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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-16494
Southwest Royalties Institutional Income Fund VIII-B, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2220418
(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 19.
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited condensed financial statements included herein have been
prepared by the Registrant (herein also referred to as the "Partnership")
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments necessary for a fair presentation have been included and are of
a normal recurring nature. The financial statements should be read in
conjunction with the audited financial statements and the notes thereto for
the year ended December 31, 2002, which are found in the Registrant's Form
10-K Report for 2002 filed with the Securities and Exchange Commission.
The December 31, 2002 balance sheet included herein has been taken from the
Registrant's 2002 Form 10-K Report. Operating results for the three month
period ended March 31, 2003 are not necessarily indicative of the results
that may be expected for the full year.
Southwest Royalties Institutional Income Fund VIII-B, L.P.
Balance Sheets
March December
31, 31,
2003 2002
------ ------
(unaudit
ed)
Assets
- ----------
Current assets:
Cash and cash equivalents $ 139,687 79,078
Receivable from Managing 193,892 125,224
General Partner
-------- --------
---- ----
Total current assets 333,579 204,302
-------- --------
---- ----
Oil and gas properties -
using the full-
cost method of accounting 4,276,31 4,133,49
8 6
Less accumulated
depreciation,
depletion and 3,794,87 3,755,05
amortization 7 8
-------- --------
---- ----
Net oil and gas 481,441 378,438
properties
-------- --------
---- ----
$ 815,020 582,740
======= =======
Liabilities and Partners'
Equity
- ----------------------------
- ------------
Current liability - $ 160 510
distributions payable
-------- --------
---- ----
Other long term liabilities 427,714 -
-------- --------
---- ----
Partners' equity:
General partners (822) 14,705
Limited partners 387,968 567,525
-------- --------
---- ----
Total partners' equity 387,146 582,230
-------- --------
---- ----
$ 815,020 582,740
======= =======
Southwest Royalties Institutional Income Fund VIII-B, L.P.
Statements of Operations
(unaudited)
Three Months Ended
March 31,
2003 2002
----- -----
Revenues
- -------------
Income from net profits $ 253,795 74,089
interests
Interest 212 245
-------- --------
-- --
254,007 74,334
-------- --------
-- --
Expenses
- ------------
General and administrative 19,380 19,301
Depreciation, depletion and 9,000 7,000
amortization
Accretion 8,387 -
-------- --------
-- --
36,767 26,301
-------- --------
-- --
Net income before cumulative 217,240 48,033
effect
Cumulative effect of change (307,325 -
in accounting principle )
-------- --------
-- --
Net income (loss) $ (90,085) 48,033
====== ======
Net income (loss) allocated
to:
Managing General Partner $ (5,027) 4,954
====== ======
General partner $ - 550
====== ======
Limited partners $ (85,058) 42,529
====== ======
Per limited partner unit $ (8.38)
4.19
====== ======
Southwest Royalties Institutional Income Fund VIII-B, L.P.
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
2003 2002
----- -----
Cash flows from operating
activities:
Cash received from income from
net profits
interests $ 176,301 52,785
Cash paid to suppliers (10,554) (15,316)
Interest received 212 245
-------- --------
-- --
Net cash provided by operating 165,959 37,714
activities
-------- --------
-- --
Cash flows used in financing
activities:
Distributions to partners (105,350 (69,814)
)
-------- --------
-- --
Net increase (decrease) in cash 60,609 (32,100)
and cash equivalents
Beginning of period 79,078 63,123
-------- --------
-- --
End of period $ 139,687 31,023
====== ======
Reconciliation of net income
(loss) to net cash
provided by operating
activities:
Net income (loss) $ (90,085) 48,033
Adjustments to reconcile net
income (loss) to net
cash provided by operating
activities:
Depreciation, depletion and 9,000 7,000
amortization
Accretion 8,387 -
Cumulative effect of change in 307,325 -
accounting principle
Increase in receivables (77,494) (21,304)
Increase in payables 8,826 3,985
-------- --------
-- -
Net cash provided by operating $ 165,959 37,714
activities
====== =====
Noncash investing and financing
activities:
Increase in oil and gas
properties - Adoption $ 112,002 -
of SFAS No.143
====== ======
Southwest Royalties Institutional Income Fund VIII-B, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Royalties Institutional Income Fund VIII-B, L.P. was
organized under the laws of the state of Delaware on November 30,
1987, 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 offering of
limited partner units began March 31, 1988 minimum capital
requirements were met July 11, 1988, with the offering concluded on
March 31, 1989. 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. Effective December 31, 2001, Mr. Wommack sold his
general partner interest to the Managing General Partner. Revenues,
costs and expenses are allocated as follows:
Limited General
Partners Partners
-------- --------
Interest income on capital 100% -
contributions
Oil and gas sales from net 90% 10%
profits interests
All other revenues 90% 10%
Organization and offering 100% -
costs (1)
Amortization of organization 100% -
costs
Property acquisition costs 100% -
Gain/loss on property 90% 10%
dispositions
Operating and administrative 90% 10%
costs (2)
Depreciation, depletion and
amortization
of oil and gas properties 100% -
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 Partner and will be
treated as a capital contribution.
2. Summary of Significant Accounting Policies
The interim financial information as of March 31, 2003, and for the
three months ended March 31, 2003, 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, 2002.
Southwest Royalties Institutional Income Fund VIII-B, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
3. Cumulative effect of change in accounting principle
On January 1, 2003, the Partnership adopted Statement of Financial
Accounting Standards No. 143, Accounting for Asset Retirement
Obligations ("SFAS No. 143"). Adoption of SFAS No. 143 is required
for all companies with fiscal years beginning after June 15, 2002.
The new standard requires the Partnership to recognize a liability for
the present value of all legal obligations associated with the
retirement of tangible long-lived assets and to capitalize an equal
amount as a cost of the asset and depreciate the additional cost over
the estimated useful life of the asset. On January 1, 2003, the
Partnership recorded additional costs, net of accumulated
depreciation, of approximately $112,002, a long term liability of
approximately $419,327 and a charge of approximately $307,325 for the
cumulative effect on depreciation of the additional costs and
accretion expense on the liability related to expected abandonment
costs of its oil and natural gas producing properties. At March 31,
2003, the asset retirement obligation was $427,714, and the increase
in the balance from January 1, 2003 of $8,387 is due to accretion
expense. The pro forma amount of the asset retirement obligation was
measured using information, assumptions and interest rates as of the
adoption date of January 1, 2003. Assuming the Partnership had
applied the provisions of SFAS No. 143 for the three months ended
March 31, 2002 pro forma net income and related income per limited
partner unit amounts would have been $40,317 and $3.98, respectively.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional Income Fund VIII-B, L.P. was organized as
a Delaware limited partnership on November 30, 1987. The offering of such
limited partnership interests began March 31, 1988, minimum capital
requirements were met July 11, 1988, and concluded on March 31, 1989 with
total limited partner contributions of $5,073,500.
The Partnership was formed to acquire royalty and net profits interests in
producing oil and gas properties, to produce and market crude oil and
natural gas produced from such properties, and to distribute the net
proceeds from operations to the limited and general partners. Net revenues
from producing oil and gas properties will not be reinvested in other
revenue producing assets except to the extent that production facilities
and wells are improved or reworked or where methods are employed to improve
or enable more efficient recovery of oil and gas reserves. 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 farm-out arrangements, sales of properties, and the depletion
of wells. Since wells deplete over time, production can generally be
expected to decline from year to year.
Well operating costs and general and administrative costs usually decrease
with production declines; however, these costs may not decrease
proportionately. Net income available for distribution to the partners is
therefore expected to fluctuate in later years based on these factors.
Based on current conditions, management anticipates performing development
drilling projects and workovers during the years 2003 and 2004 to enhance
production. The partnership may have an increase in production volumes for
the years 2003 and 2004, otherwise, the partnership will most likely
experience the historical production decline, which has approximated 6% per
year.
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.
Prior to October 1, 2002, the Partnership calculated depletion of oil and
gas properties under the units of revenue method. The Partnership changed
methods of estimating depletion effective October 1, 2002 to the units of
production method. The units of production method is more predominantly
used throughout the oil and gas industry and will allow the Partnership to
more closely align itself with its peers.
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. In applying the units of revenue method for the three
months ended March 31, 2002, we have not excluded royalty and net profit
interest payments from gross revenues as all of our royalty and net profit
interests have been purchased and capitalized to the depletion basis of our
proved oil and gas properties. As of March 31, 2003, the net capitalized
costs did not exceed the estimated present value of oil and gas reserves.
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.
The Partnership recognizes income from its net profits interest in oil and
gas property on an accrual basis, while the quarterly cash distributions of
the net profits interest are based on a calculation of actual cash received
from oil and gas sales, net of expenses incurred during that quarterly
period. The net profits interest is a calculated revenue interest that
burdens the underlying working interest in the property, and the net
profits interest owner is not responsible for the actual development or
production expenses incurred. Accordingly, if the net profits interest
calculation results in expenses incurred exceeding the oil and gas income
received during a quarter, no cash distribution is due to the Partnership's
net profits interest until the deficit is recovered from future net
profits. The Partnership accrues a quarterly loss on its net profits
interest provided there is a cumulative net amount due for accrued revenue
as of the balance sheet date. As of March 31, 2003, there were no timing
differences, which resulted in a deficit net profit interest.
Critical Accounting Policies
Full cost ceiling calculations The Partnership follows the full cost method
of accounting for its oil and gas properties. The full cost method
subjects companies to quarterly calculations of a "ceiling", or limitation
on the amount of properties that can be capitalized on the balance sheet.
If the Partnership's capitalized costs are in excess of the calculated
ceiling, the excess must be written off as an expense.
The Partnership's discounted present value of its proved oil and natural
gas reserves is a major component of the ceiling calculation, and
represents the component that requires the most subjective judgments.
Estimates of reserves are forecasts based on engineering data, projected
future rates of production and the timing of future expenditures. The
process of estimating oil and natural gas reserves requires substantial
judgment, resulting in imprecise determinations, particularly for new
discoveries. Different reserve engineers may make different estimates of
reserve quantities based on the same data. The Partnership's reserve
estimates are on an annual basis prepared by outside consultants.
Quarterly reserve estimates are prepared by the Managing General Partner's
internal staff of engineers.
The passage of time provides more qualitative information regarding
estimates of reserves, and revisions are made to prior estimates to reflect
updated information. However, there can be no assurance that more
significant revisions will not be necessary in the future. If future
significant revisions are necessary that reduce previously estimated
reserve quantities, it could result in a full cost property writedown. In
addition to the impact of these estimates of proved reserves on calculation
of the ceiling, estimates of proved reserves are also a significant
component of the calculation of DD&A.
While the quantities of proved reserves require substantial judgment, the
associated prices of oil and natural gas reserves that are included in the
discounted present value of the reserves do not require judgment. The
ceiling calculation dictates that prices and costs in effect as of the last
day of the period are generally held constant indefinitely. Because the
ceiling calculation dictates that prices in effect as of the last day of
the applicable quarter are held constant indefinitely, the resulting value
is not indicative of the true fair value of the reserves. Oil and natural
gas prices have historically been cyclical and, on any particular day at
the end of a quarter, can be either substantially higher or lower than the
Partnership's long-term price forecast that is a barometer for true fair
value.
Prior to October 1, 2002, the Partnership calculated depletion of oil and
gas properties under the units of revenue method. The Partnership changed
methods of estimating depletion effective October 1, 2002 to the units of
production method. The units of production method is more predominantly
used throughout the oil and gas industry and will allow the Partnership to
more closely align itself with its peers.
Results of Operations
A. General Comparison of the Quarters Ended March 31, 2003 and 2002
The following table provides certain information regarding performance
factors for the quarters ended March 31, 2003 and 2002:
Three Months
Ended Percenta
ge
March 31, Increase
2003 2002 (Decreas
e)
----- ----- --------
---
Average price per barrel of $ 31.64 65%
oil 19.20
Average price per mcf of gas $ 6.06 153%
2.40
Oil production in barrels 10,800 9,700 11%
Gas production in mcf 8,800 8,200 7%
Income from net profits $ 253,795 74,089 243%
interests
Partnership distributions $ 105,000 70,000 50%
Limited partner $ 94,500 63,000 50%
distributions
Per unit distribution to 9.31 50%
limited partners 6.21
Number of limited partner 10,147 10,147
units
Revenues
The Partnership's income from net profits interests increased to $253,795
from $74,089 for the quarters ended March 31, 2003 and 2002, respectively,
an increase of 243%. The principal factors affecting the comparison of the
quarters ended March 31, 2003 and 2002 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 2003 as compared to the
quarter ended March 31, 2002 by 65%, or $12.44 per barrel, resulting in
an increase of approximately $134,400 in income from net profits
interests. Oil sales represented 87% of total oil and gas sales during
the quarter ended March 31, 2003 as compared to 90% during the quarter
ended March 31, 2002.
The average price for an mcf of gas received by the Partnership
increased during the same period by 153%, or $3.66 per mcf, resulting
in an increase of approximately $32,200 in income from net profits
interests.
The total increase in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$166,600. 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 increased approximately 1,100 barrels or 11% during the
quarter ended March 31, 2003 as compared to the quarter ended March 31,
2002, resulting in an increase of approximately $21,100 in income from
net profits interests.
Gas production increased approximately 600 mcf or 7% during the same
period, resulting in an increase of approximately $1,400 in income from
net profits interests.
The total increase in income from net profits interests due to the
change in production is approximately $22,500.
3. Lease operating costs and production taxes were 7% higher, or
approximately $9,400 more during the quarter ended March 31, 2003 as
compared to the quarter ended March 31, 2002.
Costs and Expenses
Total costs and expenses increased to $36,767 from $26,301 for the quarters
ended March 31, 2003 and 2002, respectively, an increase of 40%. The
increase is a direct result of the accretion expense associated with our
long term liability related to expected abandonment costs of our oil and
natural gas properties, depletion expense and general and administrative
expense.
1. General and administrative costs consists of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs increased
less than 1% or approximately $80 during the quarter ended March 31,
2003 as compared to the quarter ended March 31, 2002.
2. Depletion expense increased to $9,000 for the quarter ended March 31,
2003 from $7,000 for the same period in 2002. This represents an
increase of 29%. Prior to October 1, 2002, the Partnership calculated
depletion of oil and gas properties under the units of revenue method.
The Partnership changed methods of estimating depletion effective
October 1, 2002 to the units of production method. The units of
production method is more predominantly used throughout the oil and gas
industry and will allow the Partnership to more closely align itself
with its peers. The effect of this change in estimate if the units of
production method were applied to 2002 would have increased 2002
depletion expense by $2,000 and decreased 2002 net income by $2,000.
The contributing factors to the increase in depletion expense is in
relation to the BOE depletion rate for the quarter ended March 31, 2003
was $.70 applied to 12,267 BOE as compared to $.78 applied to 11,067
BOE for the same period.
Cumulative effect of change in accounting principle
On January 1, 2003, the Partnership adopted Statement of Financial
Accounting Standards No. 143, Accounting for Asset Retirement Obligations
("SFAS No. 143"). Adoption of SFAS No. 143 is required for all companies
with fiscal years beginning after June 15, 2002. The new standard requires
the Partnership to recognize a liability for the present value of all legal
obligations associated with the retirement of tangible long-lived assets
and to capitalize an equal amount as a cost of the asset and depreciate the
additional cost over the estimated useful life of the asset. On January 1,
2003, the Partnership recorded additional costs, net of accumulated
depreciation, of approximately $112,002, a long term liability of
approximately $419,327 and a charge of approximately $307,325 for the
cumulative effect on depreciation of the additional costs and accretion
expense on the liability related to expected abandonment costs of its oil
and natural gas producing properties. At March 31, 2003, the asset
retirement obligation was $427,714, and the increase in the balance from
January 1, 2003 of $8,387 is due to accretion expense. The pro forma
amount of the asset retirement obligation was measured using information,
assumptions and interest rates as of the adoption date of January 1, 2003.
Assuming the Partnership had applied the provisions of SFAS No. 143 for the
three months ended March 31, 2002 pro forma net income and related income
per limited partner unit amounts would have been $40,317 and $3.98,
respectively.
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 $166,000 in
the quarter ended March 31, 2003 as compared to approximately $37,700 in
the quarter ended March 31, 2002. The primary source of the 2003 cash flow
from operating activities was profitable operations.
Cash flows used in financing activities were approximately $105,350 in the
quarter ended March 31, 2003 as compared to approximately $69,800 in the
quarter ended March 31, 2002. The only use in financing activities was the
distributions to partners.
Total distributions during the quarter ended March 31, 2003 were $105,000
of which $94,500 was distributed to the limited partners and $10,500 to the
general partners. The per unit distribution to limited partners during the
quarter ended March 31, 2003 was $9.31. Total distributions during the
quarter ended March 31, 2002 were $70,000 of which $63,000 was distributed
to the limited partners and $7,000 to the general partners. The per unit
distribution to limited partners during the quarter ended March 31, 2002
was $6.21.
The source for the 2003 distributions of $105,000 was oil and gas
operations of approximately $166,000, resulting in excess cash for
contingencies or subsequent distributions. The source for the 2002
distributions of $70,000 was oil and gas operations of approximately
$37,700, with the balance from available cash on hand at the beginning of
the period.
Since inception of the Partnership, cumulative monthly cash distributions
of $6,559,363 have been made to the partners. As of March 31, 2003,
$5,881,294 or $579.61 per limited partner unit has been distributed to the
limited partners, representing an 100% return of the capital and 16% return
on capital contributed.
As of March 31, 2003, the Partnership had approximately $333,400 in working
capital. The Managing General Partner knows of no unusual contractual
commitments. Although the partnership held many long-lived properties at
inception, because of the restrictions on property development imposed by
the partnership agreement, the Managing General Partner anticipates that at
some point in the near future, the partnership will need to be liquidated.
Maintenance of properties and administrative expenses are increasing
relative to production. As the properties continue to deplete, maintenance
of properties and administrative costs as a percentage of production will
continue to increase.
As the partnerships properties have matured, the net cash flows from
operations for the partnership have generally declined, except in periods
of substantially increased commodity pricing. Since the partnership cannot
develop their properties, the producing reserves continue to deplete
causing cash flow to steadily decline.
Liquidity - Managing General Partner
The Managing General Partner has a highly leveraged capital structure with
approximately $124.0 million of principal due between December 31, 2002 and
December 31, 2004. The Managing General Partner is constantly monitoring
its cash position and its ability to meet its financial obligations as they
become due, and in this effort, is continually exploring various strategies
for addressing its current and future liquidity needs. The Managing
General Partner regularly pursues and evaluates recapitalization strategies
and acquisition opportunities (including opportunities to engage in
mergers, consolidations or other business combinations) and at any given
time may be in various stages of evaluating such opportunities.
Based on current production, commodity prices and cash flow from
operations, the Managing General Partner has adequate cash flow to fund
debt service, developmental projects and day to day operations, but it is
not sufficient to build a cash balance which would allow the Managing
General Partner to meet its debt principal maturities scheduled for 2004.
Therefore the Managing General Partner must renegotiate the terms of its
various obligations or seek new lenders or equity investors in order to
meet its financial obligations, specifically those maturing in 2004. The
Managing General Partner would also consider disposing of certain assets in
order to meet its obligations.
There can be no assurance that the Managing General Partner's debt
restructuring efforts will be successful or that the debt holders will
agree to a course of action consistent with the Managing General Partner's
requirements in restructurings the obligations. Furthermore, there can be
no assurance that the sales of assets can be successfully accomplished on
terms acceptable to the Managing General Partner.
Recent Accounting Pronouncements
The FASB has issued Statement No. 143 "Accounting for Asset Retirement
Obligations" which establishes requirements for the accounting of removal-
type costs associated with asset retirements. The standard is effective
for fiscal years beginning after June 15, 2002, with earlier application
encouraged. This statement has been adopted by the Partnership effective
January 1, 2003. The transition adjustment resulting from the adoption of
SFAS No. 143 has been reported as a cumulative effect of a change in
accounting principle.
In April 2004, the FASB issued Statement of Financial Accounting Standards
No. 149, Amendment of Statement No. 133 on Derivative Instruments and
Hedging Activities ("SFAS No. 149"). SFAS No. 149 amendments require that
contracts with comparable characteristics be accounted for similarly,
clarifies when a contract with an initial investment meets the
characteristic of a derivative and clarifies when a derivative requires
special reporting in the statement of cash flows. SFAS No. 149 is
effective for hedging relationships designated and for contracts entered
into or modified after June 30, 2003, except for provisions that relate to
SFAS No. 133 Statement Implementation Issues that have been effective for
fiscal quarters prior to June 15, 2003, should be applied in accordance
with their respective effective dates and certain provisions relating to
forward purchases or sales of when-issued securities or other securities
that do not yet exist, should be applied to existing contracts as well as
new contracts entered into after June 30, 2003. Assessment by the Managing
General Partner revealed this pronouncement to have no impact on the
partnership.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Partnership is not a party to any derivative or embedded derivative
instruments.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures. The chief executive
officer and chief financial officer of the Partnership's managing general
partner have evaluated the effectiveness of the design and operation of the
Partnership's disclosure controls and procedures (as defined in Exchange
Act Rule 13a-14(c)) as of a date within 90 days of the filing date of this
quarterly report. Based on that evaluation, the chief executive officer and
chief financial officer have concluded that the Partnership's disclosure
controls and procedures are effective to ensure that material information
relating to the Partnership and the Partnership's consolidated subsidiaries
is made known to such officers by others within these entities,
particularly during the period this quarterly report was prepared, in order
to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls. There have not been any significant
changes in the Partnership's internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.
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:
99.1 Certification pursuant to 18 U.S.C. Section 1350
99.2 Certification pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter
for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHWEST ROYALTIES INSTITUTIONAL
INCOME FUND VIII-B, L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
Managing General Partner
By: /s/ Bill E. Coggin
--------------------------------------
Bill E. Coggin, Vice President
and Chief Financial Officer
Date: May 15, 2003
CERTIFICATIONS
I, H.H. Wommack, III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southwest
Royalties Institutional Income Fund VIII-B, L.P.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements,
and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant,
including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls
and procedures as of a date within 90 days prior
to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and
I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or
operation of internal
controls which could adversely affect the registrant's
ability to record,
process, summarize and report financial data and
have identified for the
registrant's auditors any material weaknesses in i
nternal controls; and
b) any fraud, whether or not material, that involves
management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I
have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 15, 2003
/s/ H.H. Wommack, III
H. H. Wommack, III
Chairman, President and Chief Executive Officer
of Southwest Royalties, Inc., the
Managing General Partner of
Southwest Royalties Institutional
Income Fund VIII-B, L.P.
CERTIFICATIONS
I, Bill E. Coggin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southwest
Royalties Institutional Income Fund VIII-B, L.P.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements,
and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures
to ensure that
material information relating to the registrant, including
its consolidated
subsidiaries, is made known to us by others
within those entities,
particularly during the period in which this quarterly
report is being
prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls
and procedures as of a date within 90 days prior to the
filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures
based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or
operation of internal
controls which could adversely affect the registrant's
ability to record,
process, summarize and report financial data and have
identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I
have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: May 15, 2003
/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
and Chief Financial Officer of
Southwest Royalties, Inc., the
Managing General Partner of
Southwest Royalties Institutional
Income Fund VIII-B, L.P.
CERTIFICATION PURSUANT TO
19 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Southwest Royalties
Institutional Income Fund VIII-B, Limited Partnership (the "Company") on
Form 10-Q for the period ending March 31, 2003 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, H.H. Wommack,
III, Chief Executive Officer of the Managing General Partner of the
Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to
906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results
of operation of the
Company.
Date: May 15, 2003
/s/ H.H. Wommack, III
H. H. Wommack, III
Chairman, President, Director and Chief Executive Officer
of Southwest Royalties, Inc., the
Managing General Partner of
Southwest Royalties Institutional Income Fund VIII-B, L.P.
CERTIFICATION PURSUANT TO
19 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Southwest Royalties
Institutional Income Fund VIII-B, Limited Partnership (the "Company") on
Form 10-Q for the period ending March 31, 2003 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Bill E.
Coggin, Chief Financial Officer of the Managing General Partner of the
Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to
906 of the Sarbanes-Oxley Act of 2002, that:
(3) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(4) The information contained in the Report fairly presents, in all
material respects, the financial condition and results
of operation of the
Company.
Date: May 15, 2003
/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
and Chief Financial Officer of
Southwest Royalties, Inc., the
Managing General Partner of
Southwest Royalties Institutional Income Fund VIII-B, L.P.