Page 17 of 17
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 June 30, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 000-24181
Southwest Partners III, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2699554________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
407 N. Big Spring, Suite 300
Midland, Texas 79701
(Address of principal executive offices)
(915) 686-9927
(Registrant's telephone number,
including area code)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes ___ No X
The total number of pages contained in this report is 17
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The Registrant (herein also referred to as the "Partnership" has prepared
the unaudited condensed financial statements included herein 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
annual financial statements. In the opinion of management, all adjustments
necessary for a fair presentation have been included and are of a normal
recurring nature. The financial statements should be read in conjunction
with the audited financial statements and the notes thereto for the year
ended December 31, 2002, which are found in the Registrant's Form 10-K
Report for 2002 filed with the Securities and Exchange Commission. The
December 31, 2002 balance sheet included herein has been derived from the
Registrant's 2002 Form 10-K Report. Operating results for the three and
six month periods ended June 30, 2003 are not necessarily indicative of the
results for the full year.
Southwest Partners III, L.P.
(a Delaware limited partnership)
Balance Sheets
June 30, December
31,
2003 2002
----- -----
(unaudit
ed)
Assets
- ----------
Current asset:
Cash and cash equivalents $ 24,376 24,828
-------- --------
-- --
Total current assets 24,376 24,828
-------- --------
-- --
Investment 380,506 380,000
-------- --------
-- --
Total assets $ 404,882 404,828
====== ======
Liabilities and Partners'
Equity
- ----------------------------
- ------------
Current liability:
Payable to General Partner $ 357,351 348,077
-------- --------
-- --
Total current liabilities 357,351 348,077
-------- --------
-- --
Partners' equity:
General Partner (909,696 (908,313
) )
Limited partners 957,227 965,064
-------- --------
-- --
Total partners' equity 47,531 56,751
-------- --------
-- --
$ 404,882 404,828
====== ======
Southwest Partners III, L.P.
(a Delaware limited partnership)
Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Revenues ---- ---- ---- ----
- -------------
Interest income $ 27 63 54 123
-------- -------- -------- --------
- - - -
27 63 54 123
-------- -------- -------- --------
- - - -
Expenses
- -------------
General and 8,007 1,419 9,274 2,642
administrative
-------- -------- -------- --------
- - - -
8,007 1,419 9,274 2,642
-------- -------- -------- --------
- - - -
Net loss $ (7,980) (1,356) (9,220) (2,519)
===== ===== ===== =====
Net loss allocated
to:
General Partner $ (1,197) (203) (1,383) (378)
===== ===== ===== =====
Limited partners $ (6,783) (1,153) (7,837) (2,141)
===== ===== ===== =====
Per limited partner $ (40) (7) (46) (13)
unit
===== ===== ===== =====
Southwest Partners III, L.P.
(a Delaware limited partnership)
Statement of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2003 2002
---- ----
Cash flows from operating
activities:
Interest received $ 54 123
-------- --------
--- -
Net cash provided by operating 54 123
activities
-------- --------
--- -
Cash flows from investing
activities:
Purchase of Basic investment (506) -
-------- --------
--- -
Net cash used in investing (506) -
activities
-------- --------
--- -
Net (decrease) increase in cash (452) 123
and cash equivalents
Beginning of period 24,828 28,120
-------- --------
--- -
End of period $ 24,376 28,243
====== =====
Reconciliation of net loss to net
cash
provided by operating
activities:
Net loss $ (9,220) (2,519)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Increase in accounts payable 9,274 2,642
-------- --------
--- -
Net cash provided by operating $ 54 123
activities
====== =====
Southwest Partners III, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
1. Organization
Southwest Partners III, L.P. (the "Partnership") was organized under
the laws of the State of Delaware on March 11, 1997 for the purpose of
investing in or acquiring oil field service companies assets. The
Partnership intends to wind up its operations and distribute its
assets or the proceeds therefrom on or before December 31, 2008, at
which time the Partnership's existence will terminate, unless sooner
terminated or extended in accordance with the terms of the Partnership
Agreement. Southwest Royalties, Inc., a Delaware corporation formed
in 1983, is the General Partner of the Partnership. Revenues, costs
and expenses are allocated as follows:
Limited General
Partners Partner
-------- -------
Interest income on capital (1) (1)
contributions
All other revenues 85% 15%
Organization and offering 100% -
costs
Syndication costs 100% -
Amortization of organization 100% -
costs
Gain or loss on property 85% 15%
disposition
Operating and administrative 85% 15%
costs
All other costs 85% 15%
After payout, allocations will be seventy-five (75%) to the limited
partners and twenty-five (25%) to the General Partner. Payout is when
the limited partners have received an amount equal to one hundred ten
percent (110%) of their limited partner capital contributions.
(1) Interest earned on promissory notes related to Capital
Contributions is allocated to the specific holders of those notes.
Method of Allocation of Administrative Costs
For the purpose of allocating Administrative Costs, the General
Partner will allocate each employee's time among three divisions: (1)
operating partnerships; (2) corporate activities; and (3) currently
offered or proposed partnerships. The General Partner determines a
percentage of total Administrative Costs per division based on the
total allocated time per division and personnel costs (salaries)
attributable to such time. Within the operating partnership division,
Administrative Costs are further allocated on the basis of the total
capital of each partnership invested in its operations.
Southwest Partners III, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
2. Summary of Significant Accounting Policies
The interim financial information as of June 30, 2003, and for the
three and six months ended June 30, 2003, is unaudited. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in this Form 10-Q pursuant
to the rules and regulations of the Securities and Exchange
Commission. However, in the opinion of management, these interim
financial statements include all the necessary adjustments to fairly
present the results of the interim periods and all such adjustments
are of a normal recurring nature. The interim financial statements
should be read in conjunction with the audited financial statements
for the year ended December 31, 2002.
3. Liquidity - Partnership
The Partnership as of June 30, 2003 has negative working capital of
$332,975 and a payable to the General Partner of $347,352. The
Partnership does not generate operating income and has no current
means of settling the liability to the General Partner, but believes
the fair value of its assets are sufficient to meet their current
obligations if necessary. The General Partner, should it become
necessary, has agreed to either extend the payment terms until the
Partnership can comfortably pay the balance or make other mutually
acceptable arrangements to settle the payable by transfer, sale or
assignment of Partnership assets.
4. Liquidity - General Partner
The General Partner has a highly leveraged capital structure with
approximately $124.0 million of principal due between December 31,
2002 and December 31, 2004. The General Partner is constantly
monitoring its cash position and its ability to meet its financial
obligations as they become due, and in this effort, is continually
exploring various strategies for addressing its current and future
liquidity needs. The General Partner regularly pursues and evaluates
recapitalization strategies and acquisition opportunities (including
opportunities to engage in mergers, consolidations or other business
combinations) and at any given time may be in various stages of
evaluating such opportunities.
Based on current production, commodity prices and cash flow from
operations, the General Partner has adequate cash flow to fund debt
service, developmental projects and day to day operations, but it is
not sufficient to build a cash balance which would allow the General
Partner to meet its debt principal maturities scheduled for 2004.
Therefore the General Partner is currently seeking to renegotiate the
terms of its obligations, including extending maturity dates, or to
engage new lenders or equity investors in order to satisfy its
financial obligations maturing in 2004.
There can be no assurance that the General Partner's debt
restructuring efforts will be successful. In the event these efforts
are unsuccessful, the General Partner would need to look to other
alternatives to meet its debt obligations, including potentially
selling its assets. There can be no assurance, however, that the
sales of assets can be successfully accomplished on terms acceptable
to the General Partner.
The liquidity of the General Partner, however, does not have a
material impact on the operations of the Partnership. The partnership
agreement of the Partnership allows the limited partners to elect a
successor managing general partner to continue Partnership operations.
Southwest Partners III, L.P.
(a Delaware limited partnership)
Notes to Financial Statements
5. Investments
Common stock ownership in Basic Energy Services, Inc. was as follows:
December 31, 1997 to March 31, 45.89%
1999
March 31, to December 21, 2000 44.94%
December 21, 2000 to December 31, 10.57%
2000
January 1, 2001 to May 20, 2001 8.11%
May 21, 2001 to February 13, 2002 6.32%
February 14, 2002 to May 4, 2003 5.39%
May 5, 2003 to June 30, 2003 6.63%
Southwest Partners III consist entirely of an investment in Basic's
common stock. The investment had been accounted for using the equity
method. Based on the December 21, 2000 transaction discussed below,
the Partnership accounted for the investment using the cost method.
Southwest Partners III no longer holds a 20% or more interest in Basic
and exerts no significant influence over Basic's operations.
On December 21, 2000, Basic entered into a refinancing and
restructuring of its debt and equity. Upon the signing of the
documents, the Partnership's percentage of ownership was diluted from
44.94% to 10.57%. A new equity investor, in exchange for 1,441,730
shares of Basic's common stock, purchased and retired $24.5 million of
Basic's debt from its previous lender. The equity investor received a
76% ownership. Additionally, $10.5 million of the debt held by the
previous lender was refinanced with a new lender. The remaining debt
held by the previous lender of approximately $21.7 million was
cancelled.
Basic's new equity investor mentioned in the above paragraphs
purchased an additional 576,709 shares, during the first part of 2001,
thereby increasing their ownership from 76% to 81.6%. As a result of
the purchase, the Partnership's ownership decreased at that time from
10.57% to 8.11%.
On May 21, 2001, Basic issued a Notice to Stockholders of Preemptive
Rights. The Partnership purchased an additional 19,000 shares of
common stock at $380,000.
On February 13, 2002, Basic sold 600,000 shares of common stock to a
group of related investors. Based on this transaction, the
Partnerships ownership percentage was diluted from 6.32% to 5.39%.
Basic's Board of Directors according to the Supplemental Warrant
Agreement awarded all holders of EBITDA Contingent Warrants 50% of the
maximum warrants that could have been earned, if the financial goals
of Basic were achieved. The Partnership exercised their warrants on
May 5, 2003 and purchased 50,632 shares of stock for $.01 per share.
The Partnership at June 30, 2003 owns a total of 6.63%, or 270,132
shares of Basic's outstanding common stock.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Southwest Partners III
General
Southwest Partners III, L.P., a Delaware limited partnership (the
"Partnership"), was formed on March 11, 1997 to invest in Basic Energy
Services, Inc. ("Basic"), an oilfield service company which provides
services and products to oil and gas operators for the workover,
maintenance and plugging of existing oil and gas wells in the southwestern
United States. As of June 30, 2003, the Partnership owned a 6.63% interest
in Basic, which is accounted for using the cost method of accounting.
Results of Operations
For the quarter ended June 30, 2003
Revenues
Revenues consisted of interest income of $27 for the quarter ended June 30,
2003 as compared to $63 for the quarter ended June 30, 2002.
Expenses
Direct expenses totaled $8,007 and $1,419 for the quarters ended June 30,
2003 and 2002, respectively, and consisted of general and administrative
expenses. General and administrative expenses primarily represent
independent accounting fees incurred to audit the Partnership. The
increase in direct expenses is a result of the increase in independent
accounting review and audit fees.
Results of Operations
For the six months ended June 30, 2003
Revenues
Revenues consisted of interest income of $54 for the six months ended June
30, 2003 as compared to $123 for the six months ended June 30, 2002.
Expenses
Direct expenses totaled $9,274 and $2,642 for the six months ended June 30,
2003 and 2002, respectively, and consisted of general and administrative
expenses. General and administrative expenses primarily represent
independent accounting fees incurred to audit the Partnership. The
increase in direct expenses is a result of the increase in independent
accounting review and audit fees.
Liquidity and Capital Resources
The proceeds from the sale of partnership units in March 1997 funded the
Partnership's investment in Basic.
Net Cash Provided by Operating Activities. Cash flows provided by
operating activities for the period consisted of interest income from a
financial institution of $54.
Net Cash Used in Investing Activities. Cash flows used in investing
activities for the period consisted of an additional investment in Basic of
$506.
Liquidity - General Partner
The General Partner has a highly leveraged capital structure with
approximately $124.0 million of principal due between December 31, 2002 and
December 31, 2004. The General Partner is constantly monitoring its cash
position and its ability to meet its financial obligations as they become
due, and in this effort, is continually exploring various strategies for
addressing its current and future liquidity needs. The General Partner
regularly pursues and evaluates recapitalization strategies and acquisition
opportunities (including opportunities to engage in mergers, consolidations
or other business combinations) and at any given time may be in various
stages of evaluating such opportunities.
Based on current production, commodity prices and cash flow from
operations, the General Partner has adequate cash flow to fund debt
service, developmental projects and day to day operations, but it is not
sufficient to build a cash balance which would allow the General Partner to
meet its debt principal maturities scheduled for 2004. Therefore the
General Partner is currently seeking to renegotiate the terms of its
obligations, including extending maturity dates, or to engage new lenders
or equity investors in order to satisfy its financial obligations maturing
in 2004.
There can be no assurance that the General Partner's debt restructuring
efforts will be successful. In the event these efforts are unsuccessful,
the General Partner would need to look to other alternatives to meet its
debt obligations, including potentially selling its assets. There can be
no assurance, however, that the sales of assets can be successfully
accomplished on terms acceptable to the General Partner.
The liquidity of the General Partner, however, does not have a material
impact on the operations of the Partnership. The partnership agreement of
the Partnership allows the limited partners to elect a successor managing
general partner to continue Partnership operations.
Recent Accounting Pronouncements
The FASB has issued Statement No. 143 "Accounting for Asset Retirement
Obligations" which establishes requirements for the accounting of removal-
type costs associated with asset retirements. The standard is effective
for fiscal years beginning after June 15, 2002, with earlier application
encouraged. The Partnership adopted this standard on January 1, 2003. The
standard had no impact on the Partnership.
In May 2003, the FASB issued Statement of Financial Accounting Standards
No.150, Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity ("SFAS 150"). SFAS 150 establishes
standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within the
scope of SFAS 150 as a liability (or an asset in some circumstances). Many
of those instruments were previously classified as equity. The application
of SFAS 150 is not expected to have a material effect on the Partnership's
financial statements. This Statement is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June
15, 2003.
Critical Accounting Policies
The Partnership used the cost method of accounting for its investment in
Basic since December 21, 2000. Prior to December 21, 2000 the Partnership
used the equity method of accounting for the investment. Under the cost
method of accounting the Partnership recognizes as income dividends
received that are distributed from net accumulated earnings of an investee
subsequent to the date of acquisition of the investment. The Partnership
would recognize a loss when there is a loss in value in the investment,
which is other than a temporary decline. In its assessment of value the
Partnership considers future cash flows either in the form of dividends or
other distributions from the investee or from selling it's investment to an
unrelated party.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Partnership is not a party to any derivative or embedded
derivative instruments.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures. The chief executive
officer and chief financial officer of the Partnership's General Partner
have evaluated the effectiveness of the design and operation of the
Partnership's disclosure controls and procedures (as defined in Exchange
Act Rule 13a-14(c)) as of a date within 90 days of the filing date of this
quarterly report. Based on that evaluation, the chief executive officer and
chief financial officer have concluded that the Partnership's disclosure
controls and procedures are effective to ensure that material information
relating to the Partnership and the Partnership's consolidated subsidiaries
is made known to such officers by others within these entities,
particularly during the period this quarterly report was prepared, in order
to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls. There have not been any significant
changes in the Partnership's internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
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 Pursuant to
18 U.S.C. Section
1350, as
adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to
18 U.S.C. Section
1350, as
adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter
for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHWEST PARTNERS III, L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
General Partner
By: /s/ Bill E. Coggin
------------------------------
Bill E. Coggin, Vice President
and Chief Financial Officer
Date: August 14, 2003
CERTIFICATIONS Exhibit 31.1
I, H.H. Wommack, III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southwest
Partners III, 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 have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including
its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls
and procedures as of a date within 90 days prior to
the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or
operation of internal
controls which could adversely affect the registrant's
ability to record,
process, summarize and report financial data
and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I
have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: August 14, 2003
/s/ H. H. Wommack, III
H. H. Wommack, III
Chairman, President and Chief Executive Officer
of Southwest Royalties, Inc., the
General Partner of Southwest Partners III, L.P.
CERTIFICATIONS Exhibit 31.2
I, Bill E. Coggin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Southwest
Partners III, 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 have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including
its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly
report is being
prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls
and procedures as of a date within 90 days prior
to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or
operation of internal
controls which could adversely affect the registrant's
ability to record,
process, summarize and report financial data and
have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I
have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: August 14, 2003
/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
and Chief Financial Officer of
Southwest Royalties, Inc., the
General Partner of Southwest Partners III, L.P.
CERTIFICATION PURSUANT TOExhibit 32.1
19 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Southwest Partners III,
Limited Partnership (the "Company") on Form 10-Q for the period ending June
30, 2003 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, H.H. Wommack, III, Chief Executive Officer of the
General Partner of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results
of operation of the
Company.
Date: August 14, 2003
/s/ H.H. Wommack, III
H. H. Wommack, III
Chairman, President, Director and Chief Executive Officer
of Southwest Royalties, Inc., the
General Partner of Southwest Partners III, L.P.
CERTIFICATION PURSUANT TOExhibit 32.2
19 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Southwest Partners III,
Limited Partnership (the "Company") on Form 10-Q for the period ending June
30, 2003 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Bill E. Coggin, Chief Financial Officer of the
General Partner of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results
of operation of the
Company.
Date: August 14, 2003
/s/ Bill E. Coggin
Bill E. Coggin
Executive Vice President
and Chief Financial Officer of
Southwest Royalties, Inc., the
General Partner of Southwest Partners III, L.P.