FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ________________
Commission File number 0-17023
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0208087
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(Address of principal executive offices)
(Zip Code)
(281)874-2700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
Balance Sheets
- March 31, 1997 and December 31, 1996 3
Statements of Operations
- Three month periods ended March 31, 1997 and 1996 4
Statements of Cash Flows
- Three month periods ended March 31, 1997 and 1996 5
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 8
SIGNATURES 9
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
BALANCE SHEETS
March 31, December 31,
1997 1996
--------------- ---------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 29,111 $ 1,029
Oil and gas sales receivable 231,762 199,066
Receivable due to property disposition -- 105,380
--------------- ---------------
Total Current Assets 260,873 305,475
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 12,903,273 12,897,927
Less-Accumulated depreciation, depletion
and amortization (10,569,011) (10,534,127)
--------------- ---------------
2,334,262 2,363,800
--------------- ---------------
$ 2,595,135 $ 2,669,275
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 79,652 $ 105,215
--------------- ---------------
Deferred Revenues 126,311 126,636
Partners' Capital 2,389,172 2,437,424
--------------- ---------------
$ 2,595,135 $ 2,669,275
=============== ===============
See accompanying notes to financial statements.
3
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
---------------------------------
1997 1996
--------------- ---------------
REVENUES:
Oil and gas sales $ 154,519 $ 313,192
Interest income 429 433
Other 1,394 1,677
--------------- ---------------
156,342 315,302
--------------- ---------------
COSTS AND EXPENSES:
Lease operating 48,622 87,717
Production taxes 7,935 9,698
Depreciation, depletion
and amortization 34,884 76,045
General and administrative 32,596 31,169
Interest expense -- 8,159
--------------- ---------------
124,037 212,788
--------------- ---------------
NET INCOME (LOSS) $ 32,305 $ 102,514
=============== ===============
Limited Partners' net income (loss)
per unit
March 31, 1997 $ 2.29
===============
March 31, 1996 $ 7.26
===============
See accompanying note to financial statements.
4
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------------------------
1997 1996
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 32,305 $ 102,514
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 34,884 76,045
Change in gas imbalance receivable
and deferred revenues (325) (1,327)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (32,696) (93,791)
(Increase) decrease in other current assets 105,380 --
Increase (decrease) in accounts payable
and accrued liabilities (25,563) (32,166)
--------------- ---------------
Net cash provided by (used in) operating activities 113,985 51,275
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (5,346) (6,361)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (80,557) (19,834)
Payment on notes payable -- (25,000)
--------------- ---------------
Net cash provided by (used in) financing activities (80,557) (44,834)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 28,082 80
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,029 1,854
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29,111 $ 1,934
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ 8,787
=============== ===============
See accompanying notes to financial statements.
5
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) General Information -
The financial statements included herein have been prepared by
the Partnership and are unaudited except for the balance sheet at
December 31, 1996 which has been taken from the audited financial
statements at that date. The financial statements reflect adjustments,
all of which were of a normal recurring nature, which are, in the
opinion of the managing general partner necessary for a fair
presentation. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to the rules
and regulations of the Securities and Exchange Commission ("SEC"). The
Partnership believes adequate disclosure is provided by the information
presented. The financial statements should be read in conjunction with
the audited financial statements and the notes included in the latest
Form 10-K.
(2) Gas Imbalances -
The gas imbalance receivable and deferred revenues are
accounted for on the entitlements method, whereby the Partnership
records its share of revenue, based on its entitled amount. Any amounts
over or under the entitled amount are recorded as an increase or
decrease to the gas imbalance receivable or deferred revenues as
applicable.
(3) Vulnerability Due to Certain Concentrations -
The Partnership's revenues are primarily the result of sales
of its oil and natural gas production. Market prices of oil and natural
gas may fluctuate and adversely affect operating results.
The Partnership extends credit to various companies in the oil
and gas industry which results in a concentration of credit risk. This
concentration of credit risk may be affected by changes in economic or
other conditions and may accordingly impact the Partnership's overall
credit risk. However, the Managing General Partner believes that the
risk is mitigated by the size, reputation, and nature of the companies
to which the Partnership extends credit. In addition, the Partnership
generally does not require collateral or other security to support
customer receivables.
(4) Fair Value of Financial Instruments -
The Partnership's financial instruments consist of cash and
cash equivalents and short-term receivables and payables. The carrying
amounts approximate fair value due to the highly liquid nature of the
short-term instruments.
6
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Partnership was formed for the purpose of investing in producing oil
and gas properties located within the continental United States. In order to
accomplish this, the Partnership goes through two distinct yet overlapping
phases with respect to its liquidity and results of operations. When the
Partnership is formed, it commences its "acquisition" phase, with all funds
placed in short-term investments until required for such property acquisitions.
The interest earned on these pre-acquisition investments becomes the primary
cash flow source for initial partner distributions. As the Partnership acquires
producing properties, net cash from operations becomes available for
distribution, along with the investment income. After partnership funds have
been expended on producing oil and gas properties, the Partnership enters its
"operations" phase. During this phase, oil and gas sales generate substantially
all revenues, and distributions to partners reflect those revenues less all
associated partnership expenses. The Partnership may also derive proceeds from
the sale of acquired oil and gas properties, when the sale of such properties is
economically appropriate or preferable to continued operation.
Liquidity and Capital Resources
The Partnership has completed acquisition of producing oil and gas
properties, expending all of limited partners' commitments available for
property acquisitions.
The Partnership does not allow for additional assessments from the
partners to fund capital requirements. However, funds are available from
partnership revenues, borrowings or proceeds from the sale of partnership
property. The Managing General Partner believes that the funds currently
available to the Partnership will be adequate to meet any anticipated capital
requirements.
Results of Operations
Oil and gas sales declined 51 percent in the first quarter of 1997 when
compared to the same period in 1996, primarily due to decreased gas and oil
production. Gas production decreased 43 percent and oil production declined 51
percent. The decrease in production had a significant impact on partnership
performance. Production declines were partially offset by an increase in gas
prices of 63 percent, or $1.24/MCF and in oil prices of 8 percent or $1.47/BBL
when compared to first quarter 1996 prices.
Also, current quarter oil and gas sales decreased due to the settlement of
pending litigation on the Kaiser Francis I acquisition, Cassel 1-17 well. Take
or pay proceeds were received in the amount of $119,150 and recorded in the
March 1996 revenues.
Associated depreciation expense decreased 54 percent or $41,161.
The Partnership records an additional provision in depreciation, depletion
and amortization when the present value, discounted at ten percent, of estimated
future net revenues from oil and gas properties, using the guidelines of the
Securities and Exchange Commission, was below the fair market value originally
paid for oil and gas properties. The additional provision results from the
Managing General Partner's determination that the fair market value paid for
properties may or may not coincide with reserve valuations determined according
to guidelines of the Securities and Exchange Commission. Using prices in effect
at March 31, 1997, the Partnership would have recorded an additional provision
at March 31, 1997 in the amount of $162,964. However, these temporarily low
quarter-end prices rebounded and by using prices in effect at the filing date,
the Partnership's unamortized cost of oil and gas properties were not limited by
this calculation
During 1997, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
7
SWIFT ENERGY INCOME PARTNERS 1986-D, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SWIFT ENERGY INCOME
PARTNERS 1986-D, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 5, 1997 By: /s/ John R. Alden
----------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 5, 1997 By: /s/ Alton D. Heckaman, Jr.
----------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
9