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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission File Number 0-15408
Southwest Royalties, Inc. Income Fund V
(Exact name of registrant as specified in
its limited partnership agreement)
Tennessee 75-2104619
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
407 N. Big Spring, Suite 300, Midland, Texas 79701
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (915) 686-9927
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
limited partnership interests
Indicate by check mark whether registrant (1) has filed 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [x]
The registrant's outstanding securities consist of Units of limited
partnership interests for which there exists no established public market
from which to base a calculation of aggregate market value.
The total number of pages contained in this report is 44. The exhibit
index is found on page 45.
Table of Contents
Item Page
Part I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Submission of Matters to a Vote of Security Holders. . . . . . . . 8
Part II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . . . 9
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . .10
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . .11
8. Financial Statements and Supplementary Data. . . . . . . . . . . .18
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . . .32
Part III
10. Directors and Executive Officers of the Registrant . . . . . . . .33
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . .36
12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . . . . . .36
13. Certain Relationships and Related Transactions . . . . . . . . . .38
Part IV
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Part I
Item 1. Business
General
Southwest Royalties, Inc. Income Fund V (the "Partnership" or
"Registrant") was organized as a Tennessee limited partnership on May 1,
1986. The offering of limited partnership interests began January 22, 1986,
reached minimum capital requirements on May 1, 1986 and concluded July 22,
1986. The Partnership has no subsidiaries.
The Partnership has expended its capital and acquired interests in
producing oil and gas properties. After such acquisitions, the Partnership
has produced and marketed the crude oil and natural gas produced from such
properties. In most cases, the Partnership purchased royalty or overriding
royalty interests and working interests in oil and gas properties that were
converted into net profits interests or other nonoperating interests. The
Partnership purchased either all or part of the rights and obligations under
various oil and gas leases.
The principal executive offices of the Partnership are located at
407 N. Big Spring, Suite 300, Midland, Texas, 79701. The managing general
partner of the Partnership, Southwest Royalties, Inc. (the "Managing General
Partner") and its staff of 160 individuals, together with certain independent
consultants used on an "as-needed" basis, perform various services on behalf
of the Partnership, including the selection of oil and gas properties and the
marketing of production from such properties. H. H. Wommack, III, a
stockholder, director, President and Treasurer of the Managing General
Partner, is also a general partner. The Partnership has no employees.
Principal Products, Marketing and Distribution
The Partnership has acquired and holds royalty interests and net
profit interests in oil and gas properties located in Texas, Oklahoma, New
Mexico and North Dakota. All activities of the Partnership are confined to
the continental United States. All oil and gas produced from these
properties is sold to unrelated third parties in the oil and gas business.
The revenues generated from the Partnership's oil and gas
activities are dependent upon the current market for oil and gas. With some
periodic exceptions, since the early 1980's, there has been a worldwide
oversupply of oil; therefore, market prices have declined significantly. In
the latter part of 1990 and early 1991, the Persian Gulf crisis resulted in
a short period of increased oil prices, with such prices again falling
following the cessation of hostilities. The prices received by the
Partnership for its oil and gas production depend upon numerous factors
beyond the Partnership's control, including competition, economic, political
and regulatory developments and competitive energy sources, and make it
particularly difficult to estimate future prices of oil and natural gas.
For the last few years, the natural gas industry in the United
States has been affected generally by a decline in demand for natural gas, a
surplus in available natural gas, and enhanced delivery capability causing a
general deterioration in natural gas prices.
Following is a table of the ratios of revenues received from oil
and gas production for the last three years:
Oil Gas
1995 59% 41%
1994 55% 45%
1993 62% 38%
As the table indicates, the majority of the Partnership's revenue is
from its oil production, and Partnership revenues will be highly dependent
upon the future prices and demands for oil.
Seasonality of Business
Although the demand for natural gas is highly seasonal, with higher
demand in the colder winter months and in very hot summer months, the
Partnership has been able to sell all of its natural gas, either through
contracts in place or on the spot market at the then prevailing spot market
price. As a result, the volumes sold by the Partnership have not fluctuated
materially with the change of season.
Customer Dependence
The Managing General Partner intends that no material portion of the
Partnership's business be dependent on a single purchaser, or a very few
purchasers, the loss of one of which would have a material adverse impact on
the Partnership. Three purchasers accounted for 79% of the Partnership's
total oil and gas production during 1995: Scurlock Permian Corporation 40%,
Phillips 66 Company 26% and Aquila Southwest Pipeline 13%. Three purchasers
accounted for 79% of the Partnership's total oil and gas production during
1994: Scurlock Permian Corporation 40%, Phillips 66 Company 28% and Aquila
Southwest Pipeline 11%. Two purchasers accounted for 71% of the
Partnership's total oil and gas production during 1993: Scurlock Permian
Corporation and Phillips 66 Company purchased 47% and 24%, respectively. In
the event any of these purchasers were to discontinue purchasing the
Partnership's production, the Managing General Partner believes that a
substitute purchaser or purchasers could be located without undue delay. No
other purchaser accounted for an amount equal to or greater than 10% of the
Partnership's sales of oil and gas production.
Competition
Because the Partnership has utilized all of its funds available for
the acquisition of net profits or royalty interests in producing oil and gas
properties, it is not subject to competition from other oil and gas property
purchasers. See Item 2, Properties.
Factors that may adversely affect the Partnership include delays in
completing arrangements for the sale of production, availability of a market
for production, rising operating costs of producing oil and gas and complying
with applicable water and air pollution control statutes, increasing costs
and difficulties of transportation, and marketing of competitive fuels.
Moreover, domestic oil and gas must compete with imported oil and gas and
with coal, atomic energy, hydroelectric power and other forms of energy.
Regulation
Oil and Gas Production - The production and sale of oil and gas is
subject to federal and state governmental regulation in several respects,
such as existing price controls on natural gas and possible price controls on
crude oil, regulation of oil and gas production by state and local
governmental agencies, pollution and environmental controls and various other
direct and indirect regulation. Many jurisdictions have periodically imposed
limitations on oil and gas production by restricting the rate of flow for oil
and gas wells below their actual capacity to produce and by imposing acreage
limitations for the drilling of wells. The federal government has the power
to permit increases in the amount of oil imported from other countries and to
impose pollution control measures.
Various aspects of the Partnership's oil and gas activities are
regulated by administrative agencies under statutory provisions of the states
where such activities are conducted and by certain agencies of the federal
government for operations on Federal leases. Moreover, certain prices at
which the Partnership may sell its natural gas production are controlled by
the Natural Gas Policy Act of 1978, the Natural Gas Wellhead Decontrol Act of
1989 and the regulations promulgated by the Federal Energy Regulatory
Commission.
Environmental - The Partnership's oil and gas activities are subject
to extensive federal, state and local laws and regulations governing the
generation, storage, handling, emission, transportation and discharge of
materials into the environment. Governmental authorities have the power to
enforce compliance with their regulations, and violations carry substantial
penalties. This regulatory burden on the oil and gas industry increases its
cost of doing business and consequently affects its profitability. The
Managing General Partner is unable to predict what, if any, effect compliance
will have on the Partnership.
Industry Regulations and Guidelines - Certain industry regulations
and guidelines apply to the registration, qualification and operation of oil
and gas programs in the form of limited partnerships. The Partnership is
subject to these guidelines which regulate and restrict transactions between
the Managing General Partner and the Partnership. The Partnership will
comply with these guidelines and the Managing General Partner does not
anticipate that compliance will have a material adverse effect on Partnership
operations.
Partnership Employees
The Partnership has no employees; however, the Managing General
Partner has a staff of geologists, engineers, accountants, landmen and
clerical staff who engage in Partnership activities and operations and
perform additional services for the Partnership as needed. In addition to
the Managing General Partner's staff, the Partnership engages independent
consultants such as petroleum engineers and geologists as needed. As of
December 31, 1995, there were 160 individuals directly employed by the
Managing General Partner in various capacities.
Item 2. Properties
In determining whether an interest in a particular producing
property was to be acquired, the Managing General Partner considered such
criteria as estimated oil and gas reserves, estimated cash flow from the sale
of production, present and future prices of oil and gas, the extent of
undeveloped and unproved reserves, the potential for secondary, tertiary and
other enhanced recovery projects and the availability of markets.
As of December 31, 1995, the Partnership possessed an interest in
oil and gas properties located in Midland, Dawson, Crane, Ward, Andrews,
Glasscock, Winkler, Upton, Pecos and Taylor Counties of Texas; Lea County,
New Mexico; Pottawatomie County, Oklahoma; and McKenzie County, North Dakota.
These properties consist of various interests in approximately 48 wells and
units.
Due to the Partnership's objective of maintaining current operations
without engaging in the drilling of any developmental or exploratory wells,
or additional acquisitions of producing properties, there has not been any
significant changes in properties during 1995.
During 1993, the Partnership received $15,994 from Cobra Oil and Gas
Corporation. This payment extended a farmout agreement on the Mary Shirk
lease between the Partnership and Cobra for an additional period of one year.
The farmout agreement expired March 16, 1994.
The Partnership has entered into a farmout agreement to participate
in a waterflood project on the Shawnee Townsite Unit. The operator of the
Unit is Vintage Petroleum of Tulsa, Oklahoma. The proposed waterflood of the
Shawnee Townsite Unit appears to be economically feasible and beneficial to
the Partnership. It was determined that it would be fair for a third party
to pay all of the Partnership's investment costs in return for a working
interest, effective May 1, 1993, equal to 35% of the Partnership's working
interest in the Shawnee Townsite Unit.
Significant Properties
The following table reflects the significant properties in which the
Partnership has an interest:
Date
Name and Purchased No. of Proved Reserves*
Location and Interest Wells Oil (bbls) Gas (mcf)
Mewbourne 1/87 at 50% 8 51,840 364,872
Crane County, to 100% net
Texas profits
interests
Damson-Rhoda 12/86 at 44% 7 85,659 313,134
Walker to 100% net
Ward County, profits
Texas interests
Union Texas 12/86 at 3% 5 78,457 737,298
Upton County, to 50% net
Texas profits
interests
*The reserve estimates were prepared as of January 1, 1996, by Donald R.
Creamer, P.E., an independent certified petroleum engineer, in accordance
with the rules and regulations of the SEC. The calculation of reserves is
a function, among other things, of oil and gas prices and extraction costs.
The fluctuation of such prices or costs would have a corresponding effect on
reserve estimates. The oil price used in the preparation of the reserve
report as of January 1, 1996, was $18.52, which was the posted price at
December 31, 1995, adjusted by the Partnership's average oil price, with the
price of gas being the contract price for each respective lease. As also
discussed in Part II, Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, oil prices were subject to
frequent changes in 1995.
The evaluation of oil and gas properties is not an exact science and
inevitably involves a significant degree of uncertainty, particularly with
respect to the quantity of oil or gas that any given property is capable of
producing. Estimates of oil and gas reserves are based on available
geological and engineering data, the extent and quality of which may vary in
each case and, in certain instances, may prove to be inaccurate.
Consequently, properties may be depleted more rapidly than the geological and
engineering data have indicated. Unanticipated depletion, if it occurs, will
result in lower reserves than previously estimated; thus an ultimately lower
return for the Partnership. Basic changes in past reserve estimates occur
annually. As new data is gathered during the subsequent year, the engineer
must revise his earlier estimates. A year of new information, which is
pertinent to the estimation of future recoverable volumes, is available
during the subsequent year evaluation. In applying industry standards and
procedures, the new data may cause the previous estimates to be revised.
This revision may increase or decrease the earlier estimated volumes.
Pertinent information gathered during the year may include actual production
and decline rates, production from offset wells drilled to the same geologic
formation, increased or decreased water production, workovers, and changes in
lifting costs, among others. Accordingly, reserve estimates are often
different from the quantities of oil and gas that are ultimately recovered.
The Partnership has reserves which are classified as proved
developed producing, proved developed non-producing, proved undeveloped and
probable. All of the proved reserves are included in the engineering reports
which evaluate the Partnership's present reserves. Probable reserves are not
included in the reserve evaluation, and are less certain than proved reserves
but can be estimated with a degree of certainty sufficient to indicate they
are more likely to be recovered than not.
Because the Partnership does not engage in drilling activities, the
development of proved undeveloped reserves is conducted pursuant to farmout
arrangements with the Managing General Partner or unrelated third parties.
Generally, the Partnership retains a carried interest such as an overriding
royalty interest under the terms of a farmout, or receives cash.
The Partnership or the owners of properties in which the Partnership
owns an interest can engage in workover projects or supplementary recovery
projects, for example, to extract behind the pipe reserves which qualify as
proved developed non-producing reserves. See Part II, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the
Partnership is a party.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
fourth quarter of 1995 through the solicitation of proxies or otherwise.
Part II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Market Information
Limited partnership interests, or units, in the Partnership were
initially offered and sold for a price of $1,000. Limited partner units are
not traded on any exchange and there is no public or organized trading market
for them. The Managing General Partner has become aware of certain limited
and sporadic transfers of units between limited partners and third parties,
but has no verifiable information regarding the prices at which such units
have been transferred. Further, a transferee may not become a substitute
limited partner without the consent of the Managing General Partner.
After completion of the Partnership's first full fiscal year of
operations and each year thereafter, the Managing General Partner has offered
and will continue to offer to purchase each limited partner's interest in the
Partnership, at a price based on tangible assets of the Partnership, plus the
present value of the future net revenues of proved oil and gas properties,
minus liabilities with a risk factor discount of up to one-third which may be
implemented at the sole discretion of the Managing General Partner. However,
the Managing General Partner's obligation to purchase limited partner units
is limited to an expenditure of an amount not in excess of 10% of the total
limited partner units initially subscribed for by limited partners. In 1995,
189 limited partner units were tendered to and purchased by the Managing
General Partner at an average base price of $129.42 per unit. In 1994, 92
limited partner units were tendered to and purchased by the Managing General
Partner at an average base price of $145.26 per unit. In 1993, 7 limited
partner units were tendered to and purchased by the Managing General Partner
at an average base price of $185.59 per unit.
Number of Limited Partner Interest Holders
As of December 31, 1995, there were 794 holders of limited partner
units in the Partnership.
Distributions
Pursuant to Article IV, Section 4.01 of the Partnership's
Certificate and Agreement of Limited Partnership "Net Cash Flow" is
distributed to the partners on a monthly basis. "Net Cash Flow" is defined
as "the cash generated by the Partnership's investments in producing oil and
gas properties, less (i) General and Administrative Costs, (ii) Operating
Costs, and (iii) any reserves necessary to meet current and anticipated needs
of the Partnership, as determined at the sole discretion of the Managing
General Partner." During 1995, twelve monthly distributions were made
totaling $186,941, with $168,841 distributed to the limited partners and
$18,100 to the general partners. For the year ended December 31, 1995,
distributions of $22.52 per limited partner unit were made, based upon 7,499
limited partner units outstanding. For the year ended 1994, twelve monthly
distributions were made totaling $237,500, with $213,750 distributed to the
limited partners and $23,750 to the general partners. For the year ended
December 31, 1994, distributions of $28.50 per limited partner unit were
made, based upon 7,499 limited partner units outstanding. For the year ended
December 31, 1993, twelve monthly distributions were made totaling $489,935,
with $442,295 distributed to the limited partners and $47,640 to the general
partners. For the year ended December 31, 1993, distributions of $58.98 per
limited partner unit were made, based upon 7,499 limited partner units
outstanding.
Item 6. Selected Financial Data
The following selected financial data for the years ended
December 31, 1995, 1994, 1993, 1992, and 1991 should be read in conjunction
with the financial statements included in Item 8:
Year ended December 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Revenues $ 321,963 358,085 554,303 615,708 686,023
Net income (loss) 14,937 (5,643) 18,586 143,286 (132,527)
Partners' share
of net income
(loss):
General partners 1,494 (564) 1,859 14,329 (11,754)
Limited partners 13,443 (5,079) 16,727 128,957 (120,773)
Limited partners'
net income (loss)
per unit 1.79 (0.68) 2.23 17.20 (16.11)
Limited partners'
cash distributions
per unit 22.52 28.50 58.98 66.09 81.19
Total assets $ 1,629,799 1,802,483 2,045,655 2,518,089 2,924,219
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Partnership was formed to acquire nonoperating 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 are not 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 thus depends 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 farmout arrangements and on 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 limited
partners has fluctuated over the past few years and is expected to fluctuate
in later years based on these factors.
Results of Operations
A. General Comparison of the Years Ended December 31, 1995 and 1994
The following table provides certain information regarding performance
factors for the years ended December 31, 1995 and 1994:
Year Ended Percentage
December 31, Increase
1995 1994 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 17.34 16.01 8%
Average price per mcf of gas $ 1.92 1.96 (2%)
Oil production in barrels 31,200 33,200 (6%)
Gas production in mcf 193,700 219,200 (12%)
Income from net profits interests $ 320,832 356,581 (10%)
Partnership distributions $ 186,941 237,500 (21%)
Limited partner distributions $ 168,841 213,750 (21%)
Per unit distribution to limited partners $ 22.52 28.50 (21%)
Number of limited partner units 7,499 7,499
Revenues:
The Partnership's income from net profits interests decreased to $320,832
from $356,581 for the years ended December 31, 1995 and 1994, respectively,
a decrease of 10%. The principal factors affecting the comparison of the
year ended December 31, 1995 and 1994 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the year ended December 31, 1995 as compared to the
year ended December 31, 1994 by 8%, or $1.33 per barrel, resulting in an
increase of approximately $44,200 in income from net profits interests.
Oil sales represented 59% of total oil and gas sales during the year
ended December 31, 1995 as compared to 55% during the year ended
December 31, 1994.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 2%, or $.04 per mcf, resulting in a
decrease of approximately $8,800 in income from net profits interests.
The net increase in income from net profits interests due to the change
in prices received from oil and gas production is approximately $35,400.
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.
2. Oil production decreased approximately 2,000 barrels or 6% during the
year ended December 31, 1995 as compared to the year ended December 31,
1994, resulting in a decrease of approximately $34,700 in income from
net profits interests.
Gas production decreased approximately 25,500 mcf or 12% during the same
period, resulting in a decrease of approximately $49,000 in income from
net profits interests.
The total decrease in income from net profits interests due to the
change in production is approximately $83,700. The decrease is a result
of increased downtime due to mechanical failures and property sales.
3. Lease operating costs and production taxes were 2% lower, or
approximately $12,000 less during the year ended December 31, 1995 as
compared to the year ended December 31, 1994.
Costs and Expenses:
Total costs and expenses decreased to $307,026 from $363,728 for the year
ended December 31, 1995 and 1994, respectively, a decrease of 16%. The
decrease is the result of a decrease in general and administrative costs and
depletion.
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 3%
or approximately $3,700 during the year ended December 31, 1995 as
compared to the year ended December 31, 1994.
2. Depletion expense decreased to $185,000 for the year ended December 31,
1995 from $238,000 for the same period in 1994. This represents a
decrease of 22%. Depletion is calculated using the gross revenue method
of amortization based on a percentage of current gross revenues to
future gross revenues. Consequently, depletion will fluctuate in direct
relation to oil and gas revenues. As noted above, oil and gas revenues
decreased due to a decline in gas prices and oil and gas production for
the year ended December 31, 1995 as compared to the same period for
1994. Depletion reflected a comparable decline.
B. General Comparison of the Years Ended December 31, 1994 and 1993
The following table provides certain information regarding performance
factors for the years ended December 31, 1994 and 1993:
Year Ended Percentage
December 31, Increase
1994 1993 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 16.01 17.61 (9%)
Average price per mcf of gas $ 1.96 1.91 3%
Oil production in barrels 33,200 43,100* (23%)
Gas production in mcf 219,200 248,900* (12%)
Income from net profits interests $ 356,581 552,256 (35%)
Partnership distributions $ 237,500 489,935 (52%)
Limited partner distributions $ 213,750 442,295 (52%)
Per unit distribution to limited partners $ 28.50 58.98 (52%)
Number of limited partner units 7,499 7,499
*In the Form 10-K, for the year ended December 31, 1993, the oil and gas
production volumes of 43,000 and 249,000, respectively, were calculated by
rounding to the nearest 1,000 barrels or mcf, respectively. In the
Form 10-K, for the year ended December 31, 1994, the oil and gas production
volumes of 43,100 and 248,900, respectively, were calculated by rounding to
the nearest 100 barrels or mcf, respectively.
Revenues:
The Partnership's income from net profits interests decreased to $356,581
from $552,256 for the years ended December 31, 1994 and 1993, respectively,
a decrease of 35%. The principal factors affecting the comparison of the
year ended December 31, 1994 and 1993 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the year ended December 31, 1994 as compared to the
year ended December 31, 1993 by 9%, or $1.60 per barrel, resulting in a
decrease of approximately $69,000 in income from net profits interests.
Oil sales represented 55% of total oil and gas sales during the year
ended December 31, 1994 as compared to 62% during the year ended
December 31, 1993.
The average price for an mcf of gas received by the Partnership
increased during the same period by 3%, or $.05 per mcf, resulting in an
increase of approximately $12,500 in income from net profits interests.
The net decrease in income from net profits interests due to the change
in prices received from oil and gas production is approximately $56,500.
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.
2. Oil production decreased approximately 9,900 barrels or 23% during the
year ended December 31, 1994 as compared to the year ended December 31,
1993, resulting in a decrease of approximately $158,500 in income from
net profits interests.
Gas production decreased approximately 29,700 mcf or 12% during the same
period, resulting in a decrease of approximately $58,200 in income from
net profits interests.
The total decrease in income from net profits interests due to the
change in production is approximately $216,700. Mechanical problems and
an increase in down time on three wells resulted in a decrease of 4,100
barrels of oil and 18,100 mcf of gas. A decline of 1,000 barrels of oil
and 6,200 mcf of gas resulted from units in the waterflood project of
the Shawnee Townsite Unit. In preparation for the waterflood, producing
wells are converted into water injection wells. The waterflood project
is complete, though additional time is needed to gauge the response.
Temporary shut-ins as a result of mechanical problems and low prices on
two additional wells resulted in a decrease of 2,400 barrels of oil. A
change in the pumping method on one well resulted in a decrease of 5,600
mcf of gas. The remaining decreases are due primarily to the decline
characteristics of the Partnership's oil and gas properties.
3. Lease operating costs and production taxes were 11% lower, or
approximately $76,000 less during the year ended December 31, 1994 as
compared to the year ended December 31, 1993. Approximately $11,000 in
lease operating expenses, from January 1992 through October 1992, on the
Key West Unit were inadvertently not charged to the Partnership until
April 1993. Plugging costs of approximately $10,000 were incurred on
one well during April 1993. This well was plugged due the well being
uneconomical to produce. Equipment failures on various wells during
1993 resulted in repair costs of approximately $13,800. A temporary
shut-in during the first quarter of 1994 on one well resulted in a
decrease of approximately $20,100 in lease operating expenses.
Costs and Expenses:
Total costs and expenses decreased to $363,728 from $535,717 for the year
ended December 31, 1994 and 1993, respectively, a decrease of 32%. The
decrease is the result of a decrease in depletion.
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 remained
relatively unchanged during the year ended December 31, 1994 as compared
to the year ended December 31, 1993.
2. Depletion expense decreased to $238,000 for the year ended December 31,
1994 from $375,000 for the same period in 1993. This represents a
decrease of 37%. Depletion is calculated using the gross revenue method
of amortization based on a percentage of current gross revenues to
future gross revenues. Consequently, depletion will fluctuate in direct
relation to oil and gas revenues. As noted above, oil and gas revenues
declined due to a decline in oil prices and oil and gas production for
the year ended December 31, 1994 as compared to the same period for
1993. Depletion reflected a comparable decline.
3. The Partnership incurred a write-down of $34,520 on oil and gas
properties for the year ended December 31, 1993, as the net capitalized
costs of the Partnership's oil and gas properties exceeded the present
value of oil and gas reserves. This write-down has the effect of
reducing net income, but did not affect cash flow or partner
distributions.
C. Revenue and Distribution Comparison
Partnership net income or (loss) for the years ended December 31, 1995,
1994 and 1993 was $14,937 in 1995, $(5,643) in 1994 and $18,586 in 1993.
Excluding the effects of depreciation, depletion and amortization, net income
for the years ended December 31, 1995, 1994 and 1993 would have been
$199,937, $232,357 and $428,106, respectively. Correspondingly, Partnership
distributions for the years ended December 31, 1995, 1994 and 1993 were
$186,941, $237,500 and $489,935, respectively. These differences are
indicative of the changes in oil and gas prices, production and properties
during 1995, 1994 and 1993.
The sources for the 1995 distributions of $186,941 were oil and gas
operations of $193,334 and property sales of $1,791, resulting in excess cash
for contingencies or subsequent distributions. The sources for the 1994
distributions of $237,500 were oil and gas operations of $250,017 and
property sales of $3,750, resulting in excess cash for contingencies or
subsequent distributions. The sources of the 1993 distributions of $489,935
were oil and gas operations of $443,837, property sales and farmouts of
$29,529, with the balance from available cash on hand at the beginning of the
period.
Total distributions during the year ended December 31, 1995 were
$186,941 of which $168,841 was distributed to the limited partners and
$18,100 to the general partners. The per unit distribution to limited
partners during the same period was $22.52. Total distributions during the
year ended December 31, 1994 were $237,500 of which $213,750 was distributed
to the limited partners and $23,750 to the general partners. The per unit
distribution to limited partners during the same period was $28.50. Total
distributions during the year ended December 31, 1993 were $489,935 of which
$442,295 was distributed to the limited partners and $47,640 to the general
partners. The per unit distribution to limited partners during the same
period was $58.98.
Since inception of the Partnership, cumulative monthly cash
distributions of $6,589,930 have been made to the partners. As of
December 31, 1995, $5,913,757 or $788.61 per limited partner unit, has been
distributed to the limited partners, representing a 79% return of the capital
contributed.
Liquidity and Capital Resources
The primary source of cash is from operations, the receipt of
income from net profits 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
$193,300 in 1995 compared to approximately $250,000 in 1994 and approximately
$443,800 in 1993. The primary source of the 1995 cash flow from operating
activities was profitable operations.
Cash flows provided by investing activities were approximately
$1,800 in 1995, compared to approximately $3,800 in 1994 and approximately
$29,500 in 1993. The principal source of the 1995 cash flow from investing
activities was the sale of oil and gas properties.
Cash flows used in financing activities were approximately $187,000
in 1995 compared to approximately $237,500 in 1994 and approximately $491,700
in 1993. The only use in financing activities was the distributions to
partners.
As of December 31, 1995, the Partnership had approximately $134,400
in working capital. The Managing General Partner knows of no unusual
contractual commitments and believes the revenue generated from operations
are adequate to meet the needs of the Partnership.
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . 19
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . 21
Statement of Changes in Partners' Equity . . . . . . . . . . . . . . . 22
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . 23
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Southwest Royalties, Inc.
Income Fund V
Midland, Texas
We have audited the accompanying balance sheets of Southwest Royalties, Inc.
Income Fund V as of December 31, 1995 and 1994, and the related statements of
operations, changes in partners' equity and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Southwest Royalties, Inc.
Income Fund V as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting
principles.
JOSEPH DECOSIMO AND COMPANY
A Tennessee Registered Limited Liability Partnership
Chattanooga, Tennessee
March 20, 1996
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Balance Sheets
December 31, 1995 and 1994
1995 1994
---- ----
Assets
Current assets:
Cash and cash equivalents $ 24,788 16,645
Receivable from Managing General Partner 109,546 103,629
Distribution receivable 47 -
--------- ---------
Total current assets 134,381 120,274
--------- ---------
Oil and gas properties - using the full-
cost method of accounting 6,171,938 6,173,729
Less accumulated depreciation,
depletion and amortization 4,676,520 4,491,520
--------- ---------
Net oil and gas properties 1,495,418 1,682,209
--------- ---------
$ 1,629,799 1,802,483
========= =========
Liabilities and Partners' Equity
Current liability - Accounts payable $ - 680
--------- ---------
Partners' equity:
General partners (514,025) (497,419)
Limited partners 2,143,824 2,299,222
--------- ---------
Total partners' equity 1,629,799 1,801,803
--------- ---------
$ 1,629,799 1,802,483
========= =========
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Statements of Operations
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
---- ---- ----
Revenues
Income from net profits interests $ 320,832 356,581 552,256
Interest 1,131 1,504 2,047
------- ------- -------
321,963 358,085 554,303
------- ------- -------
Expenses
General and administrative 122,026 125,728 126,197
Depreciation, depletion and amortization 185,000 238,000 375,000
Provision for impairment of oil and gas
properties - - 34,520
------- ------- -------
307,026 363,728 535,717
------- ------- -------
Net income (loss) $ 14,937 (5,643) 18,586
======= ======= =======
Net income (loss) allocated to:
Managing General Partner $ 1,344 (508) 1,673
======= ======= =======
General partner $ 150 (56) 186
======= ======= =======
Limited partners $ 13,443 (5,079) 16,727
======= ======= =======
Per limited partner unit $ 1.79 (0.68) 2.23
======= ======= =======
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Statement of Changes in Partners' Equity
Years ended December 31, 1995, 1994 and 1993
General Limited
Partners Partners Total
-------- -------- -----
Balance at December 31, 1992 $ (427,324) 2,943,619 2,516,295
Net income 1,859 16,727 18,586
Distributions (47,640) (442,295) (489,935)
------- --------- ---------
Balance at December 31, 1993 (473,105) 2,518,051 2,044,946
Net loss (564) (5,079) (5,643)
Distributions (23,750) (213,750) (237,500)
------- --------- ---------
Balance at December 31, 1994 (497,419) 2,299,222 1,801,803
Net income 1,494 13,443 14,937
Distributions (18,100) (168,841) (186,941)
------- --------- ---------
Balance at December 31, 1995 $ (514,025) 2,143,824 1,629,799
======= ========= =========
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
---- ---- ----
Cash flows from operating activities:
Cash received from income from net
profits interests $ 314,909 374,241 567,307
Cash paid to suppliers (122,706) (125,728) (125,517)
Interest received 1,131 1,504 2,047
------- ------- -------
Net cash provided by operating
activities 193,334 250,017 443,837
------- ------- -------
Cash provided by investing activities:
Cash received from sale of oil and gas
properties 1,791 3,750 29,529
------- ------- -------
Cash used in financing activities:
Distributions to partners (186,982) (237,535) (491,700)
------- ------- -------
Net increase (decrease) in cash 8,143 16,232 (18,334)
Cash and cash equivalents:
Beginning of year 16,645 413 18,747
------- ------- -------
End of year $ 24,788 16,645 413
======= ======= =======
(continued)
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Statements of Cash Flows, continued
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
---- ---- ----
Reconciliation of net income (loss)
to net cash provided by operating
activities:
Net income (loss) $ 14,937 (5,643) 18,586
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation, depletion and
amortization 185,000 238,000 375,000
(Increase) decrease in receivables (5,923) 17,660 15,051
Increase (decrease) in payables (680) - 680
Provision for impairment of
oil and gas properties - - 34,520
------- ------- -------
Net cash provided by operating
activities $ 193,334 250,017 443,837
======= ======= =======
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
1. Summary of Significant Accounting Policies
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 over their remaining useful life
using the units of revenue method based on dollars of future gross
revenue attributable to proved oil and gas reserves.
Under the future gross revenue method, the Partnership computes the
provision by multiplying the total unamortized cost of oil and gas
properties by an overall rate determined by dividing (a) oil and gas
revenues during the period by (b) the total future gross oil and gas
revenues as estimated by the Partnership's independent petroleum
consultants. It is reasonably possible that those estimates of
anticipated future gross revenues, the remaining estimated economic life
of the product, or both could be changed significantly in the near term
due to the potential fluctuation of oil and gas prices or production.
The depletion estimate would also be affected by this change.
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 December 31, 1995 and 1994, the net
capitalized costs did not exceed the estimated present value of oil and
gas reserves. In 1993, the Partnership reduced the net capitalized
costs of oil and gas properties by $34,520. These write-downs had the
effect of reducing net income, but did not affect cash flow or partner
distributions.
The Partnership's interest in oil and gas properties consists of net
profits interests in proved properties located within the continental
United States. A net profits interest is created when the owner of a
working interest in a property enters into an arrangement providing that
the net profits interest owner will receive a stated percentage of the
net profit from the property. The net profits interest owner will not
otherwise participate in additional costs and expenses of the property.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
Estimates and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Syndication Costs
Syndication costs are accounted for as a reduction of partnership
equity.
Environmental Costs
The Partnership is subject to extensive federal, state and local
environmental laws and regulations. These laws, which are constantly
changing, regulate the discharge of materials into the environment and
may require the Partnership to remove or mitigate the environmental
effects of the disposal or release of petroleum or chemical substances
at various sites. Environmental expenditures are expensed or
capitalized depending on their future economic benefit. Costs which
improve a property as compared with the condition of the property when
originally constructed or acquired and costs which prevent future
environmental contamination are capitalized. Expenditures that relate
to an existing condition caused by past operations and that have no
future economic benefits are expensed. Liabilities for expenditures of
a non-capital nature are recorded when environmental assessment and/or
remediation is probable, and the costs can be reasonably estimated.
Gas Balancing
The Partnership utilizes the sales method of accounting for over/under
deliveries of gas. Under this method, the Partnership records revenues
based on the payments it has received for sales from purchasers. As of
December 31, 1995, 1994 and 1993, the Partnership was not under or over
produced.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
Income Taxes
No provision for income taxes is reflected in these financial
statements, since the tax effects of the Partnership's income or loss
are passed through to the individual partners.
In accordance with the requirements of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", the Partnership's tax
basis in its oil and gas properties at December 31, 1995 and 1994 is
$38,165 and $67,824, respectively, more than that shown on the
accompanying Balance Sheets in accordance with generally accepted
accounting principles.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Partnership considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents. The Partnership maintains its
cash at one financial institution.
Number of Limited Partner Units
As of December 31, 1995, 1994 and 1993, there were 7,499 limited partner
units outstanding.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
2. Organization
Southwest Royalties, Inc. Income Fund V was organized under the laws of
the state of Tennessee on May 1, 1986, 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 sells 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. Revenues, costs and expenses are allocated as follows:
Limited General
Partners Partners
-------- --------
Interest income on capital contributions 100% -
Oil and gas sales 90% 10%
All other revenues 90% 10%
Organization and offering costs (1) 100% -
Amortization of organization costs 100% -
Property acquisition costs 100% -
Gain/loss on property disposition 90% 10%
Operating and administrative costs (2) 90% 10%
Depreciation, depletion and amortization
of oil and gas properties 90% 10%
All other costs 90% 10%
(1) All organization costs in excess of 3% 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 3% 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.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
3. Oil and Gas Properties
Costs incurred in connection with the Partnership's oil and gas
producing activities for the years ended December 31, 1995, 1994 and
1993 are as follows:
1995 1994 1993
---- ---- ----
Depreciation, depletion and
amortization $ 185,000 238,000 375,000
======= ======= =======
Impairment of oil and gas
properties $ - - 34,520
======= ======= =======
All of the Partnership's properties were proved when acquired.
4. Commitments and Contingent Liabilities
The Partnership is subject to various federal, state and local
environmental laws and regulations which establish standards and
requirements for protection of the environment. The Partnership cannot
predict the future impact of such standards and requirements, which are
subject to change and can have retroactive effectiveness. The
Partnership continues to monitor the status of these laws and
regulations.
As of December 31, 1995, the Partnership has not been fined, cited or
notified of any environmental violations and management is not aware of
any unasserted violations which would have a material adverse effect
upon capital expenditures, earnings or the competitive position in the
oil and gas industry.
However, the Managing General Partner does recognize by the very nature
of its business, material costs could be incurred in the near term to
bring the Partnership into total compliance. The amount of such future
expenditures is not determinable due to several factors, including the
unknown magnitude of possible contaminations, the unknown timing and
extent of the corrective actions which may be required, the
determination of the Partnership's liability in proportion to other
responsible parties and the extent to which such expenditures are
recoverable from insurance or indemnifications from prior owners of the
Partnership's properties.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
5. Related Party Transactions
A significant portion of the oil and gas properties in which the
Partnership has an interest are operated by and purchased from the
Managing General Partner. As is usual in the industry and as provided
for in the operating agreement for each respective oil and gas property
in which the Partnership has an interest, the operator is paid an amount
for administrative overhead attributable to operating such properties,
with such amounts to Southwest Royalties, Inc. as operator approximating
$91,000, $99,000 and $97,000 for the years ended December 31, 1995, 1994
and 1993, respectively. In addition, the Managing General Partner and
certain officers and employees may have an interest in some of the
properties in which the Partnership also participates.
Certain subsidiaries of the Managing General Partner perform various
oilfield services for properties in which the Partnership owns an
interest. Such services aggregated approximately $25,000, $19,000 and
$77,000 for the years ended December 31, 1995, 1994 and 1993,
respectively, and the Managing General Partner believes that these costs
are comparable to similar charges paid by the Partnership to unrelated
third parties.
Southwest Royalties, Inc., the Managing General Partner, was paid
$109,200 during 1995, 1994 and 1993, as an administrative fee, for
indirect general and administrative overhead expenses.
Amounts due from Southwest Royalties, Inc. totaled $109,546 and $103,623
as of December 31, 1995 and 1994, respectively, all of which resulted
from oil and gas production distributed to the Partnership subsequent to
the end of the year.
In addition, a director and officer of the Managing General Partner is
a partner in a law firm, with such firm providing legal services to the
Partnership approximating $800, $2,000 and $2,500 for the years ended
December 31, 1995, 1994 and 1993, respectively.
6. Major Customers
Three customers purchased 40%, 26% and 13% of the Partnership's oil and
gas production during 1995. During 1994, three customers purchased 40%,
28% and 11% of the Partnership's oil and gas production. During 1993,
two customers purchased 47% and 24% of the Partnership's oil and gas
production.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
7. Estimated Oil and Gas Reserves (unaudited)
The Partnership's interest in proved oil and gas reserves is as follows:
Oil (bbls) Gas (mcf)
---------- ---------
Proved developed and undeveloped reserves -
January 1, 1993 315,000 1,782,000
Revisions of previous estimates (25,000) 202,000
Production (43,000) (249,000)
------- ---------
December 31, 1993 247,000 1,735,000
Revisions of previous estimates 16,000 90,000
Production (35,000) (222,000)
------- ---------
December 31, 1994 228,000 1,603,000
Revisions of previous estimates 54,000 218,000
Production (31,000) (194,000)
Sale of minerals in place - (8,000)
------- ---------
December 31, 1995 251,000 1,619,000
======= =========
Proved developed reserves -
December 31, 1993 211,000 1,662,000
======= =========
December 31, 1994 191,000 1,529,000
======= =========
December 31, 1995 214,000 1,545,000
======= =========
All of the Partnership's reserves are located within the continental
United States.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
Management of the Partnership is provided by Southwest Royalties,
Inc., as Managing General Partner. The names, ages, offices, positions and
length of service of the directors and executive officers of Southwest
Royalties, Inc. are set forth below. Each director and executive officer
serves for a term of one year. The present directors of the Managing General
Partner have served in their capacity since the Company's formation in 1983.
Name Age Position
- -------------------- --- -------------------------------------
H. H. Wommack, III 40 Chairman of the Board, President,
Chief Executive Officer, Treasurer
and Director
H. Allen Corey 40 Secretary and Director
Bill E. Coggin 41 Vice President and Chief Financial
Officer
Richard E. Masterson 43 Vice President, Exploration and
Acquisitions
Jon P. Tate 38 Vice President, Land and Assistant
Secretary
Russell K. Hall 39 Vice President, Acquisitions and
Exploitation Manager
R. Douglas Keathley 40 Vice President, Operations
H. H. Wommack, III, is Chairman of the Board, President, Chief
Executive Officer, Treasurer, principal stockholder and a director of the
Managing General Partner, and has served as its President since the Company's
organization in August, 1983. Prior to the formation of the Company, Mr.
Wommack was a self-employed independent oil producer engaged in the purchase
and sale of royalty and working interests in oil and gas leases, and the
drilling of exploratory and developmental oil and gas wells. Mr. Wommack
holds a J.D. degree from the University of Texas from which he graduated in
1980, and a B.A. from the University of North Carolina in 1977.
H. Allen Corey, Secretary and a director of the Managing General
Partner, has served as its Secretary since its inception. Mr. Corey is an
attorney and is engaged in the private practice of law with the firm of
Miller & Martin, Chattanooga, Tennessee, of which he is a partner, since
1981; except for a period of five months in which Mr. Corey served as
President of Southwest Associated Securities, Inc., formerly a subsidiary of
Southwest Royalties, Inc. Mr. Corey received his J.D. degree from Vanderbilt
University Law School and a B.A. from the University of North Carolina.
Bill E. Coggin, Vice President and Chief Financial Officer, has
been with the Managing General Partner since 1985. Mr. Coggin was Controller
for Rod Ric Corporation of Midland, Texas, an oil and gas drilling company,
during the latter part of 1984. He was Controller for C.F. Lawrence &
Associates, Inc., an independent oil and gas operator also of Midland, Texas
during the early part of 1984. Mr. Coggin taught public school for four
years prior to his business experience. Mr. Coggin received a B.S. in
Education and a B.B.A. in Accounting from Angelo State University.
Richard E. Masterson, Vice President, Exploration and Acquisitions,
first became associated with the Managing General Partner as a geological
consultant in 1985. He was employed as a petroleum geologist by Grand Banks
Energy (1980-1985), Monsanto (1977-1980) and Texaco, Inc. (1974-1976) prior
to joining the Managing General Partner. Mr. Masterson is a member of the
Society of Economic Paleontologists and Mineralogists and the West Texas
Geological Society. Mr. Masterson received his B.A. degree in Geology from
Trinity University.
Jon P. Tate, Vice President, Land and Assistant Secretary, assumed
his responsibilities with the Managing General Partner in 1989. Prior to
joining the Managing General Partner, Mr. Tate was employed by C.F. Lawrence
& Associates, Inc., an independent oil and gas company, as Land Manager from
1981 through 1989. Mr. Tate is a member of the Permian Basin Landman's
Association and received his B.B.S. degree from Hardin-Simmons University.
Russell K. Hall, Vice President, Acquisitions and Exploitation
Manager, assumed his responsibilities with the Managing General Partner on
May 1, 1995. Prior to joining the Managing General Partner, Mr. Hall was
employed by NationsBank of Texas, N.A. as a petroleum engineer and vice
president, specializing in the Permian Basin (1981-1995) and for Amoco
Production Company as a reservoir engineer (1979-1981). Mr. Hall received
his B.S. in mechanical engineering in 1978 from the University of Oklahoma.
R. Douglas Keathley, Vice President, Operations, assumed his
responsibilities with the Managing General Partner as a Production Engineer
in October, 1992. Prior to joining the Managing General Partner, Mr.
Keathley was employed for four (4) years by ARCO Oil & Gas Company as senior
drilling engineer working in all phases of well production (1988-1992), eight
(8) years by Reading & Bates Petroleum Company as senior petroleum engineer
responsible for drilling (1980-1988) and two (2) years by Tenneco Oil Company
as drilling engineer responsible for all phases of drilling (1978-1980). Mr.
Keathley received his B.S. in Petroleum Engineering in 1977 from the
University of Oklahoma.
Key Employees
Accounting and Administrative Officer - Debbie A. Brock, age 43,
assumed her position with the Managing General Partner in 1991. Prior to
joining the Managing General Partner, Ms. Brock was employed with Western
Container Corporation as Accounting Manager (1982-1990), Synthetic Industries
(Texas), Inc. as Accounting Manager (1976-1982) and held various accounting
positions in the manufacturing industry (1971-1975). Ms. Brock received a
B.B.A. from the University of Houston.
Controller - Robert A. Langford, age 46, assumed his
responsibilities with the Managing General Partner in 1992. Mr. Langford
received his B.B.A. degree in Accounting in 1975 from the University of
Central Arkansas. Prior to joining the Managing General Partner, Mr.
Langford was employed with Forest Oil Corporation as Corporate Coordinator,
Regional Coordinator, Accounting Manager. He held various other positions
from 1982-1992 and 1976-1980 and was Assistant Controller of National Oil
Company from 1980-1982.
Financial Reporting Manager - Bryan Dixon, C.P.A., age 29, assumed
his responsibilities with the Managing General Partner in 1992. Mr. Dixon
received his B.B.A. degree in Accounting in 1988 from Texas Tech University
in Lubbock, Texas. Prior to joining the Managing General Partner, Mr. Dixon
was employed as a Senior Auditor with Johnson, Miller & Company from 1991-
1992 and Audit Supervisor for Texas Tech University and the Texas Tech
University Health Sciences Center from 1988-1991.
Production Superintendent - Steve C. Garner, age 54, assumed his
responsibilities with the Managing General Partner as Production
Superintendent in July, 1989. Prior to joining the Managing General Partner,
Mr. Garner was employed 16 years by Shell Oil Company working in all phases
of oil field production as operations foreman, one and one-half years with
Petroleum Corporation of Delaware as Production Superintendent, six years as
an independent engineering consultant, and one year with Citation Oil & Gas
Corp. as a workover, completion and production foreman. Mr. Garner has
worked extensively in the Permian Basin oil field for the last 25 years.
Tax Manager - Carolyn Cookson, age 39, assumed her position with
the Managing General Partner in April, 1989. Prior to joining the Managing
General Partner, Ms. Cookson was employed as Director of Taxes at C.F.
Lawrence & Associates, Inc. from 1983 to 1989, and worked in public
accounting at McCleskey, Cook & Green, P.C. from 1981 to 1983 and Deanna
Brady, C.P.A. from 1980 to 1981. She is a member of the Permian Basin
Chapter of the Petroleum Accountants' Society, and serves on its Board of
Directors and is liaison to the Tax Committee. Ms. Cookson received a B.B.A.
in accounting from New Mexico State University.
Vice President, Marketing - Steve J. Person, age 37, joined the
Managing General Partner in 1989. Prior to joining the Managing General
Partner, Mr. Person served as Vice President of Marketing for CRI, Inc., and
was associated with Capital Financial Group and Dean Witter (1983). He
received a B.B.A. from Baylor University in 1982 and an M.D.A. from Houston
Baptist University in 1987.
Investor Relations Manager - Sandra K. Flournoy, age 49, came to
Southwest Royalties, Inc. in 1988 from Parker & Parsley Petroleum, where she
was Assistant Manager of Investor Services and Broker/Dealer Relations for
two years. Prior to that, Ms. Flournoy was Administrative Assistant to the
Superintendent at Greenwood ISD for four years.
In certain instances, the Managing General Partner will engage
professional petroleum consultants and other independent contractors,
including engineers and geologists in connection with property acquisitions,
geological and geophysical analysis, and reservoir engineering. The Managing
General Partner believes that, in addition to its own "in-house" staff, the
utilization of such consultants and independent contractors in specific
instances and on an "as-needed" basis allows for greater flexibility and
greater opportunity to perform its oil and gas activities more economically
and effectively.
Item 11. Executive Compensation
The Partnership does not have any directors or executive officers.
The executive officers of the Managing General Partner do not receive any
cash compensation, bonuses, deferred compensation or compensation pursuant to
any type of plan, from the Partnership. The Managing General Partner
received $109,200 during 1995, 1994 and 1993 as an annual administrative fee.
Item 12. Security Ownership of Certain Beneficial Owners and Management
There are no limited partners who own of record, or are known by
the Managing General Partner to beneficially own, more than five percent of
the Partnership's limited partnership interests.
The Managing General Partner owns a nine percent interest in the
Partnership as a general partner. Through repurchase offers to the limited
partners, the Managing General Partner also owns 625.50 limited partner
units, a 8.34% limited partner interest. The Managing General Partner total
percentage interest ownership in the Partnership is 16.5%.
No officer or director of the Managing General Partner owns Units
in the Partnership. H. H. Wommack, III, as the individual general partner of
the Partnership, owns a one percent interest in the Partnership as a general
partner. The officers and directors of the Managing General Partner are
considered beneficial owners of the limited partner units acquired by the
Managing General Partner by virtue of their status as such. A list of
beneficial owners of limited partner units, acquired by the Managing General
Partner, is as follows:
Amount and
Nature of Percent
Name and Address of Beneficial of
Title of Class Beneficial Owner Ownership Class
- ------------------- --------------------------- --------------- -------
Limited Partnership Southwest Royalties, Inc. Directly Owns 8.34%
Interest Managing General Partner 625.50 Units
407 N. Big Spring Street
Midland, TX 79701
Limited Partnership H. H. Wommack, III Indirectly Owns 8.34%
Interest Chairman of the Board, 625.50 Units
President, CEO, Treasurer
and Director of Southwest
Royalties, Inc., the
Managing General Partner
407 N. Big Spring Street
Midland, TX 79701
Limited Partnership H. Allen Corey Indirectly Owns 8.34%
Interest Secretary and Director of 625.50 Units
Southwest Royalties, Inc.,
the Managing General
Partner
1000 Volunteer Bldg.
Chattanooga, TN 37402-2289
Limited Partnership Bill E. Coggin Indirectly Owns 8.34%
Interest Vice President and CFO of 625.50 Units
Southwest Royalties, Inc.,
the Managing General
Partner
407 N. Big Spring Street
Midland, TX 79701
Limited Partnership Richard E. Masterson Indirectly Owns 8.34%
Interest Vice President, Exploration 625.50 Units
and Acquisitions of
Southwest Royalties, Inc.,
the Managing General
Partner
407 N. Big Spring Street
Midland, TX 79701
Limited Partnership Jon P. Tate Indirectly Owns 8.34%
Interest Vice President, Land and 625.50 Units
Assistant Secretary of
Southwest Royalties, Inc.,
the Managing General
Partner
407 N. Big Spring Street
Midland, TX 79701
Amount and
Nature of Percent
Name and Address of Beneficial of
Title of Class Beneficial Owner Ownership Class
- ------------------- --------------------------- --------------- -------
Limited Partnership Russell K. Hall Indirectly Owns 8.34%
Interest Vice President, 625.50 Units
Acquisitions and
Exploitation Manager of
Southwest Royalties, Inc.,
the Managing General
Partner
407 N. Big Spring Street
Midland, TX 79701
Limited Partnership R. Douglas Keathley Indirectly Owns 8.34%
Interest Vice President, 625.50 Units
Operations of Southwest
Royalties, Inc., the
Managing General
Partner
407 N. Big Spring Street
Midland, TX 79701
There are no arrangements known to the Managing General Partner
which may at a subsequent date result in a change of control of the
Partnership.
Item 13. Certain Relationships and Related Transactions
In 1995, the Managing General Partner received $109,200 as an
administrative fee. This amount is part of the general and administrative
expenses incurred by the Partnership.
In some instances the Managing General Partner and certain officers
and employees may be working interest owners in an oil and gas property in
which the Partnership also has a net profits interest. Certain properties in
which the Partnership has an interest are operated by the Managing General
Partner, which was paid approximately $91,000 for administrative overhead
attributable to operating such properties during 1995.
Certain subsidiaries of the Managing General Partner perform
various oilfield services for properties in which the Partnership owns an
interest. Such services aggregated approximately $25,000 for the year ended
December 31, 1995.
The law firm of Miller & Martin, of which H. Allen Corey, an
officer and director of the Managing General Partner, is a partner, is
counsel to the Partnership. Legal services rendered by Miller & Martin to
the Partnership during 1995 were approximately $800 which constitutes less
than .05% of that firm's business.
In the opinion of management, the terms of the above transactions
are similar to ones with unaffiliated third parties.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements:
Included in Part II of this report --
Report of Independent Accountants
Balance Sheets
Statements of Operations
Statement of Changes in Partners' Equity
Statements of Cash Flows
Notes to Financial Statements
(a)(2) Schedules I through XIII are omitted because they are not
applicable, or because the required information is shown in
the financial statements or the notes thereto.
(a)(3) Exhibits:
Exhibit 4(a): Certificate and Agreement of Limited
Partnership of Southwest Royalties, Inc.
Income Fund V, dated May 1, 1986.
(Incorporated by reference from
Partnership's Form 10-K for the fiscal year
ended December 31, 1986.)
Exhibit 4(b): First Amendment to Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated May 21, 1986. (Incorporated by
reference from Partnership's Form 10-K for
the fiscal year ended December 31, 1986.)
Exhibit 4(c): Second Amendment to Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated July 1, 1986. (Incorporated by
reference from Partnership's Form 10-K for
the fiscal year ended December 31, 1986.)
Exhibit 4(d): Third Amendment to Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated July 17, 1986. (Incorporated by
reference from Partnership's Form 10-K for
the fiscal year ended December 31, 1986.)
Exhibit 4(e): Fourth Amendment to Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated September 8, 1986. (Incorporated by
reference from Partnership's Form 10-K for
the fiscal year ended December 31, 1986.)
Exhibit 4(f): Fifth Amendment to Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated October 9, 1987. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1987.)
Exhibit 4(g): Sixth Amendment to Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated September 3, 1987. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1987.)
Exhibit 4(h): Seventh Amendment to Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated June 30, 1988. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1988.)
Exhibit 4(i): Eighth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated December 31, 1988. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1989.)
Exhibit 4(j): Tenth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated March 19, 1990. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1990.)
Exhibit 4(k): Eleventh Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated December 31, 1990. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1990.)
Exhibit 4(l): Twelfth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated September 30, 1991. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1991.)
Exhibit 4(m): Thirteenth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated December 31, 1991. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1992.)
Exhibit 4(n): Fourteenth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated March 31, 1992. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1992.)
Exhibit 4(o): Fifteenth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated June 30, 1992. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1992.)
Exhibit 4(p): Sixteenth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated November 23, 1992. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1992.)
Exhibit 4(q): Seventeenth Amendment to the Certificate
and Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated April 22, 1993. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1993.)
Exhibit 4(r): Eighteenth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated September 30, 1993. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1993.)
Exhibit 4(s): Nineteenth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated December 31, 1993. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1993.)
Exhibit 4(t): Twentieth Amendment to the Certificate and
Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated July 26, 1994. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1994.)
Exhibit 4(u): Twenty First Amendment to the Certificate
and Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated January 18, 1995. (Incorporated by
reference from the Partnership's Form 10-K
for the fiscal year ended December 31,
1994.)
Exhibit 4(v): Twenty Second Amendment to the Certificate
and Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated July 26, 1995.
Exhibit 4(w): Twenty Third Amendment to the Certificate
and Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V,
dated January 29, 1996.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Partnership has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Southwest Royalties, Inc. Income Fund V, a
Tennessee limited partnership
By: Southwest Royalties, Inc., Managing
General Partner
By: /s/ H. H. Wommack, III
-----------------------------
H. H. Wommack, III, President
Date: March 26, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Partnership and in the capacities and on the dates indicated.
By: /s/ H. H. Wommack, III
-----------------------------------
H. H. Wommack, III, Chairman of the
Board, President, Chief Executive
Officer, Treasurer and Director
Date: March 26, 1996
By: /s/ H. Allen Corey
-----------------------------
H. Allen Corey, Secretary and
Director
Date: March 26, 1996
Exhibit Index
Item No. Description Page No.
14(a)(3) Exhibit 4(v): Twenty Second Amendment to the
Certificate and Agreement of Limited Partnership
of Southwest Royalties, Inc. Income Fund V, dated
July 26, 1995.
Exhibit 4(w): Twenty Third Amendment to the
Certificate and Agreement of Limited Partnership
of Southwest Royalties, Inc. Income Fund V, dated
January 29, 1996.
This Instrument Prepared By:
J. Porter Durham, Jr.
Miller & Martin
1000 Volunteer Building
832 Georgia Avenue
Chattanooga, Tennessee 37402
TWENTY SECOND AMENDMENT TO CERTIFICATE AND AGREEMENT OF
LIMITED PARTNERSHIP OF SOUTHWEST ROYALTIES, INC.
INCOME FUND V, A TENNESSEE LIMITED PARTNERSHIP
Pursuant to the Tennessee Revised Uniform Limited Partnership Act,
Paragraph 62-2-1204 of the Tennessee Code Annotated, and the provisions of
the Tennessee Uniform Limited Partnership Act, being formerly Paragraph 61-2-
101, et seq. of the Tennessee Code Annotated, this Twenty Second Amendment
(the "Amendment") to the Certificate and Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V is executed to be effective as of the
1st day of July, 1995, by and between H. H. WOMMACK, III, an individual
("General Partner"), SOUTHWEST ROYALTIES, INC. ("Managing General Partner")
(the Managing General Partner and the General Partner, are hereinafter
collectively referred to as "General Partners"), and the General Partners as
attorney-in-fact for those persons and entities listed on Schedule 1 attached
to this Amendment, whether existing or additional limited partners
(collectively the "Limited Partners") and as attorney-in-fact for the
Withdrawing Limited Partners, as defined hereinafter.
WHEREAS, Southwest Royalties, Inc. Income Fund V was organized as
a Tennessee limited partnership pursuant to an Agreement of Limited
Partnership, as amended from time to time, dated May 2, 1986 and recorded in
Book 3197, Page 943 in the Register's Office of Hamilton County, Tennessee
(the "Agreement"); and
WHEREAS, the General Partners, Limited Partners and Withdrawing
Limited Partners desire to amend the Agreement in the manner set forth
herein;
NOW, THEREFORE, for and in consideration of the mutual rights and
obligations herein and other good and valuable consideration the receipt and
legal sufficiency of which are acknowledged, the parties hereto agree as
follows:
1. Schedule 1 to the Agreement is hereby deleted in its entirety
and replaced by the Schedule 1 attached hereto. Those persons and entities
which were formerly listed on Schedule 1 to the Agreement but which are not
listed on the revised Schedule 1 attached hereto shall be defined
collectively as the "Withdrawing Limited Partners."
2. Except as provided herein, the Agreement is hereby constituted
and acknowledged as the controlling Agreement of Southwest Royalties, Inc.
Income Fund V.
IN WITNESS WHEREOF, the parties hereto acknowledge that they have
executed this Amendment to the Agreement to be effective as of the date first
above written.
GENERAL PARTNERS:
/s/ H. H. Wommack, III
By: -----------------------------------
H. H. Wommack, III, General Partner
By: SOUTHWEST ROYALTIES, INC.
Managing General Partner
/s/ H. H. Wommack, III
By: -----------------------------------
H. H. Wommack, III, President
LIMITED PARTNERS:
By: General Partners, as attorneys-in-fact for the Limited
Partners listed on Schedule 1 attached hereto and those
Withdrawing Limited Partners removed from Schedule 1
under Powers of Attorney previously granted
By: /s/ H. H. Wommack, III
-----------------------------------
H. H. Wommack, III
By: SOUTHWEST ROYALTIES, INC.
Managing General Partner
/s/ H. H. Wommack, III
By: -----------------------------------
STATE OF TEXAS )
COUNTY OF MIDLAND )
Personally appeared before me, /s/Vonda L. Walker, Notary Public,
H. H. Wommack, III, with whom I am personally acquainted, and who
acknowledged that he executed the within instrument for the purposes therein
contained for himself and as the attorney-in-fact for the admitted and
withdrawing Limited Partners and as president of Southwest Royalties, Inc.
for itself and as attorney-in-fact for the admitted and withdrawing Limited
Partners, and who further acknowledged that he is authorized by Southwest
Royalties, Inc., the Limited Partners and the Withdrawing Limited Partners to
execute this document on its and their behalf.
Witness my hand, at office, this 26th day of July, 1995.
/s/ Vonda L. Walker
-----------------------------------
Notary Public
My Commission Expires:
This Instrument Prepared By:
J. Porter Durham, Jr.
Miller & Martin
1000 Volunteer Building
832 Georgia Avenue
Chattanooga, Tennessee 37402
TWENTY THIRD AMENDMENT TO CERTIFICATE AND AGREEMENT OF
LIMITED PARTNERSHIP OF SOUTHWEST ROYALTIES, INC.
INCOME FUND V, A TENNESSEE LIMITED PARTNERSHIP
Pursuant to the Tennessee Revised Uniform Limited Partnership Act,
Paragraph 62-2-1204 of the Tennessee Code Annotated, and the provisions of
the Tennessee Uniform Limited Partnership Act, being formerly Paragraph 61-2-
101, et seq. of the Tennessee Code Annotated, this Twenty Third Amendment
(the "Amendment") to the Certificate and Agreement of Limited Partnership of
Southwest Royalties, Inc. Income Fund V is executed to be effective as of the
17th day of January, 1996, by and between H. H. WOMMACK, III, an individual
("General Partner"), SOUTHWEST ROYALTIES, INC. ("Managing General Partner")
(the Managing General Partner and the General Partner, are hereinafter
collectively referred to as "General Partners"), and the General Partners as
attorney-in-fact for those persons and entities listed on Schedule 1 attached
to this Amendment, whether existing or additional limited partners
(collectively the "Limited Partners") and as attorney-in-fact for the
Withdrawing Limited Partners, as defined hereinafter.
WHEREAS, Southwest Royalties, Inc. Income Fund V was organized as
a Tennessee limited partnership pursuant to an Agreement of Limited
Partnership, as amended from time to time, dated May 2, 1986 and recorded in
Book 3197, Page 943 in the Register's Office of Hamilton County, Tennessee
(the "Agreement"); and
WHEREAS, the General Partners, Limited Partners and Withdrawing
Limited Partners desire to amend the Agreement in the manner set forth
herein;
NOW, THEREFORE, for and in consideration of the mutual rights and
obligations herein and other good and valuable consideration the receipt and
legal sufficiency of which are acknowledged, the parties hereto agree as
follows:
1. Schedule 1 to the Agreement is hereby deleted in its entirety
and replaced by the Schedule 1 attached hereto. Those persons and entities
which were formerly listed on Schedule 1 to the Agreement but which are not
listed on the revised Schedule 1 attached hereto shall be defined
collectively as the "Withdrawing Limited Partners."
2. Except as provided herein, the Agreement is hereby constituted
and acknowledged as the controlling Agreement of Southwest Royalties, Inc.
Income Fund V.
IN WITNESS WHEREOF, the parties hereto acknowledge that they have
executed this Amendment to the Agreement to be effective as of the date first
above written.
GENERAL PARTNERS:
/s/ H. H. Wommack, III
By: -----------------------------------
H. H. Wommack, III, General Partner
By: SOUTHWEST ROYALTIES, INC.
Managing General Partner
/s/ H. H. Wommack, III
By: -----------------------------------
H. H. Wommack, III, President
LIMITED PARTNERS:
By: General Partners, as attorneys-in-fact for the Limited
Partners listed on Schedule 1 attached hereto and those
Withdrawing Limited Partners removed from Schedule 1
under Powers of Attorney previously granted
/s/ H. H. Wommack, III
By: -----------------------------------
H. H. Wommack, III
By: SOUTHWEST ROYALTIES, INC.
Managing General Partner
/s/ H. H. Wommack, III
By: -----------------------------------
STATE OF TEXAS )
COUNTY OF MIDLAND )
Personally appeared before me, /s/ Vonda L. Walker, Notary Public,
H. H. Wommack, III, with whom I am personally acquainted, and who
acknowledged that he executed the within instrument for the purposes therein
contained for himself and as the attorney-in-fact for the admitted and
withdrawing Limited Partners and as president of Southwest Royalties, Inc.
for itself and as attorney-in-fact for the admitted and withdrawing Limited
Partners, and who further acknowledged that he is authorized by Southwest
Royalties, Inc., the Limited Partners and the Withdrawing Limited Partners to
execute this document on its and their behalf.
Witness my hand, at office, this 29th day of January, 1996.
/s/ Vonda L. Walker
-----------------------------------
Notary Public
My Commission Expires:
AMENDMENTS FOLLOW AS EX-99