Company Quick10K Filing
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Mewbourne Energy Partners
10-Q 2019-09-30 Quarter: 2019-09-30
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
CQH Cheniere Energy Partners Holdings 6,956
BLGO Biolargo 33
SLTK Solis Tek 32
FXCH Invesco Currencyshares Chinese Renminbi Trust 3
CSGN Chase General 0
ICOG Icon Leasing Fund Twelve 0
YJ Yunji 0
TLSRP Telos 0
JCTG Jiucaitong Group 0
SHEPH Shepherd's Finance 0
MEP 2019-09-30
Part I - Financial Information
Item 1. Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Disclosure Controls and Procedures
Part II - Other Information
Item 1.Legal Proceedings
Item 6.Exhibits and Reports on Form 8-K
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Mewbourne Energy Partners Earnings 2019-09-30

MEP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 mep05-10q_093019.htm QUARTERLY REPORT

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

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. 333-113340-01

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

Delaware   20-2306210
(State or jurisdiction of incorporation or organization)   (I.R.S. Employer 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)

Securities registered pursuant to Section 12(b) of the Exchange Act: None 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 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 ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 

Yes☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   Accelerated filer  ☐
Non-accelerated filer     ☐   Smaller reporting company  ☒
  Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐   No ☒ 

 

 

 

 

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

INDEX

Part I  -  Financial Information Page No.
         
  Item 1.  Financial Statements  
         
    Condensed Balance Sheets -   3
      September 30, 2019  (Unaudited) and December 31, 2018  
         
    Condensed Statements of Operations (Unaudited) - 4
      For the three months ended September 30, 2019 and 2018  
      and the nine months ended September 30, 2019 and 2018  
         
    Condensed Statement of Changes In Partners’ Capital (Unaudited) - 5
      For the nine months ended September 30, 2019  
         
    Condensed Statements of Cash Flows (Unaudited) -   6
      For the nine months ended September 30, 2019 and 2018  
         
    Notes to Condensed Financial Statements 7
         
  Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 11
         
  Item 3.  Quantitative and Qualitative Disclosures about Market Risk 14
         
  Item 4.  Disclosure Controls and Procedures 14
         
Part II  -  Other Information  
         
  Item 1.  Legal Proceedings 15
         
  Item 6.  Exhibits and Reports on Form 8-K 15

 

 

 

 2 

 

 

Part I - Financial Information

 

Item 1. Financial Statements

 

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

 

CONDENSED BALANCE SHEETS

 

   September 30, 2019  December 31, 2018
   (Unaudited)   
ASSETS      
      
Cash  $19,169   $6,713 
Accounts receivable, affiliate   124,982    171,315 
Prepaid state taxes   4,137    2,296 
 Total current assets   148,288    180,324 
          
Oil and gas properties at cost, full-cost method   30,248,752    30,239,172 
Less accumulated depreciation, depletion, amortization          
and cost ceiling write-downs   (29,095,609)   (28,905,688)
   1,153,143    1,333,484 
          
Total assets  $1,301,431   $1,513,808 
           
LIABILITIES AND PARTNERS’ CAPITAL          
          
Accounts payable, affiliate  $43,796   $56,347 
Total current liabilities   43,796    56,347 
          
Asset retirement obligation   303,445    286,811 
Total liabilities   347,241    343,158 
          
Partners’ capital   954,190    1,170,650 
          
Total liabilities and partners’ capital  $1,301,431   $1,513,808 

 

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

 

 3 

 

 

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

 

CONDENSED STATEMENTS OF OPERATIONS
(Unaudited) 

 

  For the   For the
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2019  2018  2019  2018
Revenues:            
Oil sales  $123,421   $140,908   $452,872   $484,544 
Gas sales   45,791    135,559    247,395    392,474 
Total revenues   169,212    276,467    700,267    877,018 
                    
Expenses:                    
Lease operating expense   99,138    88,259    282,939    301,758 
Production taxes   11,876    16,938    48,819    60,413 
Administrative and general expense   13,424    14,338    63,906    68,415 
Depreciation, depletion, and amortization   13,300    21,607    51,321    63,888 
Asset retirement obligation accretion   4,572    4,224    13,671    12,672 
Total expenses   142,310    145,366    460,656    507,146 
                    
Net income  $26,902   $131,101   $239,611   $369,872 

 

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

 

 4 

 

 

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

 

CONDENSED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL
For the nine months ended September 30, 2019
(Unaudited) 

 

  Partners’ Capital
     
Balance at December 31, 2018  $1,170,650 
     
Cash distributions   (456,071)
Net income   239,611 
     
Balance at September 30, 2019  $954,190 

  

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

 

 5 

 

 

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

 

CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) 

 

  Nine Months Ended
  September 30,
  2019  2018
Cash flows from operating activities:          
Net income  $239,611   $369,872 
Adjustments to reconcile net income to net cash          
  provided by operating activities:          
Depreciation, depletion, and amortization   51,321    63,888 
Asset retirement obligation accretion   13,671    12,672 
Changes in operating assets and liabilities:          
Accounts receivable, affiliate   46,333    42,456 
Prepaid state taxes   (1,841)   (1,969)
Accounts payable, affiliate   (12,551)   (8,800)
Net cash provided by operating activities   336,544    478,119 
          
Cash flows from investing activities:          
Proceeds from sale of oil and gas properties   139,406    —   
Development of oil and gas properties   (7,423)   (3,013)
Net cash provided by (used in) investing activities   131,983    (3,013)
          
Cash flows from financing activities:          
Cash distributions to partners   (456,071)   (474,090)
Net cash used in financing activities   (456,071)   (474,090)
          
Net increase in cash   12,456    1,016 
Cash, beginning of period   6,713    1,967 
          
Cash, end of period  $19,169   $2,983 
          
Supplemental Cash Flow Information:          
Change to net oil & gas properties related to asset          
 retirement obligation liabilities  $2,963   $407 

 

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

 

 6 

 

 

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

 

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

1.       Description of Business

 

Mewbourne Energy Partners 05-A, L.P. (the “Registrant” or the “Partnership”), a Delaware limited partnership, is engaged primarily in oil and gas development and production in Texas, Oklahoma, and New Mexico, and was organized on February 14, 2005. The offering of limited and general partnership interests began June 1, 2005 as a part of an offering registered under the name Mewbourne Energy Partners 04-05 Drilling Program, (the “Program”), and concluded July 29, 2005, with total investor contributions of $30,000,000 originally being sold to 1,128 subscribers of which $26,844,000 were sold to 998 subscribers as general partner interests and $3,156,000 were sold to 130 subscribers as limited partner interests. During 2007, all general partner equity interests were converted to limited partner equity interests. In accordance with the laws of the State of Delaware, Mewbourne Development Corporation (“MD”), a Delaware Corporation, has been appointed as the Partnership’s managing general partner. MD has no significant equity interest in the Partnership.

 

2.       Summary of Significant Accounting Policies

 

Reference is hereby made to the Registrant’s Annual Report on Form 10-K for 2018, 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. In preparing these financial statements, the Partnership has evaluated subsequent events for potential recognition and disclosure through the date the financial statements were issued.

 

Full Cost Accounting

 

The Partnership follows the full-cost method of accounting for its oil and gas activities. Under the full-cost method, all productive and non-productive 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 September 30, 2019 and 2018, all capitalized costs were subject to amortization. Proceeds from the sale or other disposition of properties are credited to the full cost pool. Gains and losses 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 quarterly ceiling test that limits such costs to the aggregate of the present value of estimated future net cash flows of proved reserves, computed using the 12-month unweighted average of first-day-of-the-month oil and natural gas prices, discounted at 10%, and the lower of cost or fair value of unproved properties. If unamortized costs capitalized exceed the ceiling, the excess is charged to expense in the period the excess occurs. There were no cost ceiling write-downs for the nine months ended September 30, 2019 or 2018.

 

In the third quarter of 2019, the Partnership received $138,600 in sales proceeds from the sale of a leasehold prospect to Devon Energy. Due to immateriality, these sales proceeds were recorded as an adjustment to the full cost pool and no gain or loss was recognized.

 7 

 

 

Recent Accounting Developments

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases.” ASU 2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases currently classified as operating leases and makes certain changes to the way lease expenses are accounted for. This update is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This update should be applied using a modified retrospective approach, and early adoption is permitted. In January 2018, the FASB issued ASU 2018-01, which permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expire before the Partnership’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. The Partnership adopted the new standard on the effective date of January 1, 2019. As the Partnership has no leases, this standard had no impact on its financial statements.

 

3.       Asset Retirement Obligations

 

The Partnership has recognized an estimated asset retirement obligation liability (“ARO”) for future plugging and abandonment costs. 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. Depletion 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. 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.

 

A reconciliation of the Partnership’s liability for well plugging and abandonment costs for the nine months ended September 30, 2019 and the year ended December 31, 2018 is as follows:

 

   2019  2018
Balance, beginning of period  $286,811   $269,035 
Liabilities incurred   2,963    873 
Accretion expense   13,671    16,903 
Balance, end of period  $303,445   $286,811 

 

4.       Oil and Gas Sales

 

The Partnership’s oil and condensate production is sold and revenue recognized at or near the Partnership’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 Partnership’s interest are recorded as revenue when the gas is metered and title transferred pursuant to the gas sales contracts covering the Partnership’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.

 

 8 

 

 

Substantially all the Partnership’s accounts receivable result from oil and natural gas sales to third parties in the oil and natural gas industry. This concentration of customers may impact the Partnership’s overall credit risk in that these entities may be similarly affected by changes in economic and other conditions. Historically, the Partnership has not experienced significant credit losses on such receivables. No bad debt expense was recorded for the nine months ended September 30, 2019 or 2018. The Partnership cannot ensure that such losses will not occur in the future.

 

The Partnership has only non-operated working interests in oil and gas wells and receives monthly net revenue checks from the operator of these oil and gas wells. It recognizes revenue for oil and condensate when control transfers to the purchaser at a contractually specified delivery point at or near the wellhead at prevailing prices in accordance with arrangements which are customary in the oil and gas industry. Sales of gas applicable to the Partnership’s interest are recorded as revenue when the gas is metered and control is transferred pursuant to the gas sales contracts covering the Partnership’s interest in gas reserves.

The Partnership has reviewed its partnership, joint operating and marketing agreements as they relate to its non-operated working interests and this ASU, which includes provisions regarding revenues and expenses under a gross-versus-net presentation as it relates to principal vs agent relationship and has evaluated the impact on the presentation of its revenues and expenses under this gross-versus-net presentation guidance. Based on its review of how information about revenue has been presented for other purposes, including disclosures presented outside the financial statements and information used by management for evaluating performance operations, the appropriate categories for the disaggregation of revenue are oil and gas sales, as presented in the Partnership’s financial statements and related disclosures.

 

Disaggregation of Revenue

 

The Partnership has identified two material revenue streams in its business: oil sales and natural gas sales. Revenue attributable to each of the Partnership’s identified revenue streams is disaggregated in the Condensed Statements of Operations.

 

Principal versus agent

 

In the case of the non-operating agreements, the operator is responsible for providing the goods due to its contractual obligations with the purchaser. Based on the joint operating and marketing agreement arrangements between the Partnership and operator, the Partnership does not take title to the product prior to the operator’s ultimate sale to a customer. The operator is responsible for fulfilling promises to provide specified goods and remitting proceeds back to the Partnership for the Partnership’s proportionate share of the total product sold. MOC, rather than the Partnership, is primarily responsible for fulfilling promises to provide specified goods. MOC, as the operator, enters into the sales contract with the third-party customers and directs all activities from the wellhead to the delivery point that make the commodity available to the customer; there is no agreement between the Partnership and the customers. In the event a production delay occurs because of, for example, well-equipment failure, MOC is responsible for correcting the issues preventing fulfillment of its promises to deliver product to its customers.

 

 9 

 

 

Transaction price allocated to remaining performance obligations

 

For the Partnership’s product sales, the Partnership has utilized the practical expedient in ASC 606 that states that it is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the operator’s sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.

 

Contract balances

 

Under the Partnership’s joint operating and marketing agreements, the Partnership is entitled to consideration as production occurs at the wellhead and the value of such consideration is an estimate. Final amounts are only determined upon sale by the operator to the ultimate third-party customer, and recorded in “Accounts receivable, affiliate” in its balance sheet.

 

Sale of Leasehold

 

In the third quarter of 2019, the Partnership received $138,600 in sales proceeds from the sale of a leasehold prospect to Devon Energy. Under the full cost method, all oil and gas properties in each country are combined into a common pool. Conceptually, each property loses its separate identity, and sales and abandonments of properties are generally treated as adjustments of capitalized costs with no gains or losses recognized unless material to reserves or to the rate of depletion. Due to immateriality, these sales proceeds were recorded as an adjustment to the full cost pool and no gain or loss was recognized.

5.       Related Party Transactions

 

In accordance with the laws of the State of Delaware, MD has been appointed as the Partnership’s managing general partner. MD has no significant equity interest in the Partnership. Mewbourne Oil Company (“MOC”) is operator of oil and gas properties owned by the Partnership. Mewbourne Holdings, Inc. is the parent of both MD and MOC. Substantially all transactions are with MD and MOC.

 

In the ordinary course of business, MOC will incur certain costs that will be passed on to owners of the well for which the costs were incurred. The Partnership will receive their portion of these costs based upon their ownership in each well incurring the costs. These costs are referred to as operator charges and are standard and customary in the oil and gas industry. Operator charges include recovery of gas marketing costs, fixed rate overhead, supervision, pumping, and equipment furnished by the operator, some of which will be included in the full cost pool pursuant to Rule 4-10(c)(2) of Regulation S-X. Services and operator charges are billed in accordance with the program and partnership agreements.

 

In accordance with the Partnership agreement, during any calendar year the total amount of administrative expenses allocated to the Partnership by MOC 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.

 

 10 

 

 

The Partnership participates in oil and gas activities through the Program. The Partnership and MD are the parties to the Program, and the costs and revenues are allocated between them as follows:

 

  Partnership  MD (1)
Revenues:      
Proceeds from disposition of depreciable and depletable properties   70%   30%
All other revenues   70%   30%
           
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   70%   30%

 

(1)As noted above, pursuant to the Program, MD must contribute 100% of organization and offering costs and lease acquisition costs which should approximate 20% of total capital costs. To the extent that organization and offering costs and lease acquisition costs are less than 20% of total capital costs, MD is responsible for tangible drilling costs until its share of the Program’s total capital costs reaches approximately 20%. The Partnership’s financial statements reflect its respective proportionate interest in the Program.

 

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Liquidity and Capital Resources

 

Mewbourne Energy Partners 05-A, L.P. was formed February 14, 2005. The offering of limited and general partnership interests began June 1, 2005 and concluded July 29, 2005, with total investor contributions of $30,000,000. During 2007, all general partner equity interests were converted to limited partner equity interests.

 

Future capital requirements and operations will be conducted with available funds generated from oil and gas activities. No bank borrowing is anticipated. The Partnership had net working capital of $104,492 at September 30, 2019.

 

During the nine months ended September 30, 2019, the Partnership made cash distributions to the investor partners (including state tax payments for the benefit of investor partners) in the amount of $456,071 as compared to $474,090 for the nine months ended September 30, 2018. Since inception, the Partnership has made distributions of $31,200,402, inclusive of state tax payments.

 

The sale of crude oil and natural gas produced by the Partnership will be affected by a number of factors that 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.

 

 11 

 

 

Results of Operations

 

For the three months ended September 30, 2019 as compared to the three months ended September 30, 2018:

 

  Three Months Ended September 30,
  2019  2018
Oil sales  $123,421   $140,908 
Barrels produced   2,343    2,439 
Average price/bbl  $52.68   $57.77 
           
Gas sales  $45,791   $135,559 
Mcf produced   41,588    51,569 
Average price/mcf  $1.10   $2.63 

 

Oil and gas revenues. As shown in the above table, total oil and gas sales fell by $107,255, a 38.8% decrease, for the three months ended September 30, 2019 as compared to the three months ended September 30, 2018.

 

Of this decrease, $12,430 and $78,778 were due to decreases in the average prices of oil and gas sold, respectively. The average prices fell to $52.68 from $57.77 per barrel (bbl) and to $1.10 from $2.63 per thousand cubic feet (mcf) for the three months ended September 30, 2019 as compared to the three months ended September 30, 2018.

 

Also contributing to the lower revenue were $5,057 and $10,990 from decreases in the volumes of oil and gas sold, respectively, by 96 bbls and 9,981 mcf for the three months ended September 30, 2019 as compared to the three months ended September 30, 2018.

 

Lease operations. Lease operating expense during the three months ended September 30, 2019 increased to $99,138 from $88,259 for the three months ended September 30, 2018 due to more well repairs and workovers and overhead.

 

Production taxes. Production taxes decreased to $11,876 for the three months ended September 30, 2019 from $16,938 for the three months ended September 30, 2018. This was due to lower overall oil and gas revenue.

 

Administrative and general expense. Administrative and general expense for the three months ended September 30, 2019 fell to $13,424 from $14,338 for the three months ended September 30, 2018 due to decreased administrative expenses allocable to the Partnership.

 

Depreciation, depletion and amortization. Depreciation, depletion and amortization for the three months ended September 30, 2019 decreased to $13,300 from $21,607 for the three months ended September 30, 2018 due to the overall decline in production and to the reduction of the full cost pool by $138,600 from the sale of a leasehold prospect. Due to immateriality, these sales proceeds were recorded as a reduction to the full cost pool in accordance with the full cost method of accounting.

 

 12 

 

 

Results of Operations

 

For the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018:

 

  Nine Months Ended September 30,
  2019  2018
Oil sales  $452,872   $484,544 
Barrels produced   8,784    8,229 
Average price/bbl  $51.56   $58.88 
           
Gas sales  $247,395   $392,474 
Mcf produced   141,602    152,756 
Average price/mcf  $1.75   $2.57 

 

Oil and gas revenues. As shown in the above table, total oil and gas sales fell by $176,751, a 20.2% decrease, for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.

 

Of this decrease, $60,286 and $125,592 were due to decreases in the average prices of oil and gas sold, respectively. The average prices fell to $51.56 from $58.88 per barrel (bbl) and to $1.75 from $2.57 per thousand cubic feet (mcf) for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.

 

Also contributing to the lower revenue was $19,487 from a decrease in the volume of gas sold by 11,154 mcf for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018.

 

Partially offsetting the lower revenue was $28,614 from an increase in the volume of oil sold by 555 bbls for the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018. This increase was principally due to farmout reversions.

 

Lease operations. Lease operating expense during the nine months ended September 30, 2019 decreased to $282,939 from $301,758 for the nine months ended September 30, 2018 due to fewer well repairs and workovers and overhead.

 

Production taxes. Production taxes decreased to $48,819 for the nine months ended September 30, 2019 from $60,413 for the nine months ended September 30, 2018. This was due to lower overall oil and gas revenue.

 

Administrative and general expense. Administrative and general expense for the nine months ended September 30, 2019 fell to $63,906 from $68,415 for the nine months ended September 30, 2018 due to decreased administrative expenses allocable to the Partnership.

 

Depreciation, depletion and amortization. Depreciation, depletion and amortization for the nine months ended September 30, 2019 decreased to $51,321 from $63,888 for the nine months ended September 30, 2018 due to the overall decline in production and to the reduction of the full cost pool by $138,600 from the sale of a leasehold prospect. Due to immateriality, these sales proceeds were recorded as a reduction to the full cost pool in accordance with the full cost method of accounting.

 

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Item 3.Quantitative and Qualitative Disclosures about Market Risk

 

1. Interest Rate Risk

 

The Partnership Agreement allows borrowings from banks or other financial sources of up to 20% of the total capital contributions to the Partnership without investor approval. Should the Partnership elect to borrow monies for additional development activity on Partnership properties, it will be subject to the interest rate risk inherent in borrowing activities. Changes in interest rates could significantly affect the Partnership’s results of operations and the amount of net cash flow available for partner distributions. Also, to the extent that changes in interest rates affect general economic conditions, the Partnership will be affected by such changes.

 

2. Commodity Price Risk

 

The Partnership does not expect to engage in commodity futures trading or hedging activities or enter into derivative financial instrument transactions for trading or other speculative purposes.  The Partnership currently expects to sell a significant amount of its production from successful oil and gas wells on a month-to-month basis at market prices. Accordingly, the Partnership is at risk for the volatility in commodity prices inherent in the oil and gas industry, and the level of commodity prices will have a significant impact on the Partnership’s results of operations. For the nine months ended September 30, 2019, a 10% change in the price received for oil and gas production would have had an approximate $70,000 impact on revenue.

 

3. Exchange Rate Risk

 

The Partnership currently has no income from foreign sources or operations in foreign countries that would subject it to currency exchange rate risk. The Partnership does not currently expect to purchase any prospects located outside of either the United States or United States coastal waters in the Gulf of Mexico.

 

Item 4.Disclosure Controls and Procedures

 

MD 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. MD’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of its disclosure controls and procedures with the assistance and participation of other members of management. Based upon that evaluation, MD’s Chief Executive Officer and Chief Financial Officer concluded that its 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. Since MD’s December 31, 2018 annual report on internal control over financial reporting, and for the quarter ended September 30, 2019, there have been no changes in MD’s internal controls or in other factors which have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.

 

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Part II –  Other Information

 

Item 1.Legal Proceedings

 

From time to time, the Registrant may be a party to certain legal actions and claims arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, the Partnership does not expect these matters to have a material effect on its financial position or results of operations.

 

 

Item 6.Exhibits and Reports on Form 8-K

 

(a) Exhibits filed herewith.
       
  31.1 Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
     
  31.2 Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
     
  32.1 Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
     
  32.2 Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
     
  101 The following materials from the Partnership’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Balance Sheets, (ii) the Condensed Statements of Operations, (iii) the Condensed Statement of Changes in Partners’ Capital, (iv) the Condensed Statements of Cash Flows, and (v) related notes.
     
(b) Reports on Form 8-K
   
  None.  
         

 

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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 05-A, L.P.

 

     
    By: Mewbourne Development Corporation
      Managing General Partner
       

Date:  November 14, 2019

     
    By: /s/ J. Roe Buckley
      J. Roe Buckley
      Chairman of the Board
      Executive Vice President
      Chief Financial Officer

 

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INDEX TO EXHIBITS

 

EXHIBIT

NUMBER

DESCRIPTION
   
31.1 Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
   
31.2 Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
   
32.1 Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
   
32.2 Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
   
101 The following materials from the Partnership’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Balance Sheets, (ii) the Condensed Statements of Operations, (iii) the Condensed Statement of Changes in Partners’ Capital, (iv) the Condensed Statements of Cash Flows, and (v) related notes.
   

 

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