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. 000-54370

MEWBOURNE ENERGY PARTNERS 10-A, L.P.

Delaware	27-1903816
(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 10-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 10-A, L.P.

Part I - Financial Information

Item 1. Financial Statements

CONDENSED BALANCE SHEETS

	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Cash	$	15,377		$	7,860
Accounts receivable, affiliate		422,045			430,934
Prepaid state taxes		8,605			5,118
Total current assets		446,027			443,912
Oil and gas properties at cost, full-cost method		69,468,951			69,462,837
Less accumulated depreciation, depletion, amortization
and cost ceiling write-downs		(64,125,294	)		(63,878,364	)
		5,343,657			5,584,473
Total assets	$	5,789,684		$	6,028,385
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable, affiliate	$	104,526		$	106,813
Total current liabilities		104,526			106,813
Asset retirement obligation		854,946			834,771
Partners' capital		4,830,212			5,086,801
Total liabilities and partners' capital	$	5,789,684		$	6,028,385

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

3 

MEWBOURNE ENERGY PARTNERS 10-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	$	299,896	$	284,847	$	1,048,406	$	890,598
Gas sales		287,627		258,871		893,501		670,906
Total revenues		587,523		543,718		1,941,907		1,561,504
Expenses:
Lease operating expense		185,463		231,260		616,808		762,352
Production taxes		33,893		30,613		113,862		89,695
Administrative and general expense		32,862		30,937		122,455		121,161
Depreciation, depletion, and amortization		80,431		110,021		260,711		399,715
Cost ceiling write-down		—		—		—		1,617,571
Asset retirement obligation accretion		8,808		8,495		26,497		25,509
Total expenses		341,457		411,326		1,140,333		3,016,003
Net income (loss)	$	246,066	$	132,392	$	801,574	$	(1,454,499	)

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

4 

MEWBOURNE ENERGY PARTNERS 10-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	$	5,086,801
Cash distributions		(1,058,163	)
Net income		801,574
Balance at September 30, 2017	$	4,830,212

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

5 

MEWBOURNE ENERGY PARTNERS 10-A, L.P.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	September 30,
	2017			2016
Cash flows from operating activities:
Net income (loss)	$	801,574		$	(1,454,499	)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation, depletion, and amortization		260,711			399,715
Cost ceiling write-down		—			1,617,571
Asset retirement obligation accretion		26,497			25,509
Plugging and abandonment cost paid from asset retirement obligation		(15,905	)		—
Changes in operating assets and liabilities:
Accounts receivable, affiliate		8,889			(46,164	)
Prepaid state taxes		(3,487	)		(15,520	)
Accounts payable, affiliate		(2,287	)		(3,292	)
Net cash provided by operating activities		1,075,992			523,320
Cash flows from investing activities:
Proceeds from sale of oil and gas properties		806			947
Purchase and development of oil and gas properties		(11,118	)		(15,402	)
Net cash used in investing activities		(10,312	)		(14,455	)
Cash flows from financing activities:
Cash distributions to partners		(1,058,163	)		(526,013	)
Net cash used in financing activities		(1,058,163	)		(526,013	)
Net increase (decrease) in cash		7,517			(17,148	)
Cash, beginning of period		7,860			22,038
Cash, end of period	$	15,377		$	4,890
Supplemental Cash Flow Information:
Change to net oil & gas properties related to asset retirement
obligation liabilities	$	9,583		$	1,467

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

6 

MEWBOURNE ENERGY PARTNERS 10-A, L.P.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1.       Description of Business

Mewbourne Energy Partners 10-A, L.P., (the “Registrant” or the “Partnership”), a Delaware limited partnership engaged primarily in oil and gas development and production in Texas, Oklahoma, and New Mexico, was organized on February 9, 2010. The offering of limited and general partner interests began May 1, 2010 as a part of a private placement pursuant to Section 4(2) of the Securities Act of 1933 and Regulation D promulgated thereunder, and concluded August 2, 2010, with total investor contributions of $73,000,000 originally being sold to accredited investors of which $67,820,000 were sold to accredited investors as general partner interests and $5,180,000 were sold to accredited investors as limited partner interests. During 2012, 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 $1,617,571 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	$	834,771		$	799,280
Liabilities incurred		2,777			2,432
Liabilities reduced due to settlements and plugging and abandonments		(9,099	)		(965	)
Accretion expense		26,497			34,024
Balance, end of period	$	854,946		$	834,771

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		75	%		25	%
All other revenues		75	%		25	%
Costs and expenses:
Organization and offering costs (1)		0	%		100	%
Lease acquisition costs (1)		0	%		100	%
Tangible and intangible drilling costs (1)		100	%		0	%
Reporting and legal expenses		100	%		0	%
Operating costs, general and administrative expenses (except for
reporting and legal expenses) and all other costs		75	%		25	%

(1) As noted above, pursuant to the Program, MD must contribute 100% of organization and offering costs and lease acquisition costs which should approximate 15% of total capital costs. To the extent that organization and offering costs and lease acquisition costs are less than 15% of total capital costs, MD is responsible for tangible drilling costs until its share of the Program’s total capital costs reaches approximately 15%. 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 10-A, L.P. (“the Partnership”) was formed February 9, 2010. The offering of limited and general partnership interests began May 1, 2010 and concluded August 2, 2010, with total investor contributions of $73,000,000. During 2012, 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 $341,501 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 $1,058,163 as compared to $526,013 for the nine months ended September 30, 2016. Since inception, the Partnership has made distributions of $66,505,305, 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	$	299,896	$	284,847
Barrels produced		6,704		7,163
Average price/bbl	$	44.73	$	39.77
Gas sales	$	287,627	$	258,871
Mcf produced		76,717		88,268
Average price/mcf	$	3.75	$	2.93

Oil and gas revenues. As shown in the above table, total oil and gas sales increased by $43,805, an 8.1% rise, for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.

Of this increase, $35,582 and $72,063 were due to inclines in the average prices of oil and gas sold, respectively. The average price rose to $44.73 from $39.77 per barrel (bbl) and to $3.75 from $2.93 per thousand cubic feet (mcf) for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016.

Partially offsetting these increases were decreases of $20,533 and $43,307 from declines in the volumes of oil and gas sold, respectively, by 459 bbls and 11,551 mcf.

Lease operations. Lease operating expense during the three month period ended September 30, 2017 decreased to $185,463 from $231,260 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 $33,893 from $30,613 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 $32,862 from $30,937 for the three 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 three months ended September 30, 2017 decreased to $80,431 from $110,021 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 and to the overall decline 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	$	1,048,406	$	890,598
Barrels produced		22,821		24,879
Average price/bbl	$	45.94	$	35.80
Gas sales	$	893,501	$	670,906
Mcf produced		238,203		266,511
Average price/mcf	$	3.75	$	2.52

Oil and gas revenues. As shown in the above table, total oil and gas sales increased by $380,403, a 24.4% rise, for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

Of this increase, $252,353 and $328,778 were due to increases in the average prices of oil and gas sold, respectively. The average price rose to $45.94 from $35.80 per barrel (bbl) and to $3.75 from $2.52 per thousand cubic feet (mcf) for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

Partially offsetting these increases were decreases of $94,545 and $106,183 from declines in the volumes of oil and gas sold, respectively, by 2,058 bbls and 28,308 mcf.

Lease operations. Lease operating expense during the nine month period ended September 30, 2017 decreased to $616,808 from $762,352 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 $113,862 from $89,695 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.

Depreciation, depletion and amortization. Depreciation, depletion and amortization for the nine months ended September 30, 2017 decreased to $260,711 from $399,715 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 and to the overall decline in production.

Cost ceiling write-down. There were cost ceiling write-downs totaling $1,617,571 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 $194,000 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 10-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 10-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 10-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 10-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 10-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 10-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 10-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 10-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 10-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	0001491262
Entity Registrant Name	Mewbourne Energy Partners 10-A, L.P.
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

XML

CONDENSED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Cash	$ 15,377	$ 7,860
Accounts receivable, affiliate	422,045	430,934
Prepaid state taxes	8,605	5,118
Total current assets	446,027	443,912
Oil and gas properties at cost, full-cost method	69,468,951	69,462,837
Less accumulated depreciation, depletion, amortization and cost ceiling write-downs	(64,125,294)	(63,878,364)
Net oil and gas properties at cost, full-cost method	5,343,657	5,584,473
Total assets	5,789,684	6,028,385
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable, affiliate	104,526	106,813
Total current liabilities	104,526	106,813
Asset retirement obligation	854,946	834,771
Partners' capital	4,830,212	5,086,801
Total liabilities and partners' capital	$ 5,789,684	$ 6,028,385

XML

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	$ 299,896	$ 284,847	$ 1,048,406	$ 890,598
Gas sales	287,627	258,871	893,501	670,906
Total revenues	587,523	543,718	1,941,907	1,561,504
Expenses:
Lease operating expense	185,463	231,260	616,808	762,352
Production taxes	33,893	30,613	113,862	89,695
Administrative and general expense	32,862	30,937	122,455	121,161
Depreciation, depletion, and amortization	80,431	110,021	260,711	399,715
Cost ceiling write-down				1,617,571
Asset retirement obligation accretion	8,808	8,495	26,497	25,509
Total expenses	341,457	411,326	1,140,333	3,016,003
Net income (loss)	$ 246,066	$ 132,392	$ 801,574	$ (1,454,499)

XML

CONDENSED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited) - 9 months ended Sep. 30, 2017	Partners' Capital USD ($)
Balance, beginning at Dec. 31, 2016	$ 5,086,801
Cash distributions	(1,058,163)
Net income	801,574
Balance, ending at Sep. 30, 2017	$ 4,830,212

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)	$ 801,574	$ (1,454,499)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, and amortization	260,711	399,715
Cost ceiling write-down		1,617,571
Asset retirement obligation accretion	26,497	25,509
Plugging and abandonment cost paid from asset retirement obligation	(15,905)
Changes in operating assets and liabilities:
Accounts receivable, affiliate	8,889	(46,164)
Prepaid state taxes	(3,487)	(15,520)
Accounts payable, affiliate	(2,287)	(3,292)
Net cash provided by operating activities	1,075,992	523,320
Cash flows from investing activities:
Proceeds from sale of oil and gas properties	806	947
Purchase and development of oil and gas properties	(11,118)	(15,402)
Net cash used in investing activities	(10,312)	(14,455)
Cash flows from financing activities:
Cash distributions to partners	(1,058,163)	(526,013)
Net cash used in financing activities	(1,058,163)	(526,013)
Net increase (decrease) in cash	7,517	(17,148)
Cash, beginning of period	7,860	22,038
Cash, end of period	15,377	4,890
Supplemental Cash Flow Information:
Change to net oil & gas properties related to asset retirement obligation liabilities	$ 9,583	$ 1,467

XML

Description of Business

9 Months Ended

Sep. 30, 2017

Description Of Business

Description of Business

1.       Description of Business

Mewbourne Energy Partners 10-A, L.P., (the “Registrant” or the “Partnership”), a Delaware limited partnership engaged primarily in oil and gas development and production in Texas, Oklahoma, and New Mexico, was organized on February 9, 2010. The offering of limited and general partner interests began May 1, 2010 as a part of a private placement pursuant to Section 4(2) of the Securities Act of 1933 and Regulation D promulgated thereunder, and concluded August 2, 2010, with total investor contributions of $73,000,000 originally being sold to accredited investors of which $67,820,000 were sold to accredited investors as general partner interests and $5,180,000 were sold to accredited investors as limited partner interests. During 2012, 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

Accounting Policies [Abstract]

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 $1,617,571 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 [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	$	834,771		$	799,280
Liabilities incurred		2,777			2,432
Liabilities reduced due to settlements and plugging and abandonments		(9,099	)		(965	)
Accretion expense		26,497			34,024
Balance, end of period	$	854,946		$	834,771

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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		75	%		25	%
All other revenues		75	%		25	%
Costs and expenses:
Organization and offering costs (1)		0	%		100	%
Lease acquisition costs (1)		0	%		100	%
Tangible and intangible drilling costs (1)		100	%		0	%
Reporting and legal expenses		100	%		0	%
Operating costs, general and administrative expenses (except for
reporting and legal expenses) and all other costs		75	%		25	%

(1) As noted above, pursuant to the Program, MD must contribute 100% of organization and offering costs and lease acquisition costs which should approximate 15% of total capital costs. To the extent that organization and offering costs and lease acquisition costs are less than 15% of total capital costs, MD is responsible for tangible drilling costs until its share of the Program’s total capital costs reaches approximately 15%. 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	$	834,771		$	799,280
Liabilities incurred		2,777			2,432
Liabilities reduced due to settlements and plugging and abandonments		(9,099	)		(965	)
Accretion expense		26,497			34,024
Balance, end of period	$	854,946		$	834,771

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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		75	%		25	%
All other revenues		75	%		25	%
Costs and expenses:
Organization and offering costs (1)		0	%		100	%
Lease acquisition costs (1)		0	%		100	%
Tangible and intangible drilling costs (1)		100	%		0	%
Reporting and legal expenses		100	%		0	%
Operating costs, general and administrative expenses (except for
reporting and legal expenses) and all other costs		75	%		25	%

(1) As noted above, pursuant to the Program, MD must contribute 100% of organization and offering costs and lease acquisition costs which should approximate 15% of total capital costs. To the extent that organization and offering costs and lease acquisition costs are less than 15% of total capital costs, MD is responsible for tangible drilling costs until its share of the Program’s total capital costs reaches approximately 15%. The Partnership’s financial statements reflect its respective proportionate interest in the Program.

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Description of Business (Details Narrative)	3 Months Ended
	Aug. 02, 2010 USD ($)
Description Of Business Details Narrative
Investor contributions, total	$ 73,000,000
General Partners investor contributions	67,820,000
Limited Partners investor contributions	$ 5,180,000

XML

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 Obligations (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	$ 834,771	$ 799,280
Liabilities incurred	2,777	2,432
Liabilities reduced due to settlements and plugging and abandonments	(9,099)	(965)
Accretion expense	26,497	34,024
Balance, end of period	$ 854,946	$ 834,771

XML

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	75.00%
All other revenues	75.00%
Costs and expenses:
Organization and offering costs	0.00%	[1]
Lease acquisition costs	0.00%	[1]
Tangible and intangible drilling costs	100.00%	[1]
Reporting and legal expenses	100.00%
Operating costs, general and administrative expenses (except for reporting and legal expenses) and all other costs	75.00%
Mewbourne Development Corporation [Member]
Revenues:
Proceeds from disposition of depreciable and depletable properties	25.00%
All other revenues	25.00%
Costs and expenses:
Organization and offering costs	100.00%	[1]
Lease acquisition costs	100.00%	[1]
Tangible and intangible drilling costs	0.00%	[1]
Reporting and legal expenses	0.00%
Operating costs, general and administrative expenses (except for reporting and legal expenses) and all other costs	25.00%
Total capital costs, (percent)	15.00%

[1] s noted above, pursuant to the Program, MD must contribute 100% of organization and offering costs and lease acquisition costs which should approximate 15% of total capital costs. To the extent that organization and offering costs and lease acquisition costs are less than 15% of total capital costs, MD is responsible for tangible drilling costs until its share of the Program's total capital costs reaches approximately 15%. The Partnership's financial statements reflect its respective proportionate interest in the Program.