcf, resulting in
an increase of approximately $28,300 in revenues.
The total increase in revenues due to the change in prices received
from oil and gas production is approximately $42,700. 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.
<PAGE>
2. Oil production decreased approximately 380 barrels or 27%
during the quarter ended September 30, 2000 as compared to the quarter
ended September 30, 1999, resulting in a decrease of
approximately $11,500 in revenues.
Gas production decreased approximately 2,780 mcf or 20% during the same
period, resulting in a decrease of approximately $12,600 in revenues.
The total decrease in revenues due to the change in production is
approximately $24,100. The decrease in production is due primarily to
sharp natural decline on one major gas lease. Production on this lease
fluctuates. The decrease in oil production is due primarily to a
steeper than normal decline in several small wells.
Costs and Expenses
Total costs and expenses decreased to $20,315 from $37,387 for the quarters
ended September 30, 2000 and 1999, respectively, a decrease of 46%. The
decrease is the result of lower lease operating costs, partially offset by
an increase in depletion expense and general and administrative expense.
1. Lease operating costs and production taxes were 65% lower, or
approximately $18,700 less during the quarter ended September 30, 2000 as
compared to the quarter ended September 30, 1999. The increase in lease
operating costs and production taxes is primarily a result of the higher
oil and gas prices received by the Partnership. Higher prices have made it
possible for the Partnership to perform needed major repairs and
maintenance. Since production taxes are based on gross revenues, the
increase in oil and gas prices have directly increased production taxes.
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
17% or approximately $600 during the quarter ended September 30, 2000
as compared to the quarter ended September 30, 1999.
3. Depletion expense increased to $6,000 for the quarter ended September
30, 2000 from $5,000 for the same period in 1999. This represents an
increase of 20%. 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. The increase in
depletion expense is due to an accrual adjustment, which was made
during the quarter ended September 30, 1999 to adjust for the over
accrual of depletion in the first two quarters of 1999. The rapid rise
in prices during the first three quarters of 1999 from $14/bbl to
$23/bbl and from $1.71/mcf to $2.38/mcf caused an adjustment to be
necessary during the third quarter of 1999.
<PAGE>
B. General Comparison of the Nine Month Periods Ended September 30, 2000
and 1999
The following table provides certain information regarding performance
factors for the nine month periods ended September 30, 2000 and 1999:
Nine Months
Ended Percentage
September 30, Increase
2000 1999 (Decrease)
---- ---- ---------
Average price per barrel of oil $ 28.01 14.83 89%
Average price per mcf of gas $ 3.61 2.08 74%
Oil production in barrels 3,260 4,080 (20%)
Gas production in mcf 34,600 42,080 (18%)
Gross oil and gas revenue $ 216,226 147,972 46%
Net oil and gas revenue $ 136,130 65,502 108%
Partnership distributions $ 65,000 74,407 (13%)
Limited partner distributions $ 58,500 69,407 (16%)
Per unit distribution to limited partners $ 20.74 24.60 (16%)
Number of limited partner units 2,821 2,821
Revenues
The Partnership's oil and gas revenues increased to $216,226 from $147,972
for the nine months ended September 30, 2000 and 1999, respectively, an
increase of 46%. The principal factors affecting the comparison of the
nine months ended September 30, 2000 and 1999 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the nine months ended September 30, 2000 as compared
to the nine months ended September 30, 1999 by 89%, or $13.18 per
barrel, resulting in an increase of approximately $53,800 in revenues.
Oil sales represented 42% of total oil and gas sales during the quarter
ended September 30, 2000 as compared to 41% during the quarter ended
September 30, 1999.
The average price for an mcf of gas received by the Partnership
increased during the same period by 74%, or $1.53 per mcf, resulting in
an increase of approximately $64,400 in revenues.
The total increase in revenues due to the change in prices received
from oil and gas production is approximately $118,200. 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.
<PAGE>
2. Oil production decreased approximately 820 barrels or 20% during the
nine months ended September 30, 2000 as compared to the nine months
ended September 30, 1999, resulting in a decrease of approximately
$23,000 in revenues.
Gas production decreased approximately 7,480 mcf or 18% during the same
period, resulting in a decrease of approximately $27,000 in revenues.
The total decrease in revenues due to the change in production is
approximately $50,000. The decrease in production is due primarily to
sharp natural decline on one major gas lease. Production on this lease
fluctuates. The decrease in oil production is due primarily to a
steeper than normal decline on several small wells.
Costs and Expenses
Total costs and expenses decreased to $108,099 from $120,387 for the nine
months ended September 30, 2000 and 1999, respectively, a decrease of 10%.
The decrease is the result of lower general and administrative expense,
depletion expense and lease operating costs.
1. Lease operating costs and production taxes were 3% lower, or
approximately $2,400 less during the nine months ended September 30,
2000 as compared to the nine months ended September 30, 1999.
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
18% or approximately $2,900 during the nine months ended September 30,
2000 as compared to the nine months ended September 30, 1999.
3. Depletion expense decreased to $15,000 for the nine months ended
September 30, 2000 from $22,000 for the same period in 1999. This
represents a decrease of 32%. 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 increase in the price of oil and gas used
to determine the Partnership's reserves and the increase in oil and gas
revenues received by the Partnership.
<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 $99,900 in
the nine months ended September 30, 2000 as compared to approximately
$52,900 in the nine months ended September 30, 1999. The primary source of
the 2000 cash flow from operating activities was profitable operations.
Cash flows used in investing activities were approximately $18,600 in the
nine months ended September 30, 2000 as compared to approximately $200 in
the nine months ended September 30, 1999. The principle use of the 2000
cash flow from investing activities was the change in oil and gas
properties.
Cash flows used in financing activities were approximately $65,000 in the
nine months ended September 30, 2000 as compared to approximately $74,400
in the nine months ended September 30, 1999. The only use in financing
activities was the distributions to partners.
Total distributions during the nine months ended September 30, 2000 were
$65,000 of which $58,500 was distributed to the limited partners and $6,500
to the general partners. The per unit distribution to limited partners
during the nine months ended September 30, 2000 was $20.74. Total
distributions during the nine months ended September 30, 1999 were $74,407
of which $69,407 was distributed to the limited partners and $5,000 to the
general partners. The per unit distribution to limited partners during the
nine months ended September 30, 1999 was $24.60.
The sources for the 2000 distributions of $65,000 were oil and gas
operations of approximately $99,900, partially offset by the change in oil
and gas properties of approximately $(18,600), resulting in excess cash for
contingencies or subsequent distributions. The source for the 1999
distributions of $74,407 was oil and gas operations of approximately
$52,900, partially offset by a change in oil and gas properties of
approximately $(200), with the balance from available cash on hand at the
beginning of the period.
Since inception of the Partnership, cumulative monthly cash distributions
of $1,052,195 have been made to the partners. As of September 30, 2000,
$960,145 or $340.36 per limited partner unit has been distributed to the
limited partners, representing a 68% return of the capital contributed.
As of September 30, 2000, the Partnership had approximately $75,900 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.
<PAGE>
Liquidity - Managing General Partner
The Managing General Partner has a highly leveraged capital structure with
approximately, $33.8 million of cash interest and $5.9 million of principal
due within the next twelve months. The Managing General Partner is
currently in the process of renegotiating the terms of its various
obligations with its note holders and/or attempting to seek new lenders or
equity investors. Additionally, the Managing General Partner would
consider disposing of certain assets in order to meet its obligations.
There can be no assurance that the Managing General Partner's continuing
debt restructuring efforts will be successful or that the lenders will
agree to a course of action consistent with the Managing General Partners
requirements in restructuring the obligations. Even if such agreement is
reached, it may require approval of additional lenders, which is not
assured. Furthermore, there can be no assurance that the sales of assets
can be successfully accomplished on terms acceptable to the Managing
General Partner. Under current circumstances, the Managing General
Partner's ability to continue as a going concern depends upon its ability
to (1) successfully restructure its obligations or obtain additional
financing as may be required, (2) maintain compliance with all debt
covenants, (3) generate sufficient cash flow to meet its obligations on a
timely basis, and (4) achieve satisfactory levels of future earnings. If
the Managing General Partner is unsuccessful in its efforts, it may be
unable to meet its obligations making it necessary to undertake such other
actions as may be appropriate to preserve asset values.
<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) 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 Oil and Gas 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, 2000
<PAGE>
