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1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NO. 333-76911
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
Delaware 75-2866283
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3901 SOUTH BROADWAY, TYLER, TEXAS 75701
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (903) 561-2900
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the act: LIMITED AND GENERAL
PARTNERSHIP INTEREST $1,000 PER INTEREST
Indicate by check mark whether the 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. [X] Yes [ ] No
No market currently exists for the limited and general partnership interest of
the registrant. Based on original purchase price the aggregate market value of
limited and general partnership interest owned by non-affiliates of the
registrant is $10,000,000.00.
The following documents are incorporated by reference into the indicated parts
of this Annual Report on Form 10-K: Part of the information called for by Part
IV of the Annual Report on Form 10-K is incorporated by reference from the
Registrant's Registration Statement on Form S-1, File No. 333-76911.
2
PART I
ITEM 1. BUSINESS
Mewbourne Energy Partners 00-A, L.P. (the "Registrant") is a limited partnership
organized under the laws of the State of Delaware on February 15, 2000 (date of
inception). Its managing general partner is Mewbourne Development Corporation, a
Delaware corporation ("MD").
A Registration Statement was filed pursuant to the Securities Act of 1933, as
amended, registering limited partnership interests aggregating $4,000,000 and
$16,000,000 in general partnership interests in a series of Delaware limited
partnerships formed under Mewbourne Energy 99-00 Drilling Programs. The
Registrant was declared effective by the Securities and Exchange Commission on
May 5, 2000. On October 31, 2000, the offering of limited and general
partnership interests in the Registrant, was closed, with interests aggregating
$10,000,000 being sold to 354 subscribers of which $9,518,000 were sold to 334
subscribers as general partner interests and $482,000 were sold to 20
subscribers as limited partner interests.
The Registrant engages primarily in oil and gas development and production and
is not involved in any other industry segment. See the selected financial data
in Item 6 and the financial statements in Item 8 of this report for a summary of
the Registrant's revenue, income and identifiable assets.
The Registrant has acquired interests in oil and gas prospects for the purpose
of development drilling. At December 31, 2000, 6 wells had been drilled and were
productive and two wells were drilled and abandoned. The following table
summarizes the Registrant's drilling activity from inception through December
31, 2000:
Gross Net
--------------- ---------------
Dry Productive Dry Productive
--- ---------- --- ----------
Development wells 2 6 .600 1.293
The sale of crude oil and natural gas produced by the Registrant will be
affected by a number of factors which are beyond the Registrant's control. These
factors include the price of crude oil and natural gas, the fluctuating supply
of and demand for these products, competitive fuels, refining, transportation,
extensive federal and state regulations governing the production and sale of
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crude oil and natural gas, and other competitive conditions. It is impossible to
predict with any certainty the future effect of these factors on the Registrant.
The Registrant does not have long-term contracts with purchasers of its crude
oil or natural gas. The market for crude oil is such that the Registrant
anticipates it will be able to sell all the crude oil it can produce. Natural
gas will be sold to local distribution companies, gas marketers and end users on
the spot market. The spot market reflects immediate sales of natural gas without
long-term contractual commitments. The future market condition for natural gas
cannot be predicted with any certainty, and the Registrant may experience delays
in marketing natural gas production and fluctuations in natural gas prices.
Many aspects of the Registrant's activities are highly competitive including,
but not limited to, the acquisition of suitable drilling prospects and the
procurement of drilling and related oil field equipment, and are subject to
governmental regulation, both at Federal and state levels. The Registrant's
ability to compete depends on its financial resources and on the managing
general partner's staff and facilities, none of which are significant in
comparison with those of the oil and gas exploration, development and production
industry as a whole. Federal and state regulation of oil and gas operations
generally includes drilling and spacing of wells on producing acreage, the
imposition of maximum allowable production rates, the taxation of income and
other items, and the protection of the environment.
The Registrant does not have any employees of its own. MD is responsible for all
management functions. Mewbourne Oil Company ("MOC"), a wholly-owned subsidiary
of Mewbourne Holdings, Inc., which is also the parent of the Registrant's
managing general partner, has been appointed Program Manager and is responsible
for activities in accordance with a Drilling Program Agreement entered into by
the Registrant, MD and MOC. At March 23, 2001, MOC employed 103 persons, many of
whom dedicated a part of their time to the conduct of the Registrant's business
during the period for which this report is filed.
The production of oil and gas is not considered subject to seasonal factors
although the price received by the Registrant for natural gas sales will tend to
increase during the winter months. Order backlog is not pertinent to the
Registrant's business.
4
ITEM 2. PROPERTIES
The Registrant's properties consist primarily of leasehold interests in
properties on which oil and gas wells-in-progress are located. Such property
interests are often subject to landowner royalties, overriding royalties and
other oil and gas leasehold interests.
Fractional working interests in developmental oil and gas prospects located
primarily in the Anadarko Basin of Western Oklahoma, the Texas Panhandle and
Kansas, and the Permian Basin of New Mexico and West Texas, were acquired by the
Registrant, resulting in the Registrant's participation in the drilling of 8 oil
and gas wells. At December 31, 2000, 6 wells had been drilled and were
productive and two wells were drilled and abandoned.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not aware of any pending legal proceedings to which it 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 period ended
December 31, 2000 covered by this report.
5
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
At March 23, 2001, the Registrant had 10,000 outstanding limited and general
partnership interests held of record by 354 subscribers. There is no established
public or organized trading market for the limited and general partnership
interests.
Revenues which, in the sole judgement of the managing general partner, are not
required to meet the Registrant's obligations will be distributed to the
partners at least quarterly in accordance with the Registrant's Partnership
Agreement. During the period from inception through December 31, 2000, no
distributions had been made to the limited and general partners.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the period from
February 15, 2000 (date of inception) through December 31, 2000:
Operating results:
Oil and gas sales $ 83,611
Net income $ 129,107
Net income per limited and general
partner interest $ 12.91
At year end:
Total Assets $10,135,563
===========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Mewbourne Energy Partners 00-A, L.P. (the "Registrant") was
organized as a Delaware limited partnership on February 15, 2000.
The offering of limited and general partner interests began May 5,
2000 as part of an offering registered under the name Mewbourne
6
Energy 99-00 Drilling Programs. The offering of limited and general partner
interests in the Registrant concluded October 31, 2000, with total investor
partner contributions of $10,000,000.
The Registrant was formed to engage primarily in the business of drilling
development wells, to produce and market crude oil and natural gas produced from
such properties, to distribute any net proceeds from operations to the general
and limited partners and to the extent necessary, acquire leases which contain
drilling prospects. The economic life of the Registrant depends on the period
over which the Registrant's oil and gas reserves are economically recoverable.
Results of Operations
Because the Registrant was formed during the period covered by this report, no
trend analysis based on yearly changes in liquidity, capital resources or
results of operations is available.
Revenues during the period from February 15, 2000 (date of inception) through
December 31, 2000 totaled $165,535, and consisted of oil and gas sales in the
amount of $83,611, and interest income in the amount of $81,924. Production
volumes during the period ended December 31, 2000 amounted to approximately 249
bbls of oil and 8,944 mcf of gas at corresponding average realized prices of
$27.64 per bbl of oil and $8.58 per mcf of gas. Expenses totaling $36,428,
consisting primarily of depreciation, depletion and amortization in the amount
of $28,285, and lease operating expenses and production taxes in the amount of
$7,475. Which resulted in a net income for the period of $129,107. At December
31, 2000, 6 wells had been drilled and were productive and 2 wells had been
drilled and abandoned. The Registrant's oil and gas revenues should increase
during 2001 as additional wells are completed and oil and gas production is
sold. Interest income should decrease in 2001 as the remaining wells are drilled
and the available cash is utilized for the equipping of such wells. The
Registrant expects that drilling and completion costs will decrease during 2001
and that lease operating cost and depletion provisions will increase.
Liquidity and capital resources
Net cash increased by $2,572,942 during the period from February 15, 2000 (date
of inception) through December 31, 2000. Approximately $7,492,434 of the net
initial partners' capital of $10,000,000 was used for drilling and completion
costs. Capital requirements in the future are expected to be paid with the
initial partners' capital. Management believes that funds are sufficient to
complete the wells for which funds have been committed. Under certain
circumstances, as provided in the Registrant's Partnership
7
Agreement, the Registrant may use revenues and/or borrow monies, either through
a financial institution or through an affiliate of MD, to fund additional
capital requirements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The required financial statements of the Registrant are contained
in a separate section of this report following the signature
attestation. See "Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K".
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant does not have any officers or directors. Under the Registrant's
Partnership Agreement, the Registrant's managing general partner, MD, is granted
the exclusive right and full authority to manage, control and administer the
Registrant's business. MD is a wholly-owned subsidiary of Mewbourne Holdings,
Inc.
Set forth below are the names, ages and positions of the directors and executive
officers of MD, the Registrant's managing general partner. Directors of MD are
elected to serve until the next annual meeting of stockholders or until their
successors are elected and qualified.
Age as of
December 31,
Name 2000 Position
- ---- ------------ --------
Curtis W. Mewbourne 65 President and Director
J. Roe Buckley 38 Treasurer and Chief
Financial Officer
Michael F. Shepard 54 Secretary and General
Counsel
Dorothy M. Cuenod 40 Assistant Secretary
and Director
Ruth M. Buckley 39 Assistant Secretary
and Director
Julie M. Greene 37 Assistant Secretary
and Director
9
CURTIS W. MEWBOURNE, age 65, formed Mewbourne Holdings in 1965 and
serves as Chairman of the Board and President of Mewbourne Holdings, MOC and MD.
He has operated as an independent oil and gas producer for the past 35 years.
Mr. Mewbourne received a Bachelor of Science Degree in Petroleum Engineering
from the University of Oklahoma in 1957. Mr. Mewbourne is the father of Dorothy
M. Cuenod, Ruth M. Buckley, and Julie M. Greene and the father-in-law of J. Roe
Buckley.
J. ROE BUCKLEY, age 38, joined Mewbourne Holdings in July, 1990 and
serves a Treasurer and Chief Financial Officer of both MD and MOC. Mr. Buckley
was employed by MBank Dallas from 1985-1990 where he served as a commercial loan
officer. He received a Bachelor of Arts in Economics from Sewanee in 1984. Mr.
Buckley is the son-in-law of Curtis W. Mewbourne and is married to Ruth M.
Buckley. He is also the brother-in-law of Dorothy M. Cuenod and Julie M. Greene.
MICHAEL F. SHEPARD, age 54, joined MOC in 1986 and serves as Secretary
and General Counsel of MD. He has practiced law exclusively in the oil and gas
industry since 1979 and formerly was counsel with Parker Drilling Company and
its Perry Gas subsidiary for seven years. Mr. Shepard holds the Juris Doctor
degree from the University of Tulsa where he received the National Energy Law
and Policy Institute award as the outstanding graduate in the Energy Law
curriculum. He received the B.A. degree, magna cum laude, from the University of
Massachusetts in 1976. Mr. Shepard is a member of the bar in Texas and Oklahoma.
DOROTHY MEWBOURNE CUENOD, age 40, received a B.A. Degree in Art History
from The University of Texas and a Masters of Business Administration Degree
from Southern Methodist University. Since 1984 she has served as a Director and
Assistant Secretary of both MD and MOC. Ms. Cuenod is the daughter of Curtis W.
Mewbourne and is the sister of Ruth M. Buckley and Julie M. Greene. She is also
the sister-in-law of J. Roe Buckley.
RUTH MEWBOURNE BUCKLEY, age 39, received a Bachelor of Science Degrees
in both Engineering and Geology from Vanderbilt University. Since 1987 she has
served as a Director and Assistant Secretary of both MD and MOC. Ms. Buckley is
the daughter of Curtis W. Mewbourne and is the sister of Dorothy M. Cuenod and
Julie M. Greene. She is also the wife of J. Roe Buckley.
JULIE MEWBOURNE GREENE, age 37, received a B.A. in Business
Administration from the University of Oklahoma. Since 1988 she has served as a
Director and Assistant Secretary of both MD and MOC. Prior to that time she was
employed by Rauscher, Pierce, Refsnes, Inc. Ms. Greene is the daughter of Curtis
W. Mewbourne and is the sister of Dorothy M. Cuenod and Ruth M. Buckley. She is
also the sister-in-law of J. Roe Buckley.
10
ITEM 11. EXECUTIVE COMPENSATION
The Registrant does not have any directors or officers. Management of the
Registrant is vested in the managing general partner. None of the officers or
directors of MD or MOC will receive remuneration directly from the Registrant,
but will continue to be compensated by their present employers. The Registrant
will reimburse MD and MOC and affiliates thereof for certain costs of overhead
falling within the definition of Administrative Costs, including without
limitation, salaries of the officers and employees of MD and MOC; provided that
no portion of the salaries of the directors or of the executive officer of MOC
or MD may be reimbursed as Administrative Costs.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Beneficial owners of more than five percent
Name of Amount & Nature Percent
Beneficial of Beneficial of
Title of Class Owner Owner Class
- -------------- ---------- --------------- -------
None None N/A N/A
(b) Security ownership of management
The Registrant does not have any officers or directors. The managing general
partner of the Registrant, MD, has the exclusive right and full authority to
manage, control and administer the Registrant's business. Under the Registrant's
Partnership Agreement, limited and general partners holding a majority of the
outstanding limited and general partnership interests have the right to take
certain actions, including the removal of the managing general partner. The
Registrant is not aware of any current arrangement or activity which may lead to
such removal.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with MD and its affiliates
Pursuant to the Registrant's Partnership Agreement, the Registrant had the
following related party transactions with MD and its affiliates during the
period February 15, 2000 (date of inception) through December 31, 2000:
11
Payment of well charges
and supervision charges in
accordance with standard
industry operating agreements $77,393
The Registrant participates in oil and gas activities through a drilling program
created by the Drilling Program Agreement (the "Program"). Pursuant to the
Program, MD pays approximately 30% of the Program's capital expenditures and
approximately 40% of its operating and general and administrative expenses. The
Registrant pays the remainder of the costs and expenses of the Program. In
return, MD is allocated approximately 40% of the Program's revenues.
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial statements
The following are filed as part of this annual report:
Report of Independent Accountants
Balance sheet as of December 31, 2000
Statement of income for the period from February 15,
2000 (date of inception) through December 31, 2000
Statement of changes in partners' capital for the
period from February 15, 2000 (date of inception)
through December 31, 2000
Statement of cash flows for the period from February
15, 2000 (date of inception) through December 31,
2000
Notes to financial statements
2. Financial statement schedules
None.
All required information is in the financial statements or the
notes thereto, or is not applicable or required.
3. Exhibits
The exhibits listed on the accompanying index are filed or
incorporated by reference as part of this annual report.
(b) Reports on Form 8-K
None.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
By: Mewbourne Development Corporation
Managing General Partner
By: /s/ Curtis W. Mewbourne
-----------------------------------
Curtis W. Mewbourne
President and Director
(Principal Executive Officer)
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
Registrant and in the capacities and on the date indicated.
/s/ Curtis W. Mewbourne President/Director March 23, 2001
- ----------------------------
Curtis W. Mewbourne
/s/ J. Roe Buckley Treasurer/Chief March 23, 2001
- ---------------------------- Financial Officer
J. Roe Buckley
/s/ Dorothy M. Cuenod Director March 23, 2001
- ----------------------------
Dorothy M. Cuenod
/s/ Ruth M. Buckley Director March 23, 2001
- ----------------------------
Ruth M. Buckley
/s/ Julie M. Greene Director March 23, 2001
- ----------------------------
Julie M. Greene
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT
No annual report or proxy material has been sent to the
Registrant's security holders.
14
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE PERIOD FROM FEBRUARY 15, 2000
(DATE OF INCEPTION)
THROUGH DECEMBER 31, 2000
15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Mewbourne Energy Partners 00-A, L.P.
and to the Board of Directors of
Mewbourne Development Corporation:
In our opinion, the accompanying balance sheet and the related statement of
income, changes in partners' capital and cash flows present fairly, in all
material respects, the financial position of Mewbourne Energy Partners 00-A,
L.P. at December 31, 2000, and the results of its operations and its cash flows
for the period from February 15, 2000 (date of inception) through December 31,
2000, in conformity with accounting principles generally accepted in the United
States of America. 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 audit. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Dallas, Texas
March 2, 2001
16
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
BALANCE SHEET
DECEMBER 31, 2000
ASSETS
Cash $ 2,572,942
------------
Prepaid well costs 14,951
------------
Accounts receivable, affiliate 83,611
------------
Oil and gas properties at cost --full cost method 7,492,434
Less accumulated depreciation, depletion and amortization (28,285)
------------
7,464,149
------------
Total assets $ 10,135,563
============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable, affiliate $ 6,546
------------
General partners (9,518 G.P. interests outstanding) 9,640,884
Limited partners (482 L.P. interests outstanding) 488,223
------------
Total partners' capital 10,129,107
------------
Total liabilities and partners' capital $ 10,135,563
============
The accompanying notes are an integral part of these financial statements.
17
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
STATEMENT OF INCOME
FOR THE PERIOD FROM FEBRUARY 15, 2000 (DATE
OF INCEPTION) THROUGH DECEMBER 31, 2000
Revenues:
Oil and gas sales $ 83,611
Interest income 81,924
--------
165,535
--------
Expenses:
Lease operating and production tax 7,475
Administrative and general expense 668
Depreciation, depletion and amortization 28,285
--------
36,428
--------
Net income $129,107
========
Allocation of net income:
General partners $122,884
--------
Limited partners $ 6,223
========
Basic and diluted net income per limited and general partner interest
(10,000 outstanding) $ 12.91
========
The accompanying notes are an integral part of these financial statements.
18
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD FROM FEBRUARY 15, 2000 (DATE
OF INCEPTION) THROUGH DECEMBER 31, 2000
General Limited
Partners Partners Total
----------- ----------- -----------
Partners' capital, beginning of period $ -- $ -- $ --
Capital contributions 9,518,000 482,000 10,000,000
Net income 122,884 6,223 129,107
----------- ----------- -----------
Partners' capital, end of period $ 9,640,884 $ 488,223 $10,129,107
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
19
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 15, 2000 (DATE
OF INCEPTION) THROUGH DECEMBER 31, 2000
Cash flows from operating activities:
Net income $ 129,107
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization 28,285
Changes in operating assets and liabilities:
Increase in accounts receivable, affiliate (83,611)
Increase in accounts payable, affiliate 6,546
------------
Net cash provided by operating activities 80,327
------------
Cash flows from investing activities:
Purchase of oil and gas properties (7,492,434)
Prepaid well costs (14,951)
------------
Net cash used in investing activities (7,507,385)
------------
Cash flows from financing activities:
Capital contribution from partners 10,000,000
------------
Net cash provided by financing activities 10,000,000
------------
Net increase in cash 2,572,942
Cash at beginning of period 0
------------
Cash at end of period $ 2,572,942
============
The accompanying notes are an integral part of these financial statements.
20
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
ACCOUNTING FOR OIL AND GAS PRODUCING ACTIVITIES
Mewbourne Energy Partners 00-A, L.P., (the partnership), a
Delaware limited partnership engaged primarily in oil and gas
development and production in Texas, Oklahoma, New Mexico and Kansas
was organized on February 15, 2000. The offering of limited and general
partnership interests began May 5, 2000 as a part of an offering
registered under the name Mewbourne Energy Partners 99-00 Drilling
Programs and concluded October 31, 2000, with total investor
contributions of $10,000,000.
The Program's sole business is the development and production
of oil and gas with a concentration on gas. Substantially all of the
Program's gas reserves are being sold regionally in the "spot market."
Due to the highly competitive nature of the spot market, prices are
subject to wide seasonal and regional pricing fluctuations. In
addition, such spot market sales are generally short-term in nature and
are dependent upon the obtaining of transportation services provided by
pipelines. The prices received for the Program's oil and gas are
subject to influences such as global consumption and supply trends.
The partnership follows the full-cost method of accounting for
its oil and gas activities. Under the full-cost method, all productive
and nonproductive costs incurred in the acquisition, exploration and
development of oil and gas properties are capitalized. Depreciation,
depletion and amortization of oil and gas properties subject to
amortization is computed on the units-of- production method based on
the proved reserves underlying the oil and gas properties. At December
31, 2000, approximately $5.2 million of capitalized costs were excluded
from amortization. Gains and losses on the sale or other disposition of
properties are not recognized unless such adjustments would
significantly alter the relationship between capitalized costs and the
proved oil and gas reserves. Capitalized costs are subject to an annual
ceiling test that limits such costs to the aggregate of the present
value of future net cash flows of proved reserves and the lower of cost
or fair value of unproved properties.
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.
CASH
The partnership maintains all its cash in one financial
institution.
21
OIL AND GAS SALES
The Program's oil and condensate production is sold, title
passed, and revenue recognized at or near the Program's wells under
short-term purchase contracts at prevailing prices in accordance with
arrangements which are customary in the oil industry. Sales of gas
applicable to the Program's interest are recorded as revenue when the
gas is metered and title transferred pursuant to the gas sales
contracts covering the Program's interest in gas reserves. The
Partnership uses the sales method to recognize oil and gas revenue
whereby revenue is recognized for the amount of production taken
regardless of the amount for which the Partnership is entitled based on
its working interest ownership. As of December 31, 2000, no material
gas imbalances between the Partnership and other working interest
owners existed.
INCOME TAXES
The partnership is treated as a partnership for income tax
purposes, and as a result, income of the partnership is reported on the
tax returns of the partners and no recognition is given to income taxes
in the financial statements.
2. ORGANIZATION AND RELATED PARTY TRANSACTIONS:
The partnership was organized on February 15, 2000. Mewbourne
Development Corporation (MD) is managing general partner and Mewbourne
Oil Company (MOC) is operator of oil and gas properties owned by the
partnership. Substantially all transactions are with MD and MOC.
Reimbursement to MOC for supervision and other operator
charges totaled $77,393 for the period February 15, 2000 (date of
inception) through December 31, 2000. Services and operator charges are
billed in accordance with the program and partnership agreements.
In general, during any particular calendar year the total
amount of administrative expenses allocated to the partnership shall
not exceed the greater of (a) 3.5% of the partnership's gross revenue
from the sale of oil and natural gas production during each year
(calculated without any deduction for operating costs or other costs
and expenses) or (b) the sum of $50,000 plus .25% of the capital
contributions of limited and general partners. Under this arrangement,
$668 was allocated to the Partnership during the period ended December
31, 2000.
22
The partnership participates in oil and gas activities through
an income tax partnership (the Program). The partnership and MD are
parties to the Program agreement. The costs and revenues of the Program
are allocated to MD and the partnership as follows:
Partnership MD
----------- ----------
Revenues:
Proceeds from disposition of depreciable and
depletable properties 60% 40%
All other revenues 60% 40%
Costs and expenses:
Organization and offering costs (1) 0% 100%
Lease acquisition costs (1) 0% 100%
Tangible and intangible drilling costs (1) 100% 0%
Operating costs, reporting and legal
expenses, general and administrative
expenses and all other costs 60% 40%
(1) As noted above, pursuant to the Program, MD must contribute 100% of
organization and offering costs and lease acquisition costs which will
approximate 30% of total capital costs. To the extent that organization and
offering costs and lease acquisition costs are less that 30% of total capital
costs, MD is responsible for tangible drilling costs until its share of the
Program's total capital costs reaches approximately 30%.
23
The partnership's financial statements reflect its respective proportionate
interest in the Program.
3. RECONCILIATION OF NET INCOME PER STATEMENT OF INCOME WITH NET LOSS PER
FEDERAL INCOME TAX RETURN:
The following is a reconciliation of net income per statement
of income with the net loss per federal income tax return for the
period from February 15, 2000 (date of inception) through December 31,
2000:
Net income per statement of income $ 129,107
Intangible development costs capitalized for financial reporting
purposes and expensed for tax reporting purposes (6,908,012)
Depreciation, depletion and amortization for financial
reporting purposes over amounts for tax reporting purposes 11,669
Net income per federal income tax return before tentative tax depletion $(6,767,236)
===========
The partnership's financial reporting bases of its net assets
exceeded the tax bases of its net assets by $6,896,343 at December 31,
2000.
4. PRELIMINARY OIL AND GAS INFORMATION (UNAUDITED):
Although certain wells had been drilled, completed and began
producing in December, 2000, a majority of the wells drilled, or to be
drilled, by the partnership have been, or will be, completed subsequent
to December 31, 2000. The following information relates to the wells
drilled and completed by December 31, 2000.
ESTIMATED NET QUANTITIES OF PROVED OIL AND GAS RESERVES
Proved reserve quantities were based on estimates prepared by
Company engineers in accordance with guidelines established by the
Securities and Exchange Commission. The Partnership considers such
estimates to be reasonable, however, due to inherent uncertainties and
the limited nature of reservoir data, estimates of underground reserves
are imprecise and subject to change over time as additional information
becomes available.
There has been no favorable or adverse events that has
caused a significant change in estimated proved reserves since December
31, 2000. The Partnership has no long-term supply agreements or
contracts with governments or authorities in which it acts as producer
nor does it have any interest in oil and gas operations accounted for
by the equity method. All reserves are located onshore within the
United States.
24
Proved Reserves:
Crude Oil Natural Gas
and Condensate (Thousands
(bbls of Oil) of Cubic Feet)
--------------- ---------------
Balance at February 15, 2000 (date of inception) 0 0
Discoveries 33,006 651,953
Production (249) (8,944)
--------------- ---------------
Balance at December 31, 2000 (1) 32,757 643,009
--------------- ---------------
(1) All of these reserves are categorized as proved developed as of
December 31, 2000.
Standard Measure:
The Standard measure of discounted future net cash flows from
estimated production of proved oil and gas reserves is presented in
accordance with the provisions of Statement of Financial Accounting
Standards No. 69, "Disclosures about Oil and Gas Producing Activities"
(SFAS No. 69). In computing this data, assumptions other than those
mandated by SFAS No. 69 could produce substantially different results.
The Partnership cautions against viewing this information as a forecast
of future economic conditions or revenues.
The standardized measure has been prepared assuming year-end
selling prices, year end development and production cost and a 10
percent annual discount rate. No future income tax expense has been
provided for the Partnership since it occurs no income tax liability.
(See Significant Accounting Policies -- Income Taxes in Note 1 to the
Financial Statements.) The year-end realized prices were $25.80 per
barrel of oil and $9.13 per MCF of gas for the period ended December
31, 2000.
2000
-----------
Future cash inflows $ 6,801,005
Future production and development cost (1,039,907)
-----------
Future net cash flows 5,761,098
Discount at 10 percent (1,221,107)
-----------
Standardized measure $ 4,539,991
===========
Summary of Change in the Standardized Measure
2000
-----------
Balance, beginning of year $ 0
Increase (decrease) in discounted future net cash flows:
Sale of oil and gas production, net of related cost (83,611)
Extension, discoveries and improved recovery, less
related cost 4,456,380
Development cost incurred during the period 0
-----------
Balance, end of year $ 4,539,991
===========
25
MEWBOURNE ENERGY PARTNERS 00-A, L.P.
INDEX TO EXHIBITS
The following documents are incorporated by reference in response to Item
14(a)3.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Form of Certificate of Limited Partnership
(filed as Exhibit 3.1 to Registration
Statement on Form S-1, File No. 333-76911
and incorporate herein by reference)
3.2 Form of Certificate of Amendment of the
Certificate of Limited Partnership
(filed as Exhibit 3.2 to Registration
Statement on Form S-1, File No.333-76911
and incorporated herein by reference)
4.1 Form of Agreement of Partnership
(filed as Exhibit 4.1 to Registration
Statement on Form S-1, File No.333-76911
and incorporated herein by reference)
4.1.2 Amendment to Agreement of
Partnership (filed herewith)
10.1 Form of Drilling Program Agreement
(filed as Exhibit 10.1 to Registration
Statement on Form S-1, File No.333-76911
and incorporated herein by reference)
10.3 Form of Operating Agreement
(filed as Exhibit 10.3 to Registration
Statement on Form S-1, File No.333-76911
and incorporated herein by reference)