10-Q

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, 2017

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)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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    ☐   (Do not check if a smaller reporting company)	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 1  -  Financial Information				Page No.
	Item 1.  Financial Statements
		Condensed Balance Sheets -		3
			September 30, 2017  (Unaudited) and December 31, 2016
		Condensed Statements of Operations (Unaudited) -		4
			For the three months ended September 30, 2017 and 2016
			and the nine months ended September 30, 2017 and 2016
		Condensed Statement of Changes In Partners' Capital (Unaudited) -		5
			For the nine months ended September 30, 2017
		Condensed Statements of Cash Flows (Unaudited) -		6
			For the nine months ended September 30, 2017 and 2016
		Notes to Condensed Financial Statements		7
	Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations			9
	Item 3.  Quantitative and Qualitative Disclosures about Market Risk			12
	Item 4.  Disclosure Controls and Procedures			12
Part II  -  Other Information
	Item 1.  Legal Proceedings			13
	Item 6.  Exhibits and Reports on Form 8-K			13

2 

MEWBOURNE ENERGY PARTNERS 05-A, L.P.

Part I - Financial Information

Item 1. Financial Statements

CONDENSED BALANCE SHEETS

	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Cash	$	20,689		$	14,000
Accounts receivable, affiliate		187,882			127,843
Prepaid state taxes		2,997			1,590
Total current assets		211,568			143,433
Oil and gas properties at cost, full-cost method		30,218,414			30,218,678
Less accumulated depreciation, depletion, amortization
and cost ceiling write-downs		(28,798,673	)		(28,726,708	)
		1,419,741			1,491,970
Total assets	$	1,631,309		$	1,635,403
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable, affiliate	$	42,619		$	39,166
Total current liabilities		42,619			39,166
Asset retirement obligation		265,105			256,573
Partners' capital		1,323,585			1,339,664
Total liabilities and partners' capital	$	1,631,309		$	1,635,403

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,
	2017		2016		2017		2016
Revenues:
Oil sales	$	105,061	$	52,570	$	261,394	$	195,910
Gas sales		157,006		117,834		467,718		289,911
Total revenues		262,067		170,404		729,112		485,821
Expenses:
Lease operating expense		49,011		66,955		229,824		288,316
Production taxes		20,508		10,610		51,362		30,130
Administrative and general expense		16,030		12,819		53,003		48,569
Depreciation, depletion, and amortization		23,200		27,433		68,992		103,716
Cost ceiling write-down		—		—		—		393,752
Asset retirement obligation accretion		3,930		3,745		11,863		11,354
Total expenses		112,679		121,562		415,044		875,837
Net income (loss)	$	149,388	$	48,842	$	314,068	$	(390,016	)

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, 2017

(Unaudited)

	Partners' Capital
Balance at December 31, 2016	$	1,339,664
Cash distributions		(330,147	)
Net income		314,068
Balance at September 30, 2017	$	1,323,585

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,
	2017			2016
Cash flows from operating activities:
Net income (loss)	$	314,068		$	(390,016	)
Adjustments to reconcile net income (loss) to net cash     provided by operating activities:
Depreciation, depletion, and amortization		68,992			103,716
Cost ceiling write-down		—			393,752
Asset retirement obligation accretion		11,863			11,354
Changes in operating assets and liabilities:
Accounts receivable, affiliate		(60,039	)		(25,862	)
Prepaid state taxes		(1,407	)		(2,741	)
Accounts payable, affiliate		3,453			(21,868	)
Net cash provided by operating activities		336,930			68,335
Cash flows from investing activities:
Proceeds from sale of oil and gas properties		1,332			286
Purchase and development of oil and gas properties		(1,426	)		(3,802	)
Net cash used in investing activities		(94	)		(3,516	)
Cash flows from financing activities:
Cash distributions to partners		(330,147	)		(55,828	)
Net cash used in financing activities		(330,147	)		(55,828	)
Net increase in cash		6,689			8,991
Cash, beginning of period		14,000			24,287
Cash, end of period	$	20,689		$	33,278
Supplemental Cash Flow Information:
Change to net oil & gas properties related to asset retirement
obligation liabilities	$	(3,331	)	$	—

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 2016, 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.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance. The standard outlines a single comprehensive model for revenue recognition based on the core principle that an entity will recognize revenue when promised goods or services are transferred to clients, in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

We continue to evaluate the impact of the ASU on our accounting policies, internal controls, and financial statements and related disclosures. We only have non-operated working interests in oil and gas wells and receive monthly net revenue checks from the operator of the oil and gas wells in which we have working interests. We have reviewed our partnership, joint operating and marketing agreements as they relate to our non-operated working interests and this ASU. The ASU includes provisions regarding future revenues and expenses under a gross-versus-net presentation as it relates to principal vs agent relationship. We are evaluating the impact, if any, on the presentation of our future revenues and expenses under this gross-versus-net presentation guidance. Based upon our assessments performed to date, we do not expect the ASU to have a material effect on the timing of revenue recognition or our financial position, although our assessment, which we expect to complete during the fourth quarter, is still under evaluation. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to capital on the opening balance sheet. We will adopt the new standard on January 1, 2018, using the modified retrospective approach with a cumulative adjustment to capital as necessary.

7 

3.       Accounting for Oil and Gas Producing Activities

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, 2017 and 2016, 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 cost ceiling write-downs totaling $393,752 for the nine months ended September 30, 2016. There were no cost ceiling write-downs for the nine months ended September 30, 2017.

4.       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. 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. 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, 2017 and the year ended December 31, 2016 is as follows:

	2017			2016
Balance, beginning of period	$	256,573		$	240,334
Liabilities incurred		4,019			1,140
Liabilities reduced due to settlements		(7,350	)		—
Accretion expense		11,863			15,099
Balance, end of period	$	265,105		$	256,573

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.

8 

In accordance with the Partnership agreement, during any particular 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.

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 $168,949 at September 30, 2017.

During the nine months ended September 30, 2017, the Partnership made cash distributions to the investor partners (including state tax payments for the benefit of investor partners) in the amount of $330,147 as compared to $55,828 for the nine months ended September 30, 2016. Since inception, the Partnership has made distributions of $30,061,366, 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.

9 

Results of Operations

For the three months ended September 30, 2017 as compared to the three months ended September 30, 2016:

	Three Months Ended September 30,
	2017		2016
Oil sales	$	105,061	$	52,570
Barrels produced		2,425		1,002
Average price/bbl	$	43.32	$	52.47
Gas sales	$	157,006	$	117,834
Mcf produced		62,101		46,379
Average price/mcf	$	2.53	$	2.54

Oil and gas revenues. As shown in the above table, total oil and gas sales increased by $91,663, a 53.8% increase, for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.

Of this increase, $61,650 and $39,749 were due to increases in the volumes of oil and gas sold, respectively. The volumes of oil and gas sold rose by 1,423 barrels (bbls) and by 15,722 thousand cubic feet (mcf) for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016. The increases in volumes sold were due to 2017 well payouts from farmouts.

Partially offsetting these increases were decreases of $9,159 and $577 from declines in the average prices of oil and gas sold, respectively. The average prices fell to $43.32 from $52.47 per bbl and to $2.53 from $2.54 per mcf for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.

Lease operations. Lease operating expense during the three month period ended September 30, 2017 decreased to $49,011 from $66,955 for the three month period ended September 30, 2016 due to fewer well repairs and workovers and lower pumping expenses and overhead.

Production taxes. Production taxes during the three month period ended September 30, 2017 increased to $20,508 from $10,610 for the three month period ended September 30, 2016. This was due to higher overall oil and gas revenue for the three month period ended September 30, 2017.

Administrative and general expense. Administrative and general expense for the three month period ended September 30, 2017 rose to $16,030 from $12,819 for the three month period ended September 30, 2016 due to increased administrative expenses allocable to the Partnership and higher reporting and legal costs.

Depreciation, depletion and amortization. Depreciation, depletion and amortization for the three months ended September 30, 2017 decreased to $23,200 from $27,433 for the three months ended September 30, 2016 due to the prior period cost ceiling write-downs that reduced the balance of the full cost pool subject to amortization. This decrease was partially offset by an incline in production.

10 

Results of Operations

For the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016:

	Nine Months Ended September 30,
	2017		2016
Oil sales	$	261,394	$	195,910
Barrels produced		5,850		4,884
Average price/bbl	$	44.68	$	40.11
Gas sales	$	467,718	$	289,911
Mcf produced		173,631		141,853
Average price/mcf	$	2.69	$	2.04

Oil and gas revenues. As shown in the above table, total oil and gas sales increased by $243,291, a 50.1% increase, for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

Of this increase, $22,320 and $92,205 were due to increases in the average prices of oil and gas sold, respectively. The average price rose to $44.68 from $40.11 per barrel (bbl) and to $2.69 from $2.04 per thousand cubic feet (mcf) for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

Also contributing to the increased revenue were $43,164 and $85,602 from increases in the volumes of oil and gas sold, respectively. The volumes rose by 966 bbls and 31,778 mcf in the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The increases in volumes sold were due to 2017 well payouts from farmouts.

Lease operations. Lease operating expense during the nine month period ended September 30, 2017 decreased to $229,824 from $288,316 for the nine month period ended September 30, 2016 due to fewer well repairs and workovers and lower pumping expenses and overhead.

Production taxes. Production taxes during the nine month period ended September 30, 2017 increased to $51,362 from $30,130 for the nine month period ended September 30, 2016. This was due to higher overall oil and gas revenue for the nine month period ended September 30, 2017.

Administrative and general expense. Administrative and general expense for the nine month period ended September 30, 2017 rose to $53,003 from $48,569 for the nine month period ended September 30, 2016 due to increased administrative expenses allocable to the Partnership.

Depreciation, depletion and amortization. Depreciation, depletion and amortization for the nine months ended September 30, 2017 decreased to $68,992 from $103,716 for the nine months ended September 30, 2016 due to the prior period cost ceiling write-downs that reduced the balance of the full cost pool subject to amortization. This decrease was partially offset by an incline in production.

Cost ceiling write-down. There were cost ceiling write-downs totaling $393,752 for the nine months ended September 30, 2016. These were due to lower average oil and gas prices for the twelve months preceding the write-downs. There were no cost ceiling write-downs for the nine months ended September 30, 2017.

11 

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, 2017, a 10% change in the price received for oil and gas production would have had an approximate $73,000 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, 2016 annual report on internal control over financial reporting, and for the quarter ended September 30, 2017, 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.

12 

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, 2017 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.

13 

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, 2017

By:	/s/ Alan Clark
	Alan Clark, Treasurer and Controller

14 

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, 2017 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.

15 

EX-31.1

Mewbourne Energy Partners 05-A, L.P. 10-Q

EXHIBIT 31.1

CERTIFICATIONS

I, Ken Waits certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Mewbourne Energy Partners 05-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-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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 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 control over financial reporting.

Date:      November 14, 2017

/s/ Ken Waits

Ken Waits

Chief Executive Officer

Mewbourne Development Corporation

Managing General Partner of the Registrant

EX-31.2

Mewbourne Energy Partners 05-A, L.P. 10-Q

EXHIBIT 31.2

CERTIFICATIONS

I, J. Roe Buckley certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Mewbourne Energy Partners 05-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-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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 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 control over financial reporting.

Date:      November 14, 2017

/s/ J. Roe Buckley

J. Roe Buckley

Chairman of the Board

Executive Vice President

Chief Financial Officer

Mewbourne Development Corporation

Managing General Partner of the Registrant

EX-32.1

Mewbourne Energy Partners 05-A, L.P. 10-Q

EXHIBIT 32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Mewbourne Energy Partners 05-A, L.P. (the “Registrant”) on Form 10-Q for the three months ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report), the undersigned hereby certifies, in the capacity as indicated below and 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, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

Date:      November 14, 2017

/s/ Ken Waits

Ken Waits

Chief Executive Officer

Mewbourne Development Corporation

Managing General Partner of the Registrant

EX-32.2

Mewbourne Energy Partners 05-A, L.P. 10-Q

EXHIBIT 32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Mewbourne Energy Partners 05-A, L.P. (the “Registrant”) on Form 10-Q for the three months ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report), the undersigned hereby certifies, in the capacity as indicated below and 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, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Registrant.

Date:      November 14, 2017

/s/ J. Roe Buckley

J. Roe Buckley

Chairman of the Board

Executive Vice President

Chief Financial Officer

Mewbourne Development Corporation

Managing General Partner of the Registrant

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2017
Document And Entity Information
Entity Central Index Key	0001282723
Entity Registrant Name	MEWBOURNE ENERGY PARTNERS 05-A LP
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Filer Category	Smaller Reporting Company
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2017

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CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Cash	$ 20,689	$ 14,000
Accounts receivable, affiliate	187,882	127,843
Prepaid state taxes	2,997	1,590
Total current assets	211,568	143,433
Oil and gas properties at cost, full-cost method	30,218,414	30,218,678
Less accumulated depreciation, depletion, amortization and cost ceiling write-downs	(28,798,673)	(28,726,708)
Net oil and gas properties at cost, full-cost method	1,419,741	1,491,970
Total assets	1,631,309	1,635,403
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable, affiliate	42,619	39,166
Total current liabilities	42,619	39,166
Asset retirement obligation	265,105	256,573
Partners' capital	1,323,585	1,339,664
Total liabilities and partners' capital	$ 1,631,309	$ 1,635,403

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CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Oil sales	$ 105,061	$ 52,570	$ 261,394	$ 195,910
Gas sales	157,006	117,834	467,718	289,911
Total revenues	262,067	170,404	729,112	485,821
Expenses:
Lease operating expense	49,011	66,955	229,824	288,316
Production taxes	20,508	10,610	51,362	30,130
Administrative and general expense	16,030	12,819	53,003	48,569
Depreciation, depletion, and amortization	23,200	27,433	68,992	103,716
Cost ceiling write-down				393,752
Asset retirement obligation accretion	3,930	3,745	11,863	11,354
Total expenses	112,679	121,562	415,044	875,837
Net income (loss)	$ 149,388	$ 48,842	$ 314,068	$ (390,016)

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CONDENSED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited) - 9 months ended Sep. 30, 2017	Partners' Capital USD ($)
Balance, beginning at Dec. 31, 2016	$ 1,339,664
Cash distributions	(330,147)
Net income	314,068
Balance, ending at Sep. 30, 2017	$ 1,323,585

XML

CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net income (loss)	$ 314,068	$ (390,016)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, and amortization	68,992	103,716
Cost ceiling write-down		393,752
Asset retirement obligation accretion	11,863	11,354
Changes in operating assets and liabilities:
Accounts receivable, affiliate	(60,039)	(25,862)
Prepaid state taxes	(1,407)	(2,741)
Accounts payable, affiliate	3,453	(21,868)
Net cash provided by operating activities	336,930	68,335
Cash flows from investing activities:
Proceeds from sale of oil and gas properties	1,332	286
Purchase and development of oil and gas properties	(1,426)	(3,802)
Net cash used in investing activities	(94)	(3,516)
Cash flows from financing activities:
Cash distributions to partners	(330,147)	(55,828)
Net cash used in financing activities	(330,147)	(55,828)
Net increase in cash	6,689	8,991
Cash, beginning of period	14,000	24,287
Cash, end of period	20,689	$ 33,278
Supplemental Cash Flow Information:
Change to net oil & gas properties related to asset retirement obligation liabilities	$ (3,331)

XML

Description of Business

9 Months Ended

Sep. 30, 2017

Description Of Business

Description of Business

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.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Summary Of Significant Accounting Policies

Summary of Significant Accounting Policies

2.       Summary of Significant Accounting Policies

Reference is hereby made to the Registrant’s Annual Report on Form 10-K for 2016, 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.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance. The standard outlines a single comprehensive model for revenue recognition based on the core principle that an entity will recognize revenue when promised goods or services are transferred to clients, in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

We continue to evaluate the impact of the ASU on our accounting policies, internal controls, and financial statements and related disclosures. We only have non-operated working interests in oil and gas wells and receive monthly net revenue checks from the operator of the oil and gas wells in which we have working interests. We have reviewed our partnership, joint operating and marketing agreements as they relate to our non-operated working interests and this ASU. The ASU includes provisions regarding future revenues and expenses under a gross-versus-net presentation as it relates to principal vs agent relationship. We are evaluating the impact, if any, on the presentation of our future revenues and expenses under this gross-versus-net presentation guidance. Based upon our assessments performed to date, we do not expect the ASU to have a material effect on the timing of revenue recognition or our financial position, although our assessment, which we expect to complete during the fourth quarter, is still under evaluation. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to capital on the opening balance sheet. We will adopt the new standard on January 1, 2018, using the modified retrospective approach with a cumulative adjustment to capital as necessary.

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Accounting for Oil and Gas Producing Activities

9 Months Ended

Sep. 30, 2017

Accounting For Oil And Gas Producing Activities

Accounting for Oil and Gas Producing Activities

3.       Accounting for Oil and Gas Producing Activities

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, 2017 and 2016, 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 cost ceiling write-downs totaling $393,752 for the nine months ended September 30, 2016. There were no cost ceiling write-downs for the nine months ended September 30, 2017.

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Asset Retirement Obligations

9 Months Ended

Sep. 30, 2017

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

4.       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. 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. 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, 2017 and the year ended December 31, 2016 is as follows:

	2017			2016
Balance, beginning of period	$	256,573		$	240,334
Liabilities incurred		4,019			1,140
Liabilities reduced due to settlements		(7,350	)		—
Accretion expense		11,863			15,099
Balance, end of period	$	265,105		$	256,573

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Related Party Transactions

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

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 particular 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.

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.

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Asset Retirement Obligations (Tables)

9 Months Ended

Sep. 30, 2017

Asset Retirement Obligation [Abstract]

A reconciliation of the Partnership's liability for well plugging and abandonment costs

A reconciliation of the Partnership’s liability for well plugging and abandonment costs for the nine months ended September 30, 2017 and the year ended December 31, 2016 is as follows:

	2017			2016
Balance, beginning of period	$	256,573		$	240,334
Liabilities incurred		4,019			1,140
Liabilities reduced due to settlements		(7,350	)		—
Accretion expense		11,863			15,099
Balance, end of period	$	265,105		$	256,573

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Costs and revenues allocated between Partnership and MD

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.

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Description of Business (Details Narrative)	2 Months Ended
	Jul. 29, 2005 USD ($)
Description Of Business Details Narrative
Investor contributions, total	$ 30,000,000
Subscribers, total	1,128
General Partners investor contributions	$ 26,844,000
General partner interests	998
Limited Partners investor contributions	$ 3,156,000
Limited Partner interests	130

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Accounting for Oil and Gas Producing Activities (Details Narrative)	9 Months Ended
	Sep. 30, 2017
Accounting For Oil And Gas Producing Activities Details Narrative
Discount rate of future cash flows	10.00%

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Asset Retirement Obligation (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Partnership's liability for well plugging and abandonment costs
Balance, beginning of period	$ 256,573	$ 240,334
Liabilities incurred	4,019	1,140
Liabilities reduced to settlements	(7,350)
Accretion expense	11,863	15,099
Balance, end of period	$ 265,105	$ 256,573

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Related Party Transactions (Details Narrative)

9 Months Ended

Sep. 30, 2017

USD ($)

Related Party Transactions [Abstract]

Description of management control

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. 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.

Description of allocated administrative expenses

In accordance with the Partnership agreement, during any particular 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.

Percentage of Partnership's gross revenue from sale of oil and gas

3.50%

Amount of administrative fees allocated

$ 50,000

Percentage of capital contributions of limited and general partners

0.25%

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Related Party Transactions (Details)	9 Months Ended
	Sep. 30, 2017
Revenues:
Proceeds from disposition of depreciable and depletable properties	70.00%
All other revenues	70.00%
Costs and expenses:
Organization and offering costs	0.00%	[1]
Lease acquisition costs	0.00%	[1]
Tangible and intangible drilling costs	100.00%	[1]
Operating costs, reporting and legal expenses, general and administrative expenses and all other costs	70.00%
Mewbourne Development Corporation [Member]
Revenues:
Proceeds from disposition of depreciable and depletable properties	30.00%
All other revenues	30.00%
Costs and expenses:
Organization and offering costs	100.00%	[1]
Lease acquisition costs	100.00%	[1]
Tangible and intangible drilling costs	0.00%	[1]
Operating costs, reporting and legal expenses, general and administrative expenses and all other costs	30.00%
Total capital costs, (percent)	20.00%

[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.