10-Q 1 d08399e10vq.txt FORM 10-Q 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 June 30, 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. 333-76911 MEWBOURNE ENERGY PARTNERS 00-A, L.P. Delaware 75-2866283 ---------------------------------------- ---------------------- (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 MEWBOURNE ENERGY PARTNERS 00-A, L. P. INDEX

2 MEWBOURNE ENERGY PARTNERS 00-A, L. P. Part I - Financial Information Item 1. Financial Statements BALANCE SHEETS June 30, 2003 and December 31, 2002

The accompanying notes are an integral part of the financial statements. 3 MEWBOURNE ENERGY PARTNERS 00-A, L. P. STATEMENTS OF INCOME For the three months ended June 30, 2003 and 2002, and the six months ended June 30, 2003 and 2002 (Unaudited)

The accompanying notes are an integral part of the financial statements. 4 MEWBOURNE ENERGY PARTNERS 00-A, L. P. STATEMENTS OF CASH FLOWS For the six months ended June 30, 2003 and 2002 (Unaudited)

The accompanying notes are an integral part of the financial statements. 5 MEWBOURNE ENERGY PARTNERS 00-A, L. P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL For the six months ended June 30, 2003 (Unaudited)

The accompanying notes are an integral part of the financial statements. 6 MEWBOURNE ENERGY PARTNERS 00-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 00-A, L.P., (the "Partnership"), a Delaware limited partnership formed on February 15, 2000, is engaged primarily in oil and gas development and production in Texas, Oklahoma, New Mexico, and Kansas. The offering of limited and general partnership interests began May 5, 2000 as a part of an offering registered under the name Mewbourne Energy Partners 99-00 Drilling Programs and concluded October 31, 2000, with total investor contributions of $10,000,000. The 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 June 30, 2003 and June 30, 2002 substantially all capitalized costs were subject to 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. A liability for the estimated fair value of the future plugging and abandonment costs is 7 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 $174,713, increased the net full cost pool by $216,505 and recognized a one-time cumulative effect adjustment of $(41,791). The increase in the net full cost pool included $148,744 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 six months ended June 30, 2003, is as follows: Balance upon adoption at January 1, 2003 $174,713 Accretion expense 3,712 -------- Balance at June 30, 2003 $178,425 --------

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 00-A, L.P. (the "Partnership")was formed February 15, 2000. The offering of limited and general partnership interests began on May 5, 2000 and concluded on October 31, 2000, with investor partner contributions of $10,000,000. The Partnership has acquired interests in oil and gas prospects for the purpose of development drilling. The Partnership participated in the drilling of 32 wells. 30 wells were productive and 2 wells were abandoned. Of the 30 productive wells, 27 were producing and 3 were plugged and abandoned at June 30, 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 at June 30, 2003 of $471,690. During the six months ended June 30, 2003, the Partnership made cash distributions to the investor partners in the amount of $1,074,690 as compared to $795,995 for the six months ended June 30, 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 June 30, 2003 as compared to the three months ended June 30, 2002. Oil and gas revenues. Oil and gas revenues during the three months ended June 30, 2003 totaled $664,510. Production volumes during the period were approximately 5,726 bbls of oil and 95,839 mcf of gas at corresponding average realized prices of $27.81 per bbl of oil and $5.27 per mcf of gas. Oil and gas revenues during the three months ended June 30, 2002 totaled $545,929. Production volumes during the period were approximately 732 bbls of oil and 164,891 mcf of gas at corresponding average realized prices of $25.86 per bbl of oil and $3.20 per mcf of gas. Oil and gas revenues increased primarily due to the increase in oil production volumes and increased oil and gas prices. The increased oil production volumes were attributable to the addition of 2 New Mexico wells. Interest Income. Interest income was $255 during the three month period ended June 30, 2003 as compared to $1,306 during the three months ended June 30, 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 June 30, 2003 totaled $61,895 compared to $123,504 for the period ended June 30, 2002. Production taxes during the period ended June 30, 2003 totaled $51,573 compared to $41,616 for the period ended June 30, 2002. Lease operating expense decreased primarily due to the workover operations on two wells in 2002 compared to no workover operations in 2003. Production taxes increased due to increased oil and gas revenues in 2003. 9 Depreciation, depletion, and amortization. Depreciation, depletion, and amortization of $156,800 for the three month period ended June 30, 2003 was comparative to depreciation, depletion, and amortization of $180,360 for the three month period ended June 30, 2002. Administrative and general expense. Administrative and general expense for the three month period ended June 30, 2003 totaled $40,592 compared to $16,114 for the period ended June 30, 2002. The increase is primarily due to the increase in oil and gas revenues. Six months ended June 30, 2003 as compared to the six months ended June 30, 2002. Oil and gas revenues. Oil and gas revenues during the six months ended June 30, 2003 totaled $1,573,306. Production volumes during the period were approximately 13,353 bbls of oil and 196,730 mcf of gas at corresponding average realized prices of $31.24 per bbl of oil and $5.88 per mcf of gas. Oil and gas revenues during the six months ended June 30, 2002 totaled $879,852. Production volumes during the period were approximately 1,693 bbls of oil and 319,088 mcf of gas at corresponding average realized prices of $21.37 per bbl of oil and $2.64 per mcf of gas. Oil and gas revenues increased primarily due to the increase in oil production volumes and increased oil and gas prices. The increased oil production volumes were attributable to the addition of 2 New Mexico wells. Interest Income. Interest income was $395 during the six month period ended June 30, 2003 as compared to $3,514 during the six months ended June 30, 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 June 30, 2003 totaled $123,930 compared to $224,004 for the period ended June 30, 2002. Production taxes during the period ended June 30, 2003 totaled $125,768 compared to $66,117 for the period ended June 30, 2002. Lease operating expense decreased primarily due to the workover operations on two wells in 2002 compared to no workover operations in 2003. Production taxes increased due to increased oil and gas revenues in 2003. Depreciation, depletion, and amortization. Depreciation, depletion, and amortization of $311,612 for the six month period ended June 30, 2003 was comparative to depreciation, depletion, and amortization of $343,812 for the six month period ended June 30, 2002. Administrative and general expense. Administrative and general expense for the six month period ended June 30, 2003 totaled $69,892 compared to $39,736 for the period ended June 30, 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 $174,713, increased the net full cost pool by $216,505 and recognized a one-time cumulative effect adjustment of $(41,791). The increase in the net full cost pool included $148,744 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. 10 A reconciliation of the Partnership's liability for well plugging and abandonment costs for the six months ended June 30, 2003, is as follows: Balance upon adoption at January 1, 2003 $174,713 Accretion expense 3,712 -------- Balance at June 30, 2003 $178,425 --------

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. 11 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 Exhibit Number Description 31.1 Certification of Principal Executive Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. 31.2 Certification of Principal Financial Officer Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. 32.1 Certification of Principal Executive Officer Required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Principal Financial Officer Required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 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 - none 12 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 00-A, L.P. By: Mewbourne Development Corporation Managing General Partner Date: August 13, 2003 By: /s/ Alan Clark ------------------------------------- Alan Clark, Treasurer 13

MEWBOURNE ENERGY PARTNERS 00-A LP 10-Q