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 September 30, 1996
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 0-17024
SWIFT ENERGY INCOME PARTNERS 1987-A, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0215132
(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)
(713)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 1987-A, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
Balance Sheets
- September 30, 1996 and December 31, 1995 3
Statements of Operations
- Three month and nine month periods ended September 30, 1996 and 1995 4
Statements of Cash Flows
- Nine month periods ended September 30, 1996 and 1995 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 9
SIGNATURES 10
SWIFT ENERGY INCOME PARTNERS 1987-A, LTD.
BALANCE SHEETS
September 30, December 31,
1996 1995
--------------- ---------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,019 $ 1,877
Oil and gas sales receivable 220,422 229,526
--------------- ---------------
Total Current Assets 221,441 231,403
--------------- ---------------
Gas Imbalance Receivable -- 3,600
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 13,922,923 14,069,607
Less-Accumulated depreciation, depletion
and amortization (10,945,995) (10,752,735)
--------------- ---------------
2,976,928 3,316,872
--------------- ---------------
$ 3,198,369 $ 3,551,875
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 239,762 $ 674,950
Current portion of note payable -- 36,504
--------------- ---------------
Total Current Liabilities 239,762 711,454
--------------- ---------------
Deferred Revenues 132,445 153,194
Partners' Capital 2,826,162 2,687,227
--------------- ---------------
$ 3,198,369 $ 3,551,875
=============== ===============
See accompanying notes to financial statements.
3
SWIFT ENERGY INCOME PARTNERS 1987-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
1996 1995 1996 1995
--------------------------------- ---------------------------------
REVENUES:
Oil and gas sales $ 227,598 $ 132,221 $ 757,615 $ 587,732
Interest income 534 52 1,533 155
Other 4,116 2,544 14,269 9,426
--------------- --------------- --------------- ---------------
232,248 134,817 773,417 597,313
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 59,820 65,046 191,525 224,711
Production taxes 11,498 7,546 33,880 34,759
Depreciation, depletion
and amortization -
Normal provision 56,046 44,469 193,260 213,385
Additional provision -- 76,437 -- 640,903
General and administrative 29,565 25,666 98,738 78,051
Interest expense 1,263 12,797 14,917 37,167
--------------- --------------- --------------- ---------------
158,192 231,961 532,320 1,228,976
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 74,056 $ (97,144) $ 241,097 $ (631,663)
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ 4.91 $ (6.45) $ 16.00 $ (41.91)
=============== =============== =============== ===============
See accompanying note to financial statements.
4
SWIFT ENERGY INCOME PARTNERS 1987-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
----------------------------------------
1996 1995
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ 241,097 $ (631,663)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 193,260 854,288
Change in gas imbalance receivable
and deferred revenues (17,149) 2,450
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 9,104 114,028
Increase (decrease) in accounts payable
and accrued liabilities (435,188) (19,941)
--------------- ---------------
Net cash provided by (used in) operating activities (8,876) 319,162
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (29,525) (106,400)
Proceeds from sales of oil and gas properties 176,209 25,900
--------------- ---------------
Net cash provided by (used in) investing activities 146,684 (80,500)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (102,162) (142,444)
Payments on note payable (36,504) (95,833)
--------------- ---------------
Net cash provided by (used in) financing activities (138,666) (238,277)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (858) 385
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,877 1,385
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,019 $ 1,770
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 15,834 $ 9,736
=============== ===============
See accompanying notes to financial statements.
5
SWIFT ENERGY INCOME PARTNERS 1987-A, 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, 1995 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 Company'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 1987-A, 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 result 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 the limited partners' commitments available for
property acquisitions.
The Partnership does not allow for additional assessments from the
partners to fund capital requirements. However, funds in addition to the
remaining unexpended net capital commitments of the partners 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
The following analysis explains changes in the revenue and expense
categories for the quarter ended September 30, 1996 (current quarter) when
compared to the quarter ended September 30, 1995 (corresponding quarter), and
for the nine months ended September 30, 1996 (current period), when compared to
the nine months ended September 30, 1995 (corresponding period).
Three Months Ended September 30, 1996 and 1995
Oil and gas sales increased $95,378 or 72 percent in the current quarter
of 1996 when compared to the corresponding quarter in 1995, primarily due to
increased gas and oil prices. An increase in gas prices of 44 percent or
$.67/MCF and in oil prices of 43 percent or $6.10/BBL had a significant impact
on partnership performance. Also, current quarter gas production increased 25
percent when compared to third quarter 1995 production volumes, further
contributing to increased revenues.
Associated depreciation expense increased 26 percent or $11,577.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the third quarter of 1995 for $76,437 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.
7
SWIFT ENERGY INCOME PARTNERS 1987-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Nine Months Ended September 30, 1996 and 1995
Oil and gas sales increased $169,883 or 29 percent in the first nine
months of 1996 over the corresponding period in 1995. An increase in gas prices
of 37 percent or $.55/MCF and in oil prices of 24 percent or $3.61/BBL were
major contributing factors to the increased revenues for the period. Also,
current period oil and gas production decreased 21 percent and 16 percent,
respectively, when compared to the corresponding period in 1995, partially
offsetting the effect of increased gas and oil prices.
Associated depreciation expense decreased 9 percent or $20,125.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first nine months of 1995 for $640,903 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 Exchange Commission.
During 1996, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
8
SWIFT ENERGY INCOME PARTNERS 1987-A, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
9
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 1987-A, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: November 6, 1996 By: /s/ John R. Alden
---------------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: November 6, 1996 By: /s/ Alton D. Heckaman, Jr.
---------------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10