1 of 12
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, 2005
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 0-15408
Southwest Royalties, Inc. Income Fund V
(Exact name of registrant as specified
in its limited partnership agreement)
Tennessee 75-2104619
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Desta Drive, Suite 6500
Midland, Texas 79705
(Address of principal executive offices)
(432) 682-6324
(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 ___
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2). Yes No 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 20.
Glossary of Oil and Gas Terms
The following are abbreviations and definitions of terms commonly
used in the oil and gas industry that are used in this filing. All
volumes of natural gas referred to herein are stated at the legal
pressure base to the state or area where the reserves exit and at 60
degrees Fahrenheit and in most instances are rounded to the nearest
major multiple.
Bbl. One stock tank barrel, or 42 United States gallons liquid
volume.
BOE. Equivalent barrels of oil, with natural gas converted to
oil equivalents based on a ratio of six Mcf of natural gas to one
Bbl of oil.
Developmental well. A well drilled within the proved area of an
oil or natural gas reservoir to the depth of a stratigraphic horizon
known to be productive.
Exploratory well. A well drilled to find and produce oil or gas
in an unproved area to find a new reservoir in a field previously
found to be productive of oil or natural gas in another reservoir or
to extend a known reservoir.
Farm-out arrangement. An agreement whereby the owner of a
leasehold or working interest agrees to assign his interest in
certain specific acreage to an assignee, retaining some interest,
such as an overriding royalty interest, subject to the drilling of
one (1) or more wells or other specified performance by the
assignee.
Field. An area consisting of a single reservoir or multiple
reservoirs all grouped on or related to the same individual
geological structural feature and/or stratigraphic condition.
Mcf. One thousand cubic feet.
Net Profits Interest. An agreement whereby the owner receives
a specified percentage of the defined net profits from a producing
property in exchange for consideration paid. The net profits
interest owner will not otherwise participate in additional costs
and expenses of the property.
Oil. Crude oil, condensate and natural gas liquids.
Overriding royalty interest. Interests that are carved out of a
working interest, and their duration is limited by the term of the
lease under which they are created.
Present value and PV-10 Value. When used with respect to oil
and natural gas reserves, the estimated future net revenue to be
generated from the production of proved reserves, determined in all
material respects in accordance with the rules and regulations of
the SEC (generally using prices and costs in effect as of the date
indicated) without giving effect to non-property related expenses
such as general and administrative expenses, debt service and future
income tax expenses or to depreciation, depletion and amortization,
discounted using an annual discount rate of 10%.
Production costs. Costs incurred to operate and maintain wells
and related equipment and facilities, including depreciation and
applicable operating costs of support equipment and facilities and
other costs of operating and maintaining those wells and related
equipment and facilities.
Proved Area. The part of a property to which proved reserves
have been specifically attributed.
Proved developed oil and gas reserves. Proved oil and gas
reserves that can be expected to be recovered from existing wells
with existing equipment and operating methods.
Proved properties. Properties with proved reserves.
Proved oil and gas reserves. The estimated quantities of crude
oil, natural gas, and natural gas liquids with geological and
engineering data that demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing
economic and operating conditions, i.e., prices and costs as of the
date the estimate is made.
Proved undeveloped reserves. Proved oil and gas reserves that
are expected to be recovered from new wells on undrilled acreage, or
from existing wells where a relatively major expenditure is required
for recompletion.
Reservoir. A porous and permeable underground formation
containing a natural accumulation of producible oil or gas that is
confined by impermeable rock or water barriers and is individual and
separate from other reservoirs.
Royalty interest. An interest in an oil and natural gas
property entitling the owner to a share of oil or natural gas
production free of costs of production.
Working interest. The operating interest that gives the owner
the right to drill, produce and conduct operating activities on the
property and a share of production.
Workover. Operations on a producing well to restore or increase
production.
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, 2004, which are found
in the Registrant's Form 10-K Report for 2004 filed with the
Securities and Exchange Commission. The December 31, 2004 balance
sheet included herein has been taken from the Registrant's 2004 Form
10-K Report. Operating results for the three month period ended
March 31, 2005 are not necessarily indicative of the results that
may be expected for the full year.
Southwest Royalties, Inc. Income Fund V
Balance Sheets
March December
31, 31,
2005 2004
------ ------
(unaudit
ed)
Assets
- ---------
Current assets:
Cash and cash equivalents $ 31,316 29,725
Receivable from Managing General 86,724 90,993
Partner
Other 920 690
-------- --------
---- ----
Total current assets 118,960 121,408
-------- --------
---- ----
Oil and gas properties - using the
full-
cost method of accounting 6,216,64 6,216,64
4 4
Less accumulated depreciation,
depletion and amortization 5,668,77 5,664,40
1 6
-------- --------
---- ----
Net oil and gas properties 547,873 552,238
-------- --------
---- ----
$ 666,833 673,646
======= =======
Liabilities and Partners' Equity
- -------------------------------------
- ---
Current liability:
Distribution payable $ 467 87
-------- --------
---- ----
Asset retirement obligation 278,504 274,578
-------- --------
---- ----
Partners' equity (deficit):
General partner (636,578 (635,466
) )
Limited partners 1,024,44 1,034,44
0 7
-------- --------
---- ----
Total partners' equity 387,862 398,981
-------- --------
---- ----
$ 666,833 673,646
======= =======
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
Statements of Operations
(unaudited)
Three Months Ended
March 31,
2005 2004
------ ------
Revenues
- ------------
Income from net profits interests $108,326 96,839
Interest 124 79
Other - 247
-------- --------
-- --
108,450 97,165
-------- --------
-- --
Expenses
- ------------
Depreciation, depletion and 4,365 8,000
amortization
Accretion of asset retirement 3,926 5,104
obligation
General and administrative 31,278 30,925
-------- --------
-- --
39,569 44,029
-------- --------
-- --
Net income $68,881 53,136
====== ======
Net income allocated to:
Managing General Partner $6,888 5,314
====== ======
Limited partners $61,993 47,822
====== ======
Per limited partner unit $ 8.27
6.38
====== ======
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
2005 2004
------- -------
Cash flows from operating
activities:
Cash received from income from
net profits
interests $ 112,365 76,466
Cash paid to suppliers (31,278) (30,925)
Interest received 124 79
Other - 247
-------- --------
-- --
Net cash provided by operating 81,211 45,867
activities
-------- --------
-- --
Cash flows from financing
activities:
Distributions to partners (80,000) (65,000)
Increase (decrease) in 380 (9)
distribution payable
-------- --------
-- --
Net cash used in financing (79,620) (65,009)
activities
-------- --------
-- --
Net (decrease) increase in cash 1,591 (19,142)
and cash equivalents
Beginning of period 29,725 42,849
-------- --------
-- --
End of period $ 31,316 23,707
====== ======
Reconciliation of net income to
net
cash provided by operating
activities:
Net income $ 68,881 53,136
Adjustments to reconcile net
income to
net cash provided by operating
activities:
Depreciation, depletion and 4,365 8,000
amortization
Accretion of asset retirement 3,926 5,104
obligation
Decrease (increase) in 4,039 (20,373)
receivables
Decrease in payables - -
-------- --------
-- --
Net cash provided by operating $ 81,211 45,867
activities
====== ======
The accompanying notes are an integral
part of these financial statements.
Southwest Royalties, Inc. Income Fund V
(a Tennessee limited partnership)
Notes to Financial Statements
1. Organization
Southwest Royalties, Inc. Income Fund V was organized under the
laws of the state of Tennessee on May 1, 1986, for the purpose
of acquiring producing oil and gas properties and to produce
and market crude oil and natural gas produced from such
properties for a term of 50 years, unless terminated at an
earlier date as provided for in the Partnership Agreement. The
Partnership sells its oil and gas production to a variety of
purchasers with the prices it receives being dependent upon the
oil and gas economy. Southwest Royalties, Inc., a wholly owned
subsidiary of Clayton Williams Energy, Inc., serves as 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 90% 10%
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%
disposition
Operating and administrative 90% 10%
costs (2)
Depreciation, depletion and
amortization
of oil and gas properties 90% 10%
All other costs 90% 10%
(1) All organization costs in excess of 3% of initial
capital contributions will be paid by the Managing General
Partner and will be treated as a capital contribution.
The Partnership paid the Managing General Partner an
amount equal to 3% of initial capital contributions for
such organization costs.
(2) Administrative costs in any year, which exceed 2% of
capital contributions shall be paid by the Managing
General Partner and will be treated as a capital
contribution.
2. Summary of Significant Accounting Policies
The interim financial information as of March 31, 2005, and for
the three months ended March 31, 2005, 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 Partnership's
Annual Report on Form 10-K for the year ended December 31,
2004.
In September 2004, the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 106 ("SAB 106"). SAB 106
expresses the SEC staff's views regarding SFAS No. 143 and its
impact on both the full-cost ceiling test and the calculation
of depletion expense. In accordance with SAB 106, beginning in
the first quarter of 2005, undiscounted abandonment costs for
wells to be drilled in the future to develop proved reserves
are included in the unamortized cost of oil and gas properties,
net of related salvage value, for purposes of computing
depreciation, depletion and amortization ("DD&A"). The
implementation of SAB 106 did not have a material impact on our
financial statements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
Southwest Royalties, Inc. Income Fund V was organized as a Tennessee
limited partnership on May 1, 1986, after receipt from investors of
$1,000,000 in limited partner capital contributions. The offering
of limited partnership interests began on January 22, 1986 and
concluded on July 22, 1986, with total limited partner contributions
of $7,500,000.
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 are not 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, increases and decreases in 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 decline in later years based
on these factors.
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 sold.
Should the net capitalized costs exceed the estimated present value
of oil and gas reserves, discounted at 10%, such excess costs would
be changed to current expense. As of March 31, 2005, 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. 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, 2005, there were no timing differences, which resulted in
a deficit net profit interest.
Critical Accounting Policies
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 prepared by outside consultants.
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
depletion, depreciation, and amortization ("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.
Results of Operations
General Comparison of the Quarters Ended March 31, 2005 and 2004
The following table provides certain information regarding
performance factors for the quarters ended March 31, 2005 and 2004:
Three Months Percenta
ge
March 31, Increase
2005 2004 (Decreas
e)
------ ------ --------
--
Oil production in 2,233 2,620 (15%)
barrels
Gas production in mcf 14,480 16,190 (11%)
Total BOE 4,646 (13%)
5,318
Average price per $ 49.90 52%
barrel of oil 32.85
Average price per mcf $ 5.59 (8%)
of gas 6.09
Income from net profits $ 108,326 96,839 12%
interests
Partnership $ 80,000 65,000 23%
distributions
Limited partner $ 72,000 58,500 23%
distributions
Per unit distribution $ 9.60 23%
to limited partners 7.80
Number of limited 7,499 7,499
partner units
Income from net profits
The Partnership's income from net profits interests increased to
$108,326 from $96,839 for the quarters ended March 31, 2005 and
2004, respectively, an increase of 12%. The principal factors
affecting the comparison of the quarters ended March 31, 2005 and
2004 are as follows:
The average price for a barrel of oil received by the Partnership
increased during the quarter ended March 31, 2005 as compared to the
quarter ended March 31, 2004 by 52%, or $17.05 per barrel, resulting
in an increase of approximately $38,100 in income from net profits
interests. Oil sales represented 58% of total oil and gas sales
during the quarter ended March 31, 2005 as compared to 47% during
the quarter ended March 31, 2004.
The average price for an mcf of gas received by the Partnership
decreased during the same period by 8%, or $.50 per mcf, resulting
in a decrease of approximately $7,200 in income from net profits
interests.
The net total increase in income from net profits interests due to
the change in prices received from oil and gas production is
approximately $30,900. 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.
Oil production decreased approximately 387 barrels or 15% during the
quarter ended March 31, 2005 as compared to the quarter ended March
31, 2004, resulting in a decrease of approximately $12,700 in income
from net profits interests.
Gas production decreased approximately 1,710 mcf or 11% during the
same period, resulting in a decrease of approximately $10,400 in
income from net profits interests.
The total decrease in income from net profits interests due to the
change in production is approximately $23,100. The decrease in oil
volumes is from production decline on two wells. The decrease in
gas volumes is the result of production decline on one well.
Lease operating costs and production taxes were 4% lower, or
approximately $3,700 less during the quarter ended March 31, 2005 as
compared to the quarter ended March 31, 2004.
Costs and Expenses
Total costs and expenses decreased to $39,569 for the quarter ended
March 31, 2005 from $44,029 for the same period in 2004. This
represents a decrease of 10%. The decrease is the result of lower
depletion expense and accretion expense, partially offset by an
increase in general and administrative expense.
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 1% or approximately $400 during the quarter ended March
31, 2005 as compared to the quarter ended March 31, 2004.
Depletion expense decreased to $4,365 for the quarter ended March
31, 2005 from $8,000 for the same period in 2004. This represents a
decrease of 45%. The contributing factor to the decrease in
depletion expense is in relation to the BOE depletion rate for the
quarter ended March 31, 2005, which was $.94 applied to 4,646 BOE as
compared to $1.50 applied to 5,318 BOE for the same period in 2004.
The lower depletion rate in 2005 is due to the upward revision in
reserve estimates resulting from higher oil and gas prices.
Accretion expense decreased to $3,926 for the quarter ended March
31, 2005 from $5,104 for the same period in 2004. This represents a
decrease of 23%. The decrease in accretion is from discontinuing
accretion on several wells that reached their projected end of life
in 2004.
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
$81,200 in the quarter ended March 31, 2005 as compared to
approximately $45,900 in the quarter ended March 31, 2004.
Cash flows used in financing activities were approximately $79,600
in the quarter ended March 31, 2005 as compared to approximately
$65,000 in the quarter ended March 31, 2004. The only use in
financing activities was the distributions to partners.
Total distributions during the quarter ended March 31, 2005 were
$80,000 of which $72,000 ($9.60 per unit) was distributed to the
limited partners and $8,000 to the general partner. Total
distributions during the quarter ended March 31, 2004 were $65,000
of which $58,500 ($7.80 per unit) was distributed to the limited
partners and $6,500 to the general partner.
The source for the 2005 distributions of $80,000 was oil and gas
operations of approximately $81,200, resulting in excess cash for
contingencies or subsequent distributions. The source for the 2004
distributions of $65,000 was oil and gas operations of approximately
$45,900, with the balance from available cash on hand at the
beginning of the period.
Cumulative cash distributions of $8,206,841 have been made to the
general and limited partners. As of March 31, 2005, $7,370,618 or
$982.88 per limited partner unit has been distributed to the limited
partners, representing a 98% return of the capital contributed.
As of March 31, 2005, the Partnership had approximately $118,500 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
Partnership cannot develop its non-producing properties, if any.
Without continued development, the producing reserves continue to
deplete. Accordingly, as the Partnership's properties have matured
and depleted, the net cash flows from operations for the partnership
has steadily declined, except in periods of substantially increased
commodity pricing. Maintenance of properties and administrative
expenses for the Partnership are increasing relative to production.
As the properties continue to deplete, maintenance of properties and
administrative costs as a percentage of production are expected to
continue to increase.
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 153
"Exchanges of Nonmonetary Assets, an amendment of APB Opinion
No. 29" ("SFAS 153"). SFAS 153 specifies the criteria required to
record a nonmonetary asset exchange using carryover basis. SFAS 153
is effective for nonmonetary asset exchanges occurring after July 1,
2005. The Partnership will adopt this statement in the third
quarter of 2005, and it is not expected to have a material effect on
the financial statements when adopted.
In September 2004, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 106 ("SAB 106"). SAB 106 expresses the
SEC staff's views regarding SFAS No. 143 and its impact on both the
full-cost ceiling test and the calculation of depletion expense. In
accordance with SAB 106, beginning in the first quarter of 2005,
undiscounted abandonment costs for wells to be drilled in the future
to develop proved reserves are included in the unamortized cost of
oil and gas properties, net of related salvage value, for purposes
of computing depreciation, depletion and amortization ("DD&A"). The
implementation of SAB 106 did not have a material impact on our
financial statements.
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
The Managing General Partner has established disclosure controls and
procedures that are adequate to provide reasonable assurance that
management will be able to collect, process and disclose both
financial and non-financial information, on a timely basis, in the
Partnership's reports to the SEC. Disclosure controls and
procedures include all processes necessary to ensure that material
information is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms, and is
accumulated and communicated to management, including our chief
executive and chief financial officers, to allow timely decisions
regarding required disclosures.
With respect to these disclosure controls and procedures:
management has evaluated the effectiveness of the
disclosure controls and procedures as of the end of the
period covered by this report;
this evaluation was conducted under the supervision and
with the participation of management, including the chief
executive and chief financial officers of the Managing
General Partner; and
it is the conclusion of chief executive and chief
financial officers of the Managing General Partner that
these disclosure controls and procedures are effective in
ensuring that information that is required to be disclosed
by the Partnership in reports filed or submitted with the
SEC is recorded, processed, summarized and reported within
the time periods specified in the rules and forms
established by the SEC.
Internal Control Over Financial Reporting
There has not been any change in the Partnership's internal control
over financial reporting that occurred during the quarter ended
March 31, 2005 that has materially affected, or is reasonably likely
to materially affect, its internal control over financial reporting.
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:
31.1 Rule 13a-14(a)/15d-14(a) Certification
31.2 Rule 13a-14(a)/15d-14(a) Certification
32.1 Certification of Chief Executive Officer and Chief Financial
Officer
Pursuant to 18 U.S.C. Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
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, Inc. Income Fund V, a
Tennessee limited partnership
By: Southwest Royalties, Inc., Managing
General Partner
By: /s/ L. Paul Latham
L. Paul Latham
President and Chief Executive
Officer
Date: May 16, 2005
SECTION 302 CERTIFICATION Exhibit 31.1
I, L. Paul Latham, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Southwest
Royalties, Inc. Income Fund V, L.P.,
2.Based on my knowledge, this 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 report;
3.Based on my knowledge, the financial statements, and other
financial information included in this 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 report;
4.The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, 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 report is being prepared;
b)Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c)Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5.The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, 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 and material weaknesses in the
design or operation of internal control over financial
reporting which reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
b)Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 16, 2005 /s/ L. Paul Latham
L. Paul Latham
President and Chief Executive
Officer
of Southwest Royalties, Inc., the
Managing General Partner of
Southwest Royalties, Inc. Income
Fund V
SECTION 302 CERTIFICATION Exhibit 31.2
I, Mel G. Riggs, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southwest
Royalties, Inc. Income Fund V, L.P.,
2.Based on my knowledge, this 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 report;
3.Based on my knowledge, the financial statements, and other
financial information included in this 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 report;
4.The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, 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 report is being prepared;
b)Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c)Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5.The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, 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 and material weaknesses in the
design or operation of internal control over financial
reporting which reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
b)Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 16, 2005 /s/ Mel G. Riggs
Mel G. Riggs
Vice President and Chief
Financial Officer of
Southwest Royalties, Inc., the
Managing General Partner of
Southwest Royalties, Inc. Income
Fund V
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. 1350 and in connection with the accompanying
report on Form 10-Q for the period ended March 31, 2005 that is
being filed concurrently with the Securities and Exchange Commission
on the date hereof (the "Report"), each of the undersigned officers
of Southwest Royalties, Inc. Income Fund V (the "Company"), hereby
certifies 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.
/s/ L. Paul Latham
L. Paul Latham
President and Chief Executive
Officer
of Southwest Royalties,
Inc., the
Managing General Partner of
Southwest Royalties, Inc.
Income Fund V
May 16, 2005
/s/ Mel G. Riggs
Mel G. Riggs
Vice President and Chief
Financial Officer of
Southwest Royalties, Inc.,
the
Managing General Partner of
Southwest Royalties, Inc.
Income Fund V
May 16, 2005