SOUTHWEST OIL & GAS INCOME FUND X-B LP - 10-K Annual Report

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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, 1999

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 0-19585

Southwest Oil & Gas Income Fund X-B, L.P.
(Exact name of registrant as specified in
its limited partnership agreement)

Delaware 75-2332176
(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 40. There is no
exhibit index.

Table of Contents

Item Page

Part I

1. Business 3

2. Properties 7

3. Legal Proceedings 9

4. Submission of Matters to a Vote of Security Holders 9

Part II

5. Market for Registrant's Common Equity and Related
Stockholder Matters 10

6. Selected Financial Data 11

7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12

8. Financial Statements and Supplementary Data 19

9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 34

Part III

10. Directors and Executive Officers of the Registrant 35

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 39

Signatures 40

Part I

Item 1. Business

General
Southwest Oil & Gas Income Fund X-B, L.P. (the "Partnership" or
"Registrant") was organized as a Delaware limited partnership on November
27, 1990. The offering of limited partnership interests began December 1,
1990 as part of a shelf offering registered under the name Southwest Oil &
Gas 1990-91 Income Program (the "Program"). Minimum capital requirements
for the Partnership were met on March 1, 1991, with the offering of limited
partnership interests concluding September 30, 1991. The Partnership has
no subsidiaries.

The Partnership has acquired interests in producing oil and gas properties,
and produced and marketed the crude oil and natural gas produced from such
properties. In most cases, the Partnership purchased working interests in
oil and gas properties. 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 97 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 working interests in oil and gas
properties located in Arkansas, Louisiana, New Mexico and Texas. 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. 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.

Oil prices experienced a year of recovery during 1999. After seeing prices
languish near $10 per barrel in December 1998, a rebound occurred that
would briefly push NYMEX pricing over $27 in late November 1999. Crude oil
prices reached $20 per barrel in mid-July and would not fall below $21 the
rest of the year. There were drastic improvements to the main factors that
gave rise to the worst price depression in history. These improvements
provoked a spike in crude oil prices to levels not seen since the Gulf War.
First, OPEC has done a remarkable job of adhering to production cuts agreed
to in March, despite the temptation to cheat given current pricing. As
prices have risen over the last twelve months, OPEC has consistently
maintained a compliance rate above 90 percent. Also, most foreign markets
are well on their way to recovery, greatly increasing the demand for energy
in those countries. These and other factors have eliminated the
"oversupply" of crude oil that we experienced in 1998. The near month
contract for crude oil settled at $25.60 per barrel on December 30, 1999.

In 1999 natural gas prices rose 10% to an average of $2.18/MMBtu, 18 cents
higher than the $2.00/MMBtu average seen in 1998. Despite warmer-than-
normal heating seasons at both ends of the year, 1999 was the fourth year
in a row that prices averaged $2.00/MMBtu or above. Citing lower storage
levels and a rising demand for natural gas, industry experts are predicting
a "healthy jump" in prices for 2000. Although higher prices in 1999 fueled
an increase in production, end of year gas in storage nationwide is only
75% of capacity as compared to 87% at the end of 1998. Further, gas demand
is expected to continue to increase at a faster pace than the amount of gas
being replaced. A record breaking 70% of single-family homes built in 1999
were equipped with natural gas services ranging from traditional heating to
water heating, cooking and grilling. Based on these encouraging
statistics, we remain optimistic in our expectation of slightly higher
natural gas prices in the coming year, hopefully seeing an average above
the $2.20/MMBtu level.

Following is a table of the ratios of revenues received from oil and gas
production for the last three years:

Oil Gas

1999 83% 17%
1998 79% 21%
1997 80% 20%

As the table indicates, the majority of the Partnership's revenue is from
its oil production; therefore, 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
No material portion of the Partnership's business is dependent on a single
purchaser, or a very few purchasers, where the loss of one would have a
material adverse impact on the Partnership. Three purchasers accounted for
78% of the Partnership's total oil and gas production during 1999: Teppco
Crude Oil LLC for 46%, Scurlock Permian LLC for 19% and Mobil Corporation
for 13%. Three purchasers accounted for 56% of the Partnership's total oil
and gas production during 1998: Mesa Pipe Line Company for 21%, Mobil
Corporation for 19% and Duke Energy Transport & Trad. for 16%. Three
purchasers accounted for 69% of the Partnership's total oil and gas
production during 1997: Mesa Pipe Line Company for 37%, Mobil Corporation
for 21% and Marathon Petroleum Company for 11%. All purchasers of the
Partnership's oil and gas production are unrelated third parties. In the
event either 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 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 complies with these guidelines and the Managing General
Partner does not anticipate that continued 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,
1999, there were 97 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, 1999, the Partnership possessed an interest in oil and
gas properties located in Columbia County of Arkansas; Calcasieu Parish of
Louisiana; Eddy and Lea Counties of New Mexico; and Ector, Duval, Midland,
Panola, Reeves, Schleicher, Scurry, Ward and Winkler Counties of Texas.
These properties consist of various interests in approximately 385 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 have not been any
significant changes in properties during 1999, 1998 and 1997

There were no leases sold during 1999. During 1998, fifty-two leases were
sold for approximately $151,100. During 1997, one lease was sold for
approximately $38,500.

Significant Properties
The following table reflects the significant properties in which the
Partnership has an interest:

Date
Purchased No. of Proved Reserves*
Name and Location and Interest Wells Oil (bbls) Gas (mcf)
- ----------------- ------------ ----- ---------- ---------

Freer Acquisition 9/91 at 22 52,000 54,000
Duval County, .2% to 42.5%
Texas working interest

IRA UNIT 1/92 at 23% 239 105,000 -
Scurry County, Texas working interest

NE Vacuum Abo 9/91 at 7 141,000 105,000
Acquisition 25% to 50%
Lea County, working interest
New Mexico

SWRI Acquisition 1/92 at 5.8% to 4 25,000 105,000
Midland and Ward 50% working interest
Counties, Texas and
Eddy County, NM

*Donald R. Creamer, P.E., an Independent Registered Petroleum Engineer
prepared the reserve and present value data for the Partnership's existing
properties as of January 1, 2000. The reserve estimates were made in
accordance with guidelines established by the Securities and Exchange
Commission pursuant to Rule 4-10(a) of Regulation S-X. Such guidelines
require oil and gas reserve reports be prepared under existing economic and
operating conditions with no provisions for price and cost escalation
except by contractual arrangements.

The New York Mercantile Exchange price at December 31, 1999 of $25.60 was
used as the beginning basis for the oil price. Oil price adjustments from
$25.60 per barrel were made in the individual evaluations to reflect oil
quality, gathering and transportation costs. The results are an average
price received at the lease of $23.16 per barrel in the preparation of the
reserve report as of January 1, 2000.

In the determination of the gas price, the New York Mercantile Exchange
price at December 31, 1999 of $2.33 was used as the beginning basis. Gas
price adjustments from $2.33 per Mcf were made in the individual
evaluations to reflect BTU content, gathering and transportation costs and
gas processing and shrinkage. The results are an average price received at
the lease of $2.07 per Mcf in the preparation of the reserve report as of
January 1, 2000.

As also discussed in Part II, Item 7, Management's Discussion and Analysis
of Financial Condition and Results of Operations, oil and gas prices were
subject to frequent changes in 1999.

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 and proved undeveloped. All of the proved reserves are included
in the engineering reports which evaluate the Partnership's present
reserves.

Because the Partnership does not engage in drilling activities, the
development of proved undeveloped reserves is conducted pursuant to farm-
out 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 farm-out, 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 1999 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 $500. 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.

The Managing General Partner has the right, but not the obligation, to
purchase limited partnership units should an investor desire to sell. The
value of the unit is determined by adding the sum of (1) current assets
less liabilities and (2) the present value of the future net revenues
attributable to proved reserves and by discounting the future net revenues
at a rate not in excess of the prime rate charged by NationsBank, N.A. of
Midland, Texas plus one percent (1%), which value shall be further reduced
by a risk factor discount of no more than one-third (1/3) to be determined
by the Managing General Partner in its sole and absolute discretion. In
1999, 44 limited partner units were tendered to and purchased by the
Managing General Partner at an average base price of $72.57 per unit. In
1998, 15 limited partner units were tendered to and purchased by the
Managing General Partner at an average base price of $68.66 per unit. In
1997, 15 limited partner units were tendered to and purchased by the
Managing General Partner at an average base price of $117.72 per unit.

Number of Limited Partner Interest Holders
As of December 31, 1999, there were 528 holders of limited partner units in
the Partnership.

Distributions
Pursuant to Article III, Section 3.05 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 in the sole discretion of the
Managing General Partner."

During 1999, distributions were made totaling $78,268, with $71,268
distributed to the limited partners and $7,000 to the general partners.
For the year ended December 31, 1999, distributions of $6.54 per limited
partner unit were made, based upon 10,889 limited partner units
outstanding. During 1998, distributions were made totaling $197,234, with
$185,084 distributed to the limited partners and $12,150 to the general
partners. For the year ended December 31, 1998, distributions of $17.00
per limited partner unit were made, based upon 10,889 limited partner units
outstanding. During 1997, twelve monthly distributions were made totaling
$516,555, with $465,155 distributed to the limited partners and $51,400 to
the general partners. For the year ended December 31, 1997, distributions
of $42.72 per limited partner unit were made, based upon 10,889 limited
partner units outstanding.

Item 6. Selected Financial Data

The following selected financial data for the years ended December 31,
1999, 1998, 1997, 1996 and 1995 should be read in conjunction with the
financial statements included in Item 8:

Years ended December 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----

Revenues $ 735,235 682,327 1,327,125 1,523,632 1,461,983

Net income
(loss) 143,687 (762,994) 274,614 461,830 358,834

Partners' share
of net income
(loss):

General
partners 17,369 (4,789) 48,861 60,732 55,783

Limited
partners 126,318 (758,205) 225,753 401,098 303,051

Limited partners'
net income
(loss) per unit 11.60 (69.63) 20.73 36.84
27.83

Limited partners'
cash distributions
per unit 6.54 17.00 42.72 60.00 47.23

Total assets $ 514,356 448,962 1,409,227 1,651,202 1,914,851

Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

General
The Partnership was formed to acquire interests in producing oil and gas
properties, to produce and market crude oil and natural gas produced from
such properties and to distribute 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 farm-out 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 is therefore expected to fluctuate in later years based on these
factors.

Based on current conditions, management anticipates performing no workovers
during 2000 or 2001 to enhance production. Workovers may be performed in
the years 2002 or 2003. The partnership may have an increase in production
volumes for the years 2002 and 2003, otherwise, the partnership will most
likely experience the historical production decline of approximately 7% per
year.

Results of Operations

A. General Comparison of the Years Ended December 31, 1999 and 1998

The following table provides certain information regarding performance
factors for the years ended December 31, 1999 and 1998:

Year Ended Percentage
December 31, Increase
1999 1998 (Decrease)

Average price per barrel of oil $ 16.15 11.25 44%
Average price per mcf of gas $ 2.26 1.83 23%
Oil production in barrels 37,800 47,800 (21%)
Gas production in mcf 54,670 78,000 (30%)
Gross oil and gas revenue $ 734,011 680,756 8%
Net oil and gas revenue $ 249,535 41,794 497%
Partnership distributions $ 78,268 197,234 (60%)
Limited partner distributions $ 71,268 185,084 (61%)
Per unit distribution to limited partners $ 6.54 17.00 (61%)
Number of limited partner units 10,889 10,889

Revenues

The Partnership's oil and gas revenues increased to $734,011 from $680,756
for the years ended December 31, 1999 and 1998, respectively, an increase
of 8%. The principal factors affecting the comparison of the years ended
December 31, 1999 and 1998 are as follows:

1. The average price for a barrel of oil received by the Partnership
increased during the year ended December 31, 1999 as compared to the
year ended December 31, 1998 by 44%, or $4.90 per barrel, resulting in
an increase of approximately $234,200 in revenues. Oil sales
represented 83% of total oil and gas sales during the year ended
December 31, 1999 as compared to 79% during the year ended December 31,
1998.

The average price for an mcf of gas received by the Partnership
increased during the same period by 23%, or $.43 per mcf, resulting in
an increase of approximately $33,500 in revenues.

The total increase in revenues due to the change in prices received
from oil and gas production is approximately $267,700. The market
price for oil and gas has been extremely volatile over the past decade
and management expects a certain amount of volatility to continue in
the foreseeable future.

2. Oil production decreased approximately 10,000 barrels or 21% during the
year ended December 31, 1999 as compared to the year ended December 31,
1998, resulting in a decrease of approximately $161,500 in revenues.

Gas production decreased approximately 23,330 mcf or 30% during the
same period, resulting in a decrease of approximately $52,700 in
revenues.

The total decrease in revenues due to the change in production is
approximately $214,200. The decrease of oil and gas production was due
primarily to property sales in 1998, downtime and shut-in of wells
uneconomical to operate.

Costs and Expenses

Total costs and expenses decreased to $591,548 from $1,445,321 for the
years ended December 31, 1999 and 1998, respectively, a decrease of 59%.
The decrease is the result of lower general and administrative costs,
depletion expense, provision for impairment and lease operating costs.

1. Lease operating costs and production taxes were 24% lower, or
approximately $154,500 less during the year ended December 31, 1999 as
compared to the year ended December 31, 1998. The decrease in lease
operating costs is primarily due to property sales and the shut-in of wells
uneconomical to operate.

2. General and administrative costs consist of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased
16% or approximately $14,200 during the year ended December 31, 1999 as
compared to the year ended December 31, 1998. The decrease of general
and administrative costs were due in part to additional accounting
costs incurred in 1998 in relation to the outsourcing of K-1 tax
package preparation and a change in auditors requiring opinions from
both the predecessors and successor auditors. Additionally, the
Managing General Partner in its effort to cut back on general and
administrative costs whenever and wherever possible was able to reduce
the cost of reserve reports and K-1 tax package preparation during
1999.

3. Depletion expense decreased to $30,000 for the year ended December 31,
1999 from $328,000 for the same period in 1998. This represents a
decrease of 91%. Depletion is calculated using the units of revenue
method of amortization based on a percentage of current period gross
revenues to total future gross oil and gas revenues, as estimated by
the Partnership's independent petroleum consultants.

A contributing factor to the decrease in depletion expense between the
comparative periods was the increase in the price of oil and gas used
to determine the Partnership's reserves for January 1, 2000 as compared
to 1999. Another contributing factor was due to the impact of
revisions of previous estimates on reserves. Revisions of previous
estimates can be attributed to the changes in production performance,
oil and gas price and production costs. The impact of the revision
would have decreased depletion expense approximately $209,000 as of
December 31, 1998.

3. The Partnership reduced the net capitalized costs of oil and gas
properties during 1998 by $387,102. This provision for impairment had
the effect of reducing net income, but did not affect cash flow or
partner distributions. See Summary of Significant Accounting Policies
- Oil and Gas Properties.

Results of Operations

B. General Comparison of the Years Ended December 31, 1998 and 1997

The following table provides certain information regarding performance
factors for the years ended December 31, 1998 and 1997:

Year Ended Percentage
December 31, Increase
1998 1997 (Decrease)

Average price per barrel of oil $ 11.25 18.36 (39%)
Average price per mcf of gas $ 1.83 2.36 (22%)
Oil production in barrels 47,800 57,700 (17%)
Gas production in mcf 78,000 110,700 (30%)
Gross oil and gas revenue $ 680,7561,322,821 (49%)
Net oil and gas revenue $ 41,794 566,133 (93%)
Partnership distributions $ 197,234 516,555 (62%)
Limited partner distributions $ 185,084 465,155 (60%)
Per unit distribution to limited partners $ 17.00 42.72 (60%)
Number of limited partner units 10,889 10,889

Revenues

The Partnership's oil and gas revenues decreased to $680,756 from
$1,322,821 for the years ended December 31, 1998 and 1997, respectively, a
decrease of 49%. The principal factors affecting the comparison of the
years ended December 31, 1998 and 1997 are as follows:

1. The average price for a barrel of oil received by the Partnership
decreased during the year ended December 31, 1998 as compared to the
year ended December 31, 1997 by 39%, or $7.11 per barrel, resulting in
a decrease of approximately $410,200 in revenues. Oil sales
represented 79% of total oil and gas sales during the year ended
December 31, 1998 as compared to 80% during the year ended December 31,
1997.

The average price for an mcf of gas received by the Partnership
decreased during the same period by 22%, or $.53 per mcf, resulting in
a decrease of approximately $58,700 in revenues.

The total decrease in revenues due to the change in prices received
from oil and gas production is approximately $468,900. 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 17% during the
year ended December 31, 1998 as compared to the year ended December 31,
1997, resulting in a decrease of approximately $111,400 in revenues.

Gas production decreased approximately 32,700 mcf or 30% during the
same period, resulting in a decrease of approximately $59,800 in
revenues.

The total decrease in revenues due to the change in production is
approximately $171,200. The decrease in oil and gas production is
primarily due to property sales, downtime and natural decline.

Costs and Expenses

Total costs and expenses increased to $1,445,321 from $1,052,511 for the
years ended December 31, 1998 and 1997, respectively, an increase of 37%.
The increase is the result of higher general and administrative costs,
depletion expense and provision for impairment, partially offset by a
decrease in lease operating costs.

2. Lease operating costs and production taxes were 16% lower, or
approximately $117,700 less during the year ended December 31, 1998 as
compared to the year ended December 31, 1997. The decrease is primarily
due to property sales and pulling expenses incurred in 1997 on one well.

2. General and administrative costs consist of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs increased
12% or approximately $9,400 during the year ended December 31, 1998 as
compared to the year ended December 31, 1997.

3. Depletion expense increased to $328,000 for the year ended December 31,
1998 from $214,000 for the same period in 1997. This represents an
increase of 53%. Depletion is calculated using the units of revenue
method of amortization based on a percentage of current period gross
revenues to total future gross oil and gas revenues, as estimated by
the Partnership's independent petroleum consultants.

A contributing factor to the increase in depletion expense between the
comparative periods was the decrease in the price of oil and gas used
to determine the Partnership's reserves for January 1, 1999 as compared
to 1998. Another contributing factor was due to the impact of
revisions of previous estimates on reserves. Revisions of previous
estimates can be attributed to the changes in production performance,
oil and gas price and production costs. The impact of the revision
would have increased depletion expense approximately $125,000 as of
December 31, 1997.

3. The Partnership reduced the net capitalized costs of oil and gas
properties by $387,102. This provision for impairment had the effect
of reducing net income, but did not affect cash flow or partner
distributions. See Summary of Significant Accounting Policies - Oil
and Gas Properties.

C. Revenue and Distribution Comparison

Partnership income (loss) for the years ended December 31, 1999, 1998 and
1997 was $143,687, $(762,994) and $274,614, respectively. Excluding the
effects of depreciation, depletion and amortization and provision for
impairment, net income (loss) would have been $173,687 in 1999, $(47,892)
in 1998 and $488,614 in 1997. Correspondingly, Partnership distributions
for the years ended December 31, 1999, 1998 and 1997 were $78,268, $197,234
and $516,555, respectively. These differences are indicative of the
changes in oil and gas prices, production and property sales.

The source for the 1999 distributions of $78,268 were oil and gas
operations of approximately $74,300 and the change in oil and gas
properties of approximately $(7,700), with the balance from available cash
on hand at the beginning of the period. The source for the 1998
distributions of $197,234 were oil and gas operations of approximately
$49,200 and the change in oil and gas properties of approximately $184,400,
resulting in excess cash for contingencies or subsequent distributions.
The source for the 1997 distributions of $516,555 were oil and gas
operations of approximately $541,300 and the change in oil and gas
properties of approximately $(27,700), with the balance from available cash
on hand at the beginning of the period.

Total distributions during the year ended December 31, 1999 were $78,268 of
which $71,268 was distributed to the limited partners and $7,000 to the
general partners. The per unit distribution to limited partners during the
same period was $6.54. Total distributions during the year ended December
31, 1998 were $197,234 of which $185,084 was distributed to the limited
partners and $12,150 to the general partners. The per unit distribution to
limited partners during the same period was $17.00. Total distributions
during the year ended December 31, 1997 were $516,555 of which $465,155 was
distributed to the limited partners and $51,400 to the general partners.
The per unit distribution to limited partners during the same period was
$42.72.

Since inception of the Partnership, cumulative monthly cash distributions
of $4,644,295 have been made to the partners. As of December 31, 1999,
$4,206,320 or $386.29 per limited partner unit, has been distributed to the
limited partners, representing a 77% return of the capital contributed.

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 $74,300 in
1999 compared to $49,200 in 1998 and approximately $541,300 in 1997. The
primary source of the 1999 cash flow from operating activities was
profitable operations.

Cash flows provided by or (used in) investing activities were approximately
$(7,700) in 1999 compared to $184,400 in 1998 and approximately $(27,700)
in 1997. The principle use of the 1999 cash flow from investing activities
was additions to oil and gas properties.

Cash flows used in financing activities were approximately $78,300 in 1999
compared to $197,300 in 1998 and approximately $516,600 in 1997. The only
use in the 1999 financing activities was the distributions to partners.

As of December 31, 1999 the Partnership had approximately $156,200 in
working capital. The Managing General Partner knows of no unusual
contractual commitments and believes the revenues generated from operations
are adequate to meet the needs of the Partnership.

Liquidity - Managing General Partner

The Managing General Partner has a highly leveraged capital structure with
over $35.1 million principal and $17.5 million interest payments due in
2000 on its debt obligations. Due to the severely depressed commodity
prices experienced during the last quarter of 1997, throughout 1998 and
continuing through the second quarter of 1999 the Managing General Partner
is experiencing difficulty in generating sufficient cash flow to meet its
obligations and sustain its operations. The Managing General Partner is
currently in the process of renegotiating the terms of its various
obligations with its creditors and/or attempting to seek new lenders or
equity investors. Additionally, the Managing General Partner would
consider disposing of certain assets in order to meet its obligations.

There can be no assurance that the Managing General Partner's debt
restructuring efforts will be successful or that the lenders will agree to
a course of action consistent with the Managing General Partners
requirements in restructuring the obligations. Even if such agreement is
reached, it may require approval of additional lenders, which is not
assured. Furthermore, there can be no assurance that the sales of assets
can be successfully accomplished on terms acceptable to the Managing
General Partner. Under current circumstances, the Managing General
Partner's ability to continue as a going concern depends upon its ability
to (1) successfully restructure its obligations or obtain additional
financing as may be required, (2) maintain compliance with all debt
covenants, (3) generate sufficient cash flow to meet its obligations on a
timely basis, and (4) achieve satisfactory levels of future earnings. If
the Managing General Partner is unsuccessful in its efforts, it may be
unable to meet its obligations making it necessary to undertake such other
actions as may be appropriate to preserve asset values.

Information Systems for the Year 2000

The year 2000 issue referred to the risk of disruptions of operations
caused by the failure of computer-controlled systems, including systems
used by third parties, to properly recognize date sensitive information
when the year changed from 1999 to 2000. During the year ended December
31, 1999, the Managing General Partners data processing subsidiary, Midland
Southwest Software, Inc., installed new software as part of an on-going
project to upgrade its financial and management information systems. The
cost of upgrading the software occurred in the normal course of Midland
Southwest Software's business and was not material to the results of
operations or financial condition of the Partnership.

The Partnership has not experienced any significant business disruptions
due to year 2000 issues causing processing errors in its systems, or a
third party's systems, during the period of operations after January 1,
2000 until the filing of the 10-K.

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements

Page

Independent Auditors Report 20

Balance Sheets 21

Statements of Operations 22

Statement of Changes in Partners' Equity 23

Statements of Cash Flows 24

Notes to Financial Statements 26

INDEPENDENT AUDITORS REPORT

The Partners
Southwest Oil & Gas Income Fund X-B, L.P.
(A Delaware Limited Partnership):

We have audited the accompanying balance sheets of Southwest Oil & Gas
Income Fund X-B, L.P. (the "Partnership") as of December 31, 1999 and 1998,
and the related statements of operations, changes in partners' equity and
cash flows for each of the years in the three-year period ended December
31, 1999. 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 Oil & Gas
Income Fund X-B, L.P. as of December 31, 1999 and 1998 and the results of
its operations and its cash flows for each of the years in the three-year
period ended December 31, 1999 in conformity with generally accepted
accounting principles.

KPMG LLP

Midland, Texas
March 10, 2000

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)
Balance Sheets
December 31, 1999 and 1998

1999 1998
---- ----

Assets

Current assets:
Cash and cash equivalents $ 35,345 47,027
Receivable from Managing General Partner 120,934 21,511

- --------- ---------
Total current assets
156,279 68,538

- --------- ---------
Oil and gas properties - using the full-
cost method of accounting 4,413,783 4,406,130
Less accumulated depreciation,
depletion and amortization
4,055,706 4,025,706

- --------- ---------
Net oil and gas properties
358,077 380,424

- --------- ---------
$
514,356 448,962

========= =========
Liabilities and Partners' Equity

Current liability - distribution payable $ 72 97

- --------- ---------
Partners' equity:
General partners (485) (10,854)
Limited partners 514,769 459,719

- --------- ---------
Total partners' equity
514,284 448,865

- --------- ---------
$
514,356 448,962

========= =========

The accompanying notes are an integral
part of these financial statements.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)
Statements of Operations
Years ended December 31, 1999, 1998 and 1997

1999 1998 1997
---- ---- ----

Revenues

Oil and gas income $ 734,011 680,7561,322,821
Interest from operations 1,224 1,562 4,304
Miscellaneous income - 9 -
---------
- --------- ---------
735,235
682,327 1,327,125
---------
- --------- ---------
Expenses

Production 484,476 638,962 756,688
General and administrative 77,072 91,257 81,823
Depreciation, depletion and amortization 30,000 328,000 214,000
Provision for impairment of oil and
gas properties - 387,102 -
---------
- --------- ---------
591,548
1,445,321 1,052,511
---------
- --------- ---------
Net income (loss) $ 143,687 (762,994) 274,614
=========
========= =========

Net income (loss) allocated to:

Managing General Partner $ 15,632 (4,310) 43,975
=========
========= =========
General Partner $ 1,737 (479) 4,886
=========
========= =========
Limited partners $ 126,318 (758,205) 225,753
=========
========= =========
Per limited partner unit $ 11.60 (69.63) 20.73
=========
========= =========

The accompanying notes are an integral
part of these financial statements.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)
Statement of Changes in Partners' Equity
Years ended December 31, 1999, 1998 and 1997

General Limited
Partners Partners Total
-------- -------- -----

Balance at December 31, 1996 $ 8,624 1,642,410 1,651,034

Net income 48,861 225,753 274,614

Distributions (51,400) (465,155) (516,555)
-------
- --------- ---------
Balance at December 31, 1997 6,085 1,403,008 1,409,093

Net income (loss) (4,789) (758,205) (762,994)

Distributions (12,150) (185,084) (197,234)
-------
- --------- ---------
Balance at December 31, 1998 (10,854) 459,719 448,865

Net income 17,369 126,318 143,687

Distributions (7,000) (71,268) (78,268)
-------
- --------- ---------
Balance at December 31, 1999 $ (485) 514,769 514,284
=======
========= =========

The accompanying notes are an integral
part of these financial statements.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)
Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997

1999 1998 1997
---- ---- ----

Cash flows from operating activities:

Cash received from oil and gas sales $ 648,055 803,5881,379,950
Cash paid to Managing General Partner
for administrative fees and general
and administrative overhead
(575,015) (755,901)(842,995)
Interest received 1,224 1,562 4,304
---------
- --------- ---------
Net cash provided by operating activities 74,264 49,249
541,259
---------
- --------- ---------
Cash flows from investing activities:

Additions to oil and gas properties (7,653) - (29,841)
Sale of oil and gas properties - 184,445 2,093
---------
- --------- ---------
Net cash (used in) provided by investing
activities (7,653) 184,445
(27,748)
---------
- --------- ---------
Cash flows used in financing activities:

Distributions to partners (78,293) (197,271)(516,589)
---------
- --------- ---------
Net increase (decrease) in cash and cash
equivalents (11,682) 36,423 (3,078)

Beginning of period 47,027 10,604 13,682
---------
- --------- ---------
End of period $ 35,345 47,027 10,604
=========
========= =========

(continued)

The accompanying notes are an integral
part of these financial statements.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)
Statements of Cash Flows, continued
Years ended December 31, 1999, 1998 and 1997

1999 1998 1997
---- ---- ----

Reconciliation of net income (loss) to net
cash provided by operating activities:

Net income (loss) $ 143,687 (762,994) 274,614

Adjustments to reconcile net income (loss) to
net cash provided by operating activities:

Depreciation, depletion and amortization 30,000 328,000
214,000
Provision for impairment of oil and gas
properties - 387,102
- -
(Increase) decrease in receivables (85,956) 122,823 57,129
Decrease in payables (13,467) (25,682) (4,484)
-------
- ------- -------
Net cash provided by operating activities $ 74,264 49,249 541,259
=======
======= =======

Supplemental schedule of noncash investing
and financing activities:

Sale of oil and gas properties included in
receivable from Managing General Partner $ - -
38,500

The accompanying notes are an integral
part of these financial statements.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)

Notes to Financial Statements

1. Organization
Southwest Oil & Gas Income Fund X-B, L.P. was organized under the laws
of the state of Delaware on November 27, 1990 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 or 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 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 General Partner and
will be treated as a capital contribution.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)

Notes to Financial Statements

2. 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 under the units of revenue
method. Under the units of revenue method, depreciation, depletion
and amortization is computed on the basis of current gross revenues
from production in relation to future gross revenues, based on current
prices, from estimated production of proved oil and gas reserves.

Under the units of 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 production, 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, 1999 and 1997 the net
capitalized costs did not exceed the estimated present value of oil
and gas reserves. As of December 31, 1998, the net capitalized cost
exceeded the estimated present value of oil and gas reserves thus an
adjustment of $387,102 was made to the financial statement.

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.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)

Notes to Financial Statements

2. Summary of Significant Accounting Policies - continued

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 gas-
balancing arrangements. Under this method the Partnership recognizes
sales revenue on all gas sold. As of December 31, 1999 and 1998,
there were no significant amounts of imbalance in terms of units and
value. As of December 31, 1997, the Partnership was under produced by
2,195 mcf of gas.

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 net oil and gas properties at December
31, 1999 and 1998 is $428,221 and $580,319, respectively, more than
that shown on the accompanying Balance Sheets in accordance with
generally accepted accounting principles.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)

Notes to Financial Statements

2. Summary of Significant Accounting Policies - continued

Cash and Cash Equivalents
For purposes of the statement 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 per Limited Partner Units
As of December 31, 1999, 1998 and 1997, there were 10,889 limited
partner units outstanding held by 528, 531 and 531 partners.

Concentrations of Credit Risk
The Partnership is subject to credit risk through trade receivables.
Although a substantial portion of its debtors' ability to pay is
dependent upon the oil and gas industry, credit risk is minimized due
to a large customer base. All partnership revenues are received by
the Managing General Partner and subsequently remitted to the
partnership and all expenses are paid by the Managing General Partner
and subsequently reimbursed by the partnership.

Fair Value of Financial Instruments
The carrying amount of cash and accounts receivable approximates fair
value due to the short maturity of these instruments.

Net Income (loss) per limited partnership unit
The net income (loss) per limited partnership unit is calculated by
using the number of outstanding limited partnership units.

3. Liquidity - Managing General Partner
The Managing General Partner has a highly leveraged capital structure
with over $35.1 million principal and $17.5 million interest payments
due in 2000 on its debt obligations. Due to the severely depressed
commodity prices experienced during the last quarter of 1997,
throughout 1998 and continuing through the second quarter of 1999 the
Managing General Partner is experiencing difficulty in generating
sufficient cash flow to meet its obligations and sustain its
operations. The Managing General Partner is currently in the process
of renegotiating the terms of its various obligations with its
creditors and/or attempting to seek new lenders or equity investors.
Additionally, the Managing General Partner would consider disposing of
certain assets in order to meet its obligations.

There can be no assurance that the Managing General Partner's debt
restructuring efforts will be successful or that the lenders will
agree to a course of action consistent with the Managing General
Partners requirements in restructuring the obligations. Even if such
agreement is reached, it may require approval of additional lenders,
which is not assured. Furthermore, there can be no assurance that the
sales of assets can be successfully accomplished on terms acceptable
to the Managing General Partner. Under current circumstances, the
Managing General Partner's ability to continue as a going concern
depends upon its ability to (1) successfully restructure its
obligations or obtain additional financing as may be required, (2)
maintain compliance with all debt covenants, (3) generate sufficient
cash flow to meet its obligations on a timely basis, and (4) achieve
satisfactory levels of future earnings. If the Managing General
Partner is unsuccessful in its efforts, it may be unable to meet its
obligations making it necessary to undertake such other actions as may
be appropriate to preserve asset values.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)

Notes to Financial Statements

4. Commitments and Contingent Liabilities
The Managing General Partner has the right, but not the obligation, to
purchase limited partnership units should an investor desire to sell.
The value of the unit is determined by adding the sum of (1) current
assets less liabilities and (2) the present value of the future net
revenues attributable to proved reserves and by discounting the future
net revenues at a rate not in excess of the prime rate charged by
NationsBank, N.A. of Midland, Texas plus one percent (1%), which value
shall be further reduced by a risk factor discount of no more than one-
third (1/3) to be determined by the Managing General Partner in its
sole and absolute discretion.

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, 1999, 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 reliably
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 Partnership's properties.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware 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 $161,500, $165,100 and $155,000 for the years
ended December 31, 1999, 1998 and 1997, respectively. In addition,
the Managing General Partner and certain officers and employees may
have an interest in some of the properties that the Partnership also
participates.

Certain subsidiaries or affiliates of the Managing General Partner
perform various oilfield services for properties in which the
Partnership owns an interest. Such services aggregated approximately
$2,400, $1,900 and $60 for the years ended December 31, 1999, 1998 and
1997, 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
$72,000 during 1999, 1998 and 1997, as an administrative fee for
reimbursement of indirect general and administrative overhead
expenses.

Receivables from Southwest Royalties, Inc., the Managing General
Partner, of approximately $120,934 and $21,511 are from oil and gas
production, net of lease operating costs and production taxes, as of
December 31, 1999 and 1998, respectively.

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. There were no legal services provided for the year
ended December 31, 1999, 1998 and 1997.

6. Major Customers
No material portion of the Partnership's business is dependent on a
single purchaser, or a very few purchasers, where the loss of one
would have a material adverse impact on the Partnership. Three
purchasers accounted for 78% of the Partnership's total oil and gas
production during 1999: Teppco Crude Oil for 46%, Scurlock Permian LLC
for 19% and Mobil Corporation for 13%. Three purchasers accounted for
56% of the Partnership's total oil and gas production during 1998:
Mesa Pipe Line Company for 21%, Mobil Corporation for 19% and Duke
Energy Transport and Trad. for 16%. Three purchasers accounted for
69% of the Partnership's total oil and gas production during 1997:
Mesa Pipe Line Company for 37%, Mobil Corporation for 21% and Marathon
Petroleum Company for 11%. All purchasers of the Partnership's oil
and gas production are unrelated third parties. In the event either
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.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware 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, 1997 672,000 1,088,000

Revisions of estimates in place (265,000) (92,000)
Production (58,000) (111,000)
Sale of minerals in place (5,000) (1,000)
------- ---------
December 31, 1997 344,000 884,000

Revisions of estimates in place (202,000) (146,000)
Production (48,000) (78,000)
Sale of minerals in place (14,000) (277,000)
------- ---------
December 31, 1998 80,000 383,000

Revisions of estimates in place 297,000 132,000
Production (38,000) (55,000)
------- ---------
December 31, 1999 339,000 460,000
======= =========

Proved developed reserves -

December 31, 1997 330,000 821,000
======= =========
December 31, 1998 69,000 326,000
======= =========
December 31, 1999 327,000 402,000
======= =========

All of the Partnership's reserves are located within the continental
United States.

*Donald R. Creamer, P.E., an Independent Registered Petroleum Engineer
prepared the reserve and present value data for the Partnership's
existing properties as of January 1, 2000. The reserve estimates were
made in accordance with guidelines established by the Securities and
Exchange Commission pursuant to Rule 4-10(a) of Regulation S-X. Such
guidelines require oil and gas reserve reports be prepared under
existing economic and operating conditions with no provisions for
price and cost escalation except by contractual arrangements.

The New York Mercantile Exchange price at December 31, 1999 of $25.60
was used as the beginning basis for the oil price. Oil price
adjustments from $25.60 per barrel were made in the individual
evaluations to reflect oil quality, gathering and transportation
costs. The results are an average price received at the lease of
$23.16 per barrel in the preparation of the reserve report as of
January 1, 2000.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)

Notes to Financial Statements

7. Estimated Oil & Gas Reserves (unaudited) - continued
In the determination of the gas price, the New York Mercantile
Exchange price at December 31, 1999 of $2.33 was used as the beginning
basis. Gas price adjustments from $2.33 per Mcf were made in the
individual evaluations to reflect BTU content, gathering and
transportation costs and gas processing and shrinkage. The results
are an average price received at the lease of $2.07 per Mcf in the
preparation of the reserve report as of January 1, 2000.

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 and proved undeveloped. All of the proved reserves are
included in the engineering reports which evaluate the Partnership's
present reserves.

Because the Partnership does not engage in drilling activities, the
development of proved undeveloped reserves is conducted pursuant to
farm-out 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 farm-out,
or receives cash.

Southwest Oil & Gas Income Fund X-B, L.P.
(a Delaware limited partnership)

Notes to Financial Statements

7. Estimated Oil & Gas Reserves (unaudited) - continued
The standardized measure of discounted future net cash flows relating
to proved oil and gas reserves at December 31, 1999, 1998 and 1997 is
presented below:

1999 1998 1997
---- ---- ----

Future cash inflows $ 8,807,000 1,451,000 7,672,000
Production and development costs 5,155,000 925,000 4,983,000
---------- ---------- ----------
Future net cash flows 3,652,000 526,000 2,689,000
10% annual discount for estimated
timing of cash flows 1,553,000 146,000 870,000
---------- ---------- ----------
Standardized measure of discounted
future net cash flows $ 2,099,000 380,000 1,819,000
========== ========== ==========

The principal sources of change in the standardized measure of
discounted future net cash flows for the years ended December 31,
1999, 1998 and 1997 are as follows:

1999 1998 1997
---- ---- ----

Sales of oil and gas produced,
net of production costs $ (250,000) (42,000) (566,000)
Changes in prices and production costs 395,000 (718,000)
(2,956,000)
Changes of production rates
(timing) and others (75,000) 81,000 214,000
Sales of minerals in place - (242,000) (14,000)
Revisions of previous
quantities estimates 1,611,000 (700,000)(1,033,000)
Accretion of discount 38,000 182,000 561,000
Discounted future net
cash flows -
Beginning of year 380,000 1,819,000 5,613,000
---------- --------- ---------
End of year $ 2,099,000 380,000 1,819,000
========== ========= =========

Future net cash flows were computed using year-end prices and costs
that related to existing proved oil and gas reserves in which the
Partnership has mineral interests.

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 44 Chairman of the Board,
President,
Chief Executive Officer, Treasurer
and Director

H. Allen Corey 43 Secretary and Director

Bill E. Coggin 45 Vice President and Chief
Financial Officer

J. Steven Person 41 Vice President, Marketing

Paul L. Morris 58 Director

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, a founder of the Managing General Partner, has served as
the Managing General Partner's secretary and a director since its
inception. Mr. Corey is President of Trolley Barn Brewery, Inc., a brew
pub restaurant chain based in the Southeast. Prior to his involvement with
Trolley Barn, Mr. Corey was a partner at the law firm of Miller & Martin in
Chattanooga, Tennessee. He is currently of counsel to the law firm of
Baker, Donelson, Bearman & Caldwell, with the offices in Chattanooga,
Tennessee. Mr. Corey received a J.D. degree from the Vanderbilt University
Law School and B.A. degree from the University of North Carolina at Chapel
Hill.

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.

J. Steven Person, Vice President, Marketing, assumed his responsibilities
with the Managing General Partner as National Marketing Director 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.

Paul L. Morris has served as a Director of Southwest Royalties Holdings,
Inc. since August 1998 and Southwest Royalties, Inc. since September 1998.
Mr. Morris is President and CEO of Wagner & Brown, Ltd., one of the largest
independently owned oil and gas companies in the United States. Prior to
his position with Wagner & Brown, Mr. Morris served as President of Banner
Energy and in various managerial positions with Columbia Gas System, Inc.

Key Employees

Jon P. Tate, Vice President, Land and Assistant Secretary, age 42, 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.

R. Douglas Keathley, Vice President, Operations, age 44, 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.

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, as an administrative fee, $72,000 during 1999, 1998 and 1997.

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 as a general
partner. Through prior purchases, the Managing General Partner also owns
80 limited partner units, or a .73% limited partner interest. The Managing
General Partner total percentage interest ownership in the Partnership is
9.7%.

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 9.7%
Interest Managing General Partner 80 Units
407 N. Big Spring Street
Midland, TX 79701

Limited Partnership H. H. Wommack, III Indirectly Owns 9.7%
Interest Chairman of the Board, 80 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 9.7%
Interest Secretary and Director of 80 Units
Southwest Royalties, Inc.,
the Managing General
Partner
633 Chestnut Street
Chattanooga, TN 37450-1800

Limited Partnership Bill E. Coggin Indirectly Owns 9.7%
Interest Vice President and CFO of 80 Units
Southwest Royalties, Inc.,
the Managing General
Partner
407 N. Big Spring Street
Midland, TX 79701

Limited Partnership J. Steven Person Indirectly Owns 9.7%
Interest Vice President, Marketing 80 Units
of Southwest Royalties, Inc.,
the Managing General
Partner
407 N. Big Spring Street
Midland, TX 79701

Limited Partnership Paul L. Morris Indirectly Owns 9.7%
Interest Director of Southwest 80 Units
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 1999, the Managing General Partner received $72,000 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 working interest. Certain properties in
which the Partnership has an interest are operated by the Managing General
Partner, who was paid approximately $161,500 for administrative overhead
attributable to operating such properties during 1999.

Certain subsidiaries or affiliates of the Managing General Partner perform
various oilfield services for properties in which the Partnership owns an
interest. Such services aggregated approximately $2,400 for the year ended
December 31, 1999.

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 --

Independent Auditors Report
Balance Sheets
Statements of Operations
Statement of Changes in Partners' Equity
Statements of Cash Flows
Notes to Financial Statements

(2) Schedules required by Article 12 of Regulation S-
X are either omitted because they are not applicable or
because the required information is shown in the
financial statements or the notes thereto.

(3) Exhibits:

4 (a) Certificate of Limited
Partnership of Southwest Oil & Gas Income Fund X-
B, L.P., dated November 27, 1990. (Incorporated
by reference from Partnership's Form 10-K for the
fiscal year ended December 31, 1990.)

(b) Agreement of Limited
Partnership of Southwest Oil & Gas Income Fund X-
B, L.P. dated November 27, 1990. (Incorporated
by reference from Partnership's Form 10-K for the
fiscal year ended December 31, 1991.)

27 Financial Data Schedule

(b) Reports on Form 8-K

There were no reports filed on Form 8-K during the
quarter ended December 31, 1999.

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 Oil & Gas Income Fund X-B, L.P.,
a
Delaware limited partnership

By: Southwest Royalties, Inc.,
Managing
General Partner

By: /s/ H. H. Wommack, III
-----------------------------
H. H. Wommack, III, President

Date: March 31, 2000

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 31, 2000

By: /s/ H. Allen Corey
-----------------------------
H. Allen Corey, Secretary and
Director

Date: March 31, 2000