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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
or
[ ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 333-57156
MEWBOURNE ENERGY PARTNERS 01-A, L.P.
Delaware 75-2926279
------------------------- --------------------
(State or 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
Not Applicable
(Former name, former address and former fiscal year, if
changed since last report)
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
1
MEWBOURNE ENERGY PARTNERS 01-A, L. P.
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Balance Sheets -
March 31, 2003 (Unaudited) and December 31, 2002 ........ 3
Statements of Income (Loss) (Unaudited) -
For the three months ended March 31, 2003 and 2002 ...... 4
Statements of Cash Flows (Unaudited) -
For the three months ended March 31, 2003 and 2002 ...... 5
Statement of Changes In Partners' Capital (Unaudited) -
For the three months ended March 31, 2003 ............... 6
Notes to Financial Statements ............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 9
Item 4. Disclosure Controls and Procedures ........................ 11
Part II-Other Information
Item 1. Legal Proceedings ......................................... 11
Item 6. Exhibits and Reports on Form 8-K .......................... 11
2
MEWBOURNE ENERGY PARTNERS 01-A, L. P.
Part I - Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, 2003 and December 31, 2002
March 31, December 31,
2003 2002
--------- ------------
(Unaudited)
ASSETS
Cash and cash equivalents ....................... $ 556,739 $ 20,408
Accounts receivable, affiliate .................. 1,080,349 1,724,752
------------ ------------
Total current assets ............................ 1,637,088 1,745,160
------------ ------------
Oil and gas properties at cost,
full cost method ............................. 14,523,753 14,017,226
Less accumulated depreciation,
depletion and amortization ................... (6,056,307) (5,822,961)
------------ ------------
8,467,446 8,194,265
------------ ------------
Total assets ................................ $ 10,104,534 $ 9,939,425
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable, affiliate ..................... $ 89,517 $ 233,602
------------ ------------
Asset retirement obligation plugging liability .. 300,906 0
------------ ------------
Partners' capital
General partners ............................. 8,751,111 8,743,645
Limited partners ............................. 963,000 962,178
------------ ------------
Total partners' capital ..................... 9,714,111 9,705,823
------------ ------------
Total liabilities and partners' capital ......... $ 10,104,534 $ 9,939,425
============ ============
The accompanying notes are an integral
part of the financial statements.
3
MEWBOURNE ENERGY PARTNERS 01-A, L. P.
STATEMENTS OF INCOME (LOSS)
For the three months ended March 31, 2003 and 2002
(Unaudited)
2003 2002
----------- -----------
Revenues and other income:
Oil and gas sales ................................. $ 1,537,141 $ 386,906
Interest income ................................... 871 19,580
----------- -----------
Total revenues and other income ................... 1,538,012 406,486
----------- -----------
Expenses:
Lease operating expense ........................... 78,032 50,649
Production taxes .................................. 126,574 31,436
Administrative and general expense ................ 44,108 9,259
Depreciation, depletion and amortization .......... 298,936 302,202
Cost ceiling write-down ........................... 0 2,152,691
Asset retirement obligation accretion ............. 3,164 0
----------- -----------
Net income (loss) before cumulative effect of
accounting change ............................... 987,198 (2,139,751)
----------- -----------
Cumulative effect of accounting change ............ 48,590 0
----------- -----------
Net income (loss) ................................. $ 1,035,788 $(2,139,751)
=========== ===========
Allocation of net income (loss):
General partners .................................. $ 933,109 $(1,927,635)
----------- -----------
Limited partners .................................. $ 102,679 $ (212,116)
----------- -----------
Basic and diluted net income per general
partner interest (13,513 interests outstanding) . $ 62.20 $ (128.51)
----------- -----------
Basic and diluted net income per limited
partner interest (1,487 interests outstanding) .. $ 6.85 $ (14.14)
----------- -----------
The accompanying notes are an integral
part of the financial statements.
4
MEWBOURNE ENERGY PARTNERS 01-A, L. P.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2003 and 2002
(Unaudited)
2003 2002
----------- -----------
Cash flows from operating activities:
Net income (loss) ...................................... $ 1,035,788 $(2,139,751)
Adjustment to reconcile net income (loss) to net cash
provided by operating activities:
Cumulative effect of accounting change ............. (48,590) 0
Depreciation, depletion and amortization ........... 298,936 302,202
Cost ceiling write-down ............................ 0 2,152,691
Asset retirement obligation accretion .............. 3,164 0
Changes in operating assets and liabilities:
Accounts receivables, affiliate .................. 644,403 (125,689)
Accounts payable, affiliate ...................... (144,085) 10,702
----------- -----------
Net cash provided by operating activities ............ 1,789,616 200,155
----------- -----------
Cash flows from investing activities:
Purchase of oil and gas properties ..................... (225,785) (966,189)
----------- -----------
Net cash used in investing activities ................ (225,785) (966,189)
----------- -----------
Cash flows from financing activities:
Cash distributions to partners ......................... (1,027,500) (225,000)
----------- -----------
Net cash used in financing activities ..................... (1,027,500) (225,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents ...... 536,331 (991,034)
Cash and cash equivalents, beginning of period ............ 20,408 4,976,657
----------- -----------
Cash and cash equivalents, end of period .................. $ 556,739 $ 3,985,623
=========== ===========
The accompanying notes are an integral
part of the financial statements.
5
MEWBOURNE ENERGY PARTNERS 01-A, L. P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the three months ended March 31, 2003
(Unaudited)
General Limited
Partners Partners Total
-------- -------- -----
Balance at December 31, 2002 $ 8,743,645 $ 962,178 $ 9,705,823
Cash distributions (925,643) (101,857) (1,027,500)
Net income 933,109 102,679 1,035,788
----------- ----------- -----------
Balance at March 31, 2003 $ 8,751,111 $ 963,000 $ 9,714,111
=========== =========== ===========
The accompanying notes are an integral
part of the financial statements.
6
MEWBOURNE ENERGY PARTNERS 01-A, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
Reference is hereby made to the Partnership's Annual Report on Form 10-K for
2002, which contains a summary of significant accounting policies followed by
the partnership in the preparation of its financial statements. These policies
are also followed in preparing the quarterly report included herein.
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments of a normal recurring nature necessary to present fairly
our financial position, results of operations, cash flows and partners' capital
for the periods presented. The results of operations for the interim periods are
not necessarily indicative of the final results expected for the full year.
2. Accounting for Oil and Gas Producing Activities
Mewbourne Energy Partners 01-A, L.P., (the "Partnership"), a Delaware limited
partnership formed on February 23, 2001, is engaged primarily in oil and gas
development and production in Texas, Oklahoma, and New Mexico. The offering of
limited and general partnership interests began June 12, 2001 as a part of an
offering registered under the name Mewbourne Energy Partners 01-02 Drilling
Programs and concluded August 28, 2001, with total investor contributions of
$15,000,000.
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
March 31, 2003, substantially all capitalized costs were subject to
amortization, while at March 31, 2002, approximately $0.8 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 a periodic 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.
3. Comprehensive Income
Total comprehensive income (loss) equals net income (loss) during each of the
periods presented herein.
4. Asset Retirement Obligations
On January 1, 2003, the Partnership adopted Statement of Financial Accounting
Standard No. 143 ("FAS 143"), "Accounting for Asset Retirement Obligations."
This statement changes financial accounting and reporting obligations associated
with the retirement and disposal of long-lived assets, including the
Partnership's oil and gas properties, and the associated asset retirement costs.
7
A liability for the estimated fair value of the future plugging and abandonment
costs is recorded with a corresponding increase in the full cost pool at the
time a new well is drilled. Depreciation expense associated with estimated
plugging and abandonment costs is recognized in accordance with the full cost
methodology.
The Partnership estimates a liability for plugging and abandonment costs based
on historical experience and estimated well life. The liability is discounted
using the credit-adjusted risk-free rate of 4.25%. Revisions to the liability
could occur due to changes in well plugging and abandonment costs or well useful
lives, or if federal or state regulators enact new well restoration
requirements. The Partnership recognizes accretion expense in connection with
the discounted liability over the remaining life of the well.
Upon adoption of FAS 143 on January 1, 2003, the Partnership recorded a
discounted liability of $297,742, increased the net full cost pool by $346,332
and recognized a one- time cumulative effect adjustment of $(48,590). The
increase in the net full cost pool included $182,214 for the reversal of
accumulated depreciation related to the inclusion of estimated salvage value of
equipment on the Partnership's oil and gas properties. Prior to the adoption of
FAS 143, the Partnership assumed salvage value approximated plugging and
abandonment costs and as a result was not included in the full cost pool.
A reconciliation of the Partnership's liability for well plugging and
abandonment costs for the three months ended March 31, 2003, is as follows:
Balance upon adoption at January 1, 2003 $297,742
Accretion expense 3,164
--------
Balance at March 31, 2003 $300,906
--------
5. Recently Issued Accounting Standards
In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146 (FAS 146), Accounting for Costs
Associated with Exit or Disposal Activities. This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and was effective for the Partnership beginning January 1, 2003. The adoption of
FAS 146 did not have a material impact on the Partnership.
8
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Mewbourne Energy Partners 01-A, L.P. (the "Partnership")was formed February 23,
2001. The offering of limited and general partnership interests began on June
12, 2001 and concluded on August 28, 2001, with investor partner contributions
of $15,000,000.
The Partnership has acquired interests in oil and gas prospects for the purpose
of development drilling. The Partnership participated in the drilling of 41
wells. 36 wells were productive and 5 wells were abandoned. Of the 36 productive
wells, 35 were producing and 1 was plugged and abandoned at March 31, 2003.
Operations will be conducted with available funds and revenues generated from
oil and gas activities. No bank borrowing is anticipated. The Partnership had
net working capital of $1,547,571 at March 31, 2003.
During the three months ended March 31, 2003, the Partnership made cash
distributions to the investor partners in the amount of $1,027,500 as compared
to $225,000 for the three months ended March 31, 2002. The Partnership expects
that cash distributions will continue during 2003 as additional oil and gas
revenues are received.
The sale of crude oil and natural gas produced by the Partnership will be
affected by a number of factors which are beyond the Partnership'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 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 Partnership.
Results of Operations
Three months ended March 31, 2003 as compared to the three months ended March
31, 2002.
Oil and gas revenues. Oil and gas revenues during the three months ended March
31, 2003 totaled $1,537,141. Production volumes during the period were
approximately 5,306 bbls of oil and 232,822 mcf of gas at corresponding average
realized prices of $32.54 per bbl of oil and $5.86 per mcf of gas. Oil and gas
revenues during the three months ended March 31, 2002 totaled $386,906.
Production volumes during the period were approximately 254 bbls of oil and
201,072 mcf of gas at corresponding average realized prices of $18.14 per bbl of
oil and $1.90 per mcf of gas. Oil and gas revenues increased primarily due to
the increase in oil and gas production volumes and increased oil and gas prices.
The increased production volumes were attributable to the addition of 3 New
Mexico wells.
Interest Income. Interest income was $871 during the three month period ended
March 31, 2003 as compared to $19,580 during the three months ended March 31,
2002. The decrease is primarily due to the decrease in capital available for
investment.
Lease operations and production taxes. Lease operating expense during the period
ended March 31, 2003 totaled $78,032 as compared to $50,649 for the period ended
March 31, 2002. Production taxes during the period ended March 31, 2003 totaled
$126,574 compared to $31,436 for the period ended March 31, 2002. Lease
operating expense increased due to the increase in the number of wells producing
in 2003. Production taxes increased due to increased oil and gas revenues in
2003.
9
Depreciation, depletion, and amortization. Depreciation, depletion, and
amortization of $298,936 for the three month period ended March 31, 2003 was
comparative to depreciation, depletion, and amortization of $302,202 for the
three month period ended March 31, 2002. There was no cost ceiling write-down
for the period ended March 31, 2003 compared to $2,152,691 for the period ended
March 31, 2002.
Administrative and general expense. Administrative and general expense for the
three month period ended March 31, 2003 totaled $44,108 compared to $9,259 for
the period ended March 31, 2002. The increase is primarily due to the increase
in oil and gas revenues.
Asset Retirement Obligation
In accordance with FAS 143, the Partnership has recognized an estimated
liability for future oil and gas well plugging and abandonment costs (see Note
4). The estimated liability is based on historical experience and estimated well
lives. The liability is discounted using the credit-adjusted risk-free rate of
4.25%. Revisions to the liability could occur due to changes in well plugging
and abandonment costs or well useful lives, or if federal or state regulators
enact new well restoration requirements.
Upon adoption of FAS 143 on January 1, 2003, the Partnership recorded a
discounted liability of $297,742, increased the net full cost pool by $346,332
and recognized a one- time cumulative effect adjustment of $(48,590). The
increase in the net full cost pool included $182,214 for the reversal of
accumulated depreciation related to the inclusion of estimated salvage value of
equipment on the Partnership's oil and gas properties. Prior to the adoption of
FAS 143, the Partnership assumed salvage value approximated plugging and
abandonment costs and as a result was not included in the full cost pool.
A reconciliation of the Partnership's liability for well plugging and
abandonment costs for the three months ended March 31, 2003, is as follows:
Balance upon adoption at January 1, 2003 $297,742
Accretion expense 3,164
--------
Balance at March 31, 2003 $300,906
--------
Recently Issued Accounting Standards
In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146 (FAS 146), Accounting for Costs
Associated with Exit or Disposal Activities. This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and was effective for the Partnership beginning January 1, 2003. The adoption of
FAS 146 did not have a material impact on the Partnership.
10
Item 4. Disclosure Controls and Procedures
Mewbourne Development Corporation ("MDC"), the Managing General Partner of the
Partnership, maintains a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and other
disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. Within 90 days prior to the filing of this
report, MDC's Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of the design and operation of our disclosure controls and
procedures with the assistance and participation of other members of management.
Based upon that evaluation, MDC's Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective for
gathering, analyzing and disclosing the information the Partnership is required
to disclose in the reports it files under the Securities Exchange Act of 1934
within the time periods specified in the SEC's rules and forms. There have been
no significant changes in MDC's internal controls or in other factors which
could significantly affect internal controls subsequent to the date MDC carried
out its evaluation.
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
MEWBOURNE ENERGY PARTNERS 01-A, L.P.
By: Mewbourne Development Corporation
Managing General Partner
Date: May 13, 2003 By: /s/ Alan Clark
----------------------------------
Alan Clark, Treasurer
12
CERTIFICATIONS
I, Curtis W. Mewbourne, Chief Executive Officer of Mewbourne Development
Corporation, Managing General Partner of Mewbourne Energy Partners 01-A, L.P.
(the "Registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-Q of Mewbourne Energy
Partners, 01- A, L.P.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d- 14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us
particularly during the period in which this quarterly report is
being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report
13
financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 13, 2003.
/s/ Curtis W. Mewbourne
------------------------------------------
Curtis W. Mewbourne
Chief Executive Officer
Mewbourne Development Corporation,
Managing General Partner of the Registrant
14
CERTIFICATIONS
I, J. Roe Buckley, Chief Financial Officer of Mewbourne Development
Corporation, Managing General Partner of Mewbourne Energy Partners 01-A, L.P.
(the "Registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-Q of Mewbourne Energy
Partners, 01- A, L.P.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d- 14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant is made known to us
particularly during the period in which this quarterly report is
being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report
15
financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 13, 2003.
/s/ J. Roe Buckley
------------------------------------------
J. Roe Buckley
Chief Financial Officer
Mewbourne Development Corporation,
Managing General Partner of the Registrant
16
CERTIFICATION OF
CURTIS W. MEWBOURNE/CHIEF EXECUTIVE OFFICER
OF MEWBOURNE DEVELOPMENT CORPORATION
PURSUANT TO 18 U.S.C. SECTION 1350
I, Curtis W. Mewbourne, Chief Executive Officer of Mewbourne Development
Corporation, Managing General Partner of Mewbourne Energy Partners 01-A, L.P.,
(the "Registrant"), hereby certify that the accompanying report on Form 10-Q,
for the quarterly period ended March 31, 2003 and filed with the Securities and
Exchange Commission on the date hereof pursuant to Section 13(a) of the
Securities Exchange Act of 1934 (the "Report") by the Registrant fully complies
with the requirements of that section.
I further certify that the information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Registrant.
/s/ Curtis W. Mewbourne
--------------------------------------
Name: Curtis W. Mewbourne
Date: May 13, 2003
17
CERTIFICATION OF
J. ROE BUCKLEY/CHIEF FINANCIAL OFFICER
OF MEWBOURNE DEVELOPMENT CORPORATION
PURSUANT TO 18 U.S.C. SECTION 1350
I, J. Roe Buckley, Chief Financial Officer of Mewbourne Development
Corporation, Managing General Partner of Mewbourne Energy Partners 01-A, L.P.,
(the "Registrant"), hereby certify that the accompanying report on Form 10-Q,
for the quarterly period ended March 31, 2003 and filed with the Securities and
Exchange Commission on the date hereof pursuant to Section 13(a) of the
Securities Exchange Act of 1934 (the "Report") by the Registrant fully complies
with the requirements of that section.
I further certify that the information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Registrant.
/s/ J. Roe Buckley
---------------------------------------
Name: J. Roe Buckley
Date: May 13, 2003
18