Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 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 33-11773-14
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
(Exact name of registrant as specified in
its Certificate of Limited Partnership)
TEXAS 76-0318471
(State of Organization) (I.R.S. Employer Identification No.)
16825 Northchase Dr., Suite 400
Houston, Texas 77060
(281) 874-2700
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b)
of the Act:
None
Securities registered pursuant to Section 12(g)
of the Act:
56,952 Limited Partnership Units
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 periods that the registrant was
required), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Registrant does not have an aggregate market value for its Limited Partnership
Interests.
Documents Incorporated by Reference
Document Incorporated as to
Registration Statement No. 33-11773 Items 1 and 13
on Form S-1
TABLE OF CONTENTS
Form 10-K Annual Report
For the Period Ended December 31, 1997
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
ITEM NO. PART I PAGE
1 Business I-1
2 Properties I-5
3 Legal Proceedings I-7
4 Submission of Matters to a Vote of
Security Holders I-7
PART II
5 Market Price of and Distributions on the
Registrant's Units and Related Limited
Partner Matters II-1
6 Selected Financial Data II-2
7 Management's Discussion and Analysis of
Financial Condition and Results of Operations II-2
8 Financial Statements and Supplementary Data II-3
9 Disagreements on Accounting and Financial
Disclosure II-3
PART III
10 Directors and Executive Officers of the
Registrant III-1
11 Executive Compensation III-2
12 Security Ownership of Certain Beneficial
Owners and Management III-2
13 Certain Relationships and Related Transactions III-2
PART IV
14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K IV-1
OTHER
Signatures
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
PART I
Item 1. Business
General Description of Partnership
Swift Energy Income Partners 1990-C, Ltd., a Texas limited partnership
(the "Partnership" or the "Registrant"), is a partnership formed under a public
serial limited partnership offering denominated Swift Energy Income Partners III
(Registration Statement No. 33-11773 on Form S-1, originally declared effective
March 19, 1987, and amended effective March 28, 1988, May 4, 1989 and May 1,
1990 [the "Registration Statement"]). The Partnership was formed effective
September 30, 1990 under a Limited Partnership Agreement dated September 30,
1990. The initial 539 limited partners made capital contributions of $5,695,200.
The Partnership is principally engaged in the business of acquiring,
developing and, when appropriate, disposing of working interests in proven oil
and gas properties within the continental United States. The Partnership does
not engage in exploratory drilling. Each working interest held by the
Partnership entitles the Partnership to receive, in kind or in value, a share of
the production of oil and gas from the producing property, and obligates the
Partnership to participate in the operation of the property and to bear its
proportionate share of all operating costs associated therewith. The Partnership
typically holds less than the entire working interest in its producing
properties.
At December 31, 1997, the Partnership had expended or committed to
expend 100% of the limited partners' net commitments (i.e., limited partners'
commitments available to the Partnership for property acquisitions after payment
of organization fees and expenses) in the acquisition and development of
producing properties, which properties are described under Item 2, "Properties,"
below. The Partnership's revenues and profits are derived almost entirely from
the sale of oil and gas produced from its properties and from the sale of
acquired oil and gas properties, when the sale of such properties is
economically preferable to continued operation.
The Partnership's business and affairs are conducted by its Managing
General Partner, Swift Energy Company, a Texas corporation ("Swift"). The
Partnership's Special General Partner, VJM Corporation, a California corporation
("VJM"), consults with and advises Swift as to certain financial matters. Swift
is the designated operator of many of the properties in which the Partnership
owns interests. The remaining properties are operated by industry operators
designated by the owners of a majority of the working interest in each property.
The general manner in which the Partnership acquires producing
properties and otherwise conducts its business is described in detail in the
Registration Statement under "Proposed Activities," which is incorporated herein
by reference. The following is intended only as a summary of the Partnership's
manner of doing business and specific activities to date.
Liquidation
In October 1997, the managing general partner informed the limited
partners of a proposal to sell all the Partnership's properties and dissolve and
liquidate the Partnership. The special meeting of Limited Partners was held on
November 25, 1997.
Of the total units held by the limited partners, a majority voted for
adoption of the proposal for sales of substantially all of the assets of the
Partnership and the dissolution, winding up and termination of the Partnership.
The Partnership adopted the liquidation basis of accounting for the period
subsequent to November 30, 1997.
Manner of Acquiring Properties; Net Profits and Overriding Royalty Interest
Agreement
For the sake of legal and administrative convenience, the producing
properties owned by the Registrant have typically been acquired initially by
Swift, which then conveyed ownership of each such property to the Registrant.
The Registrant acquires producing properties from Swift at the property
acquisition cost of such properties to Swift, as adjusted for intervening
operations.
I-1
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
The Registrant entered into a Net Profits and Overriding Royalty
Interest Agreement dated September 30, 1990 (the "NP/OR Agreement") with Swift
Energy Managed Pension Assets Partnership 1990-C, Ltd. (the "Pension
Partnership"). The Pension Partnership is a Texas limited partnership that is
also managed by Swift and VJM. The Pension Partnership was formed to acquire
nonoperating interests, such as net profits, royalty and overriding royalty
interests, in producing oil and gas properties.
Under the NP/OR Agreement, the Registrant and the Pension Partnership
have, in effect, combined their funds in acquiring producing properties; using
funds committed to the NP/OR Agreement by both partnerships, the Registrant
acquires producing properties, then promptly conveys nonoperating interests
therein to the Pension Partnership. The Registrant initially committed
$5,200,650 and the Pension Partnership initially committed $3,072,822 for
acquisitions under the NP/OR Agreement. The Registrant is obligated under the
NP/OR Agreement to convey to the Pension Partnership a 37% fixed net profits
interest and a variable overriding royalty interest in specified depths of every
producing property it acquires, except that (i) properties anticipated to
require significant development operations, and (ii) nonoperating interests
offered to the Registrant by third parties may be purchased by the registrant
outside the NP/OR Agreement, without participation by the Pension Partnership.
The Registrant is entitled to withdraw up to 30% of its committed funds under
the NP/OR Agreement for such acquisitions.
All properties acquired by the Registrant since the date of the NP/OR
Agreement have been acquired subject to the NP/OR Agreement and the nonoperating
interests created thereby. At December 31, 1997, the Registrant had not made any
withdrawals to acquire properties anticipated to require significant
development.
In accordance with its obligations under the NP/OR Agreement, as of
December 31, 1997 the Registrant had conveyed to the Pension Partnership a net
profits interest burdening certain depths of all producing properties acquired
by the Registrant since the date of the NP/OR Agreement. Typically, a net
profits interest in an oil and gas property entitles the owner to a specified
percentage share of the gross proceeds generated by the burdened property, net
of operating costs. The 37% net profits interest conveyed to the Pension
Partnership under the NP/OR Agreement differs from the typical net profits
interest in that it is calculated over the entire group of producing properties
acquired under the NP/OR Agreement; i.e., all operating costs attributable to
the burdened depths of such properties are aggregated, and the total is then
subtracted from the total of all gross proceeds attributable to such depths in
order to calculate the net profits to which the Pension Partnership is entitled.
The net profits interest conveyed to the Pension Partnership burdens only those
depths of each subject property which were evaluated to contain proved reserves
at the date of acquisition, to the extent such depths underlie specified surface
acreage.
The Registrant has also conveyed to the Pension Partnership under the
NP/OR Agreement an overriding royalty interest in each property acquired since
the date of the NP/OR Agreement. An overriding royalty interest is a fractional
interest in the gross production (or the gross proceeds therefrom) of oil and
gas from a property, free of any exploration, development, operation or
maintenance expenses. Under the NP/OR Agreement, the overriding royalty interest
burdens the portions of each producing property that were evaluated at the date
of acquisition not to contain proved reserves.
Competition, Markets and Regulations
Competition
The oil and gas industry is highly competitive in all its phases. The
Partnership encounters strong competition from many other oil and gas producers,
many of which possess substantial financial resources, in acquiring economically
desirable Producing Properties.
Markets
The amounts of and price obtainable for oil and gas production from
Partnership Properties will be affected by market factors beyond the control of
the Partnership. Such factors include the extent of domestic production, the
level of imports of foreign oil and gas, the general level of market demand on a
regional, national and worldwide basis, domestic and foreign economic conditions
that determine levels of industrial production, political events in foreign
oil-producing regions, and variations in governmental regulations and tax laws
and the imposition of new governmental requirements upon the oil and gas
industry. There can be no assurance that oil and gas prices will not decrease in
the future, thereby decreasing net Revenues from Partnership Properties.
I-2
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
From time to time, there may exist a surplus of natural gas or oil
supplies, the effect of which may be to reduce the amount of hydrocarbons that
the Partnerships may produce and sell while such oversupply exists. In recent
years, initial steps have been taken to provide additional gas transportation
lines from Canada to the United States. If additional Canadian gas is brought to
the United States market, it could create downward pressure on United States gas
prices.
Regulations
Environmental Regulation
The federal government and various state and local governments have
adopted laws and regulations regarding the control of contamination of the
environment. These laws and regulations may require the acquisition of a permit
by Operators before drilling commences, prohibit drilling activities on certain
lands lying within wilderness areas or where pollution arises and impose
substantial liabilities for pollution resulting from operations, particularly
operations near or in onshore and offshore waters or on submerged lands. These
laws and regulations may also increase the costs of routine drilling and
operation of wells. Because these laws and regulations change frequently, the
costs to the Partnership of compliance with existing and future environmental
regulations cannot be predicted. However, the Managing Partner does not believe
that the Partnership is affected in a significantly different manner by these
regulations than are its competitors in the oil and gas industry.
Federal Regulation of Natural Gas
The transportation and sale of natural gas in interstate commerce is
heavily regulated by agencies of the federal government. The following
discussion is intended only as a summary of the principal statutes, regulations
and orders that may affect the production and sale of natural gas from
Partnership Properties. This summary should not be relied upon as a complete
review of applicable natural gas regulatory provisions.
FERC Orders
Several major regulatory changes have been implemented by the Federal
Energy Regulatory Commission ("FERC") from 1985 to the present that affect the
economics of natural gas production, transportation and sales. In addition, the
FERC continues to promulgate revisions to various aspects of the rules and
regulations affecting those segments of the natural gas industry that remain
subject to the FERC's jurisdiction. In April 1992, the FERC issued Order No. 636
pertaining to pipeline restructuring. This rule requires interstate pipelines to
unbundle transportation and sales services by separately stating the price of
each service and by providing customers only the particular service desired,
without regard to the source for purchase of the gas. The rule also requires
pipelines to (i) provide nondiscriminatory "no-notice" service allowing firm
commitment shippers to receive delivery of gas on demand up to certain limits
without penalties, (ii) establish a basis for release and reallocation of firm
upstream pipeline capacity and (iii) provide non-discriminatory access to
capacity by firm transportation shippers on a downstream pipeline. The rule
requires interstate pipelines to use a straight fixed variable rate design. The
rule imposes these same requirements upon storage facilities.
FERC Order No. 500 affects the transportation and marketability of
natural gas. Traditionally, natural gas has been sold by producers to pipeline
companies, which then resold the gas to end-users. FERC Order No. 500 alters
this market structure by requiring interstate pipelines that transport gas for
others to provide transportation service to producers, distributors and all
other shippers of natural gas on a nondiscriminatory, "first-come, first-served"
basis ("open access transportation"), so that producers and other shippers can
sell natural gas directly to end-users. FERC Order No. 500 contains additional
provisions intended to promote greater competition in natural gas markets.
It is not anticipated that the marketability of and price obtainable
for natural gas production from Partnership Properties will be significantly
affected by FERC Order No. 500. Gas produced from Partnership Properties
normally will be sold to intermediaries who have entered into transportation
arrangements with pipeline companies. These intermediaries will accumulate gas
purchased from a number of producers and sell the gas to end-users through open
access pipeline transportation.
I-3
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
State Regulations
Production of any oil and gas from Partnership Properties will be
affected to some degree by state regulations. Many states in which the
Partnership will operate have statutory provisions regulating the production and
sale of oil and gas, including provisions regarding deliverability. Such
statutes, and the regulations promulgated in connection therewith, are generally
intended to prevent waste of oil and gas and to protect correlative rights to
produce oil and gas between owners of a common reservoir. Certain state
regulatory authorities also regulate the amount of oil and gas produced by
assigning allowable rates of production to each well or proration unit.
Federal Leases
Some of the Partnership's properties are located on federal oil and gas
leases administered by various federal agencies, including the Bureau of Land
Management. Various regulations and orders affect the terms of leases,
exploration and development plans, methods of operation and related matters.
Employees
The Partnership has no employees. Swift, however, has a staff of
geologists, geophysicists, petroleum engineers, landmen, and accounting
personnel who administer the operations of Swift and the Partnership. As of
December 31, 1997, Swift had 194 employees. Swift's administrative and overhead
expenses attributable to the Partnership's operations are borne by the
Partnership.
I-4
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
Item 2. Properties
As of December 31, 1997, the Partnership has acquired interests in
producing oil and gas properties which are generally described below.
Principal Oil and Gas Producing Properties
The most valuable fields in the Partnership, based upon year-end
engineering estimates of discounted future net revenues using constant pricing
and costs, are described below.
1. The Velrex Field is located in Schleicher County, Texas, and
accounts for 43% of the value in this Partnership. Wells in this field produce
from the Henderson and Canyon Sands, (Sugarland acquisition).
2. The Cody Bell Field is in Schleicher County, Texas (Sugarland
acquisition). This field represents 25% of the Partnership's value.
3. The Key Field is in Wheeler County, Texas (Arkla acquisition). This
field represents 20% of the Partnership's value.
The remaining value in the Partnership is attributable to numerous
properties none of which equals or exceeds 15 percent of the total Partnership
value.
Title to Properties
Title to substantially all significant producing properties of the
Partnership has been examined. The properties are subject to royalty, overriding
royalty and other interests customary in the industry. The Managing General
Partner does not believe any of these burdens materially detract from the value
of the properties or will materially detract from the value of the properties or
materially interfere with their use in the operation of the business of the
Partnership.
Production and Sales Price
The following table summarizes the sales volumes of the Partnership's
net oil and gas production expressed in MCFs. Equivalent MCFs are obtained by
converting oil to gas on the basis of their relative energy content; one barrel
equals 6,000 cubic feet of gas.
Net Production
-------------------------------
For the Years Ended
December 31,
-------------------------------
1997 1996 1995
------- ------- -------
Net Volumes (Equivalent MCFs) 177,596 305,494 357,960
Average Sales Price
per Equivalent MCF $2.41 $2.17 $1.67
Average Production Cost
per Equivalent MCF
(includes production taxes) $0.92 $0.79 $0.82
I-5
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
Net Proved Oil and Gas Reserves
Presented below are the estimates of the Partnership's proved reserves
as of December 31, 1997, 1996 and 1995. All of the Partnership's proved reserves
are located in the United States.
December 31,
----------------------------------------------------------------------
1997 1996 1995
------------------ ------------------- -------------------
Natural Natural Natural
Oil Gas Oil Gas Oil Gas
------- -------- ------- -------- ------- --------
(BBLS) (MMCF) (BBLS) (MMCF) (BBLS) MMCF)
Proved developed
reserves at end of year 5,714 692 14,509 1,165 62,254 2,591
------- ------ ------- ----- ------- -----
Proved reserves
Balance at beginning
of year 17,489 1,424 66,494 2,787 68,649 3,172
Extensions, discoveries
and other additions -- -- -- -- -- --
Revisions of previous
estimates 2,860 (27) 2,911 136 10,239 (102)
Sales of minerals in
place (10,499) (374) (44,633) (1,237) -- --
Production (2,775) (161) (7,283) (262) (12,394) (283)
------- ------ ------- ------ ------- -----
Balance at end of year 7,075 862 17,489 1,424 66,494 2,787
------- ----- ------- ------ ------- -----
Revisions of previous quantity estimates are related to upward or
downward variations based on current engineering information for production
rates, volumetrics and reservoir pressure. Additionally, changes in quantity
estimates are the result of the increase or decrease in crude oil and natural
gas prices at each year end which have the effect of adding or reducing proved
reserves on marginal properties due to economic limitations.
I-6
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
The following table summarizes by acquisition the Registrant's reserves
and gross and net interests in producing oil and gas wells as of December 31,
1997:
Reserves
December 31, 1997
---------------------
Natural Wells
Oil Gas -----------------
Acquisition State(s) (BBLS) (MMCF) Gross Net
- ----------- --------- ------ ------ ----- -------
Richer TX 10 50 4 0.077
Sugarland OK, TX 6,952 637 56 4.959
Arkla TX 113 175 2 0.335
------ ----- -- -----
7,075 862 62 5.371
------ ----- -- -----
There are numerous uncertainties inherent in estimating quantities of
proved reserves and in projecting the future rates of production, timing and
plan of development. Oil and gas reserve engineering must be recognized as a
subjective process of estimating underground accumulations of oil and gas that
cannot be measured in an exact way, and estimates of other engineers might
differ from those above, audited by H. J. Gruy and Associates, Inc., an
independent petroleum consulting firm. The accuracy of any reserve estimate is a
function of the quality of available data and of engineering and geological
interpretation and judgment. Results of drilling, testing and production
subsequent to the date of the estimate may justify revision of such estimate,
and, as a general rule, reserve estimates based upon volumetric analysis are
inherently less reliable than those based on lengthy production history.
Accordingly, reserve estimates are often different from the quantities of oil
and gas that are ultimately recovered.
In estimating the oil and natural gas reserves, the Registrant, in
accordance with criteria prescribed by the Securities and Exchange Commission,
has used prices received as of December 31, 1997 without escalation, except in
those instances where fixed and determinable gas price escalations are covered
by contracts, limited to the price the Partnership reasonably expects to
receive. The Registrant does not believe that any favorable or adverse event
causing a significant change in the estimated quantity of proved reserves has
occurred between December 31, 1997 and the date of this report.
Future prices received for the sale of the Partnership's products may
be higher or lower than the prices used in the evaluation described above; the
operating costs relating to such production may also increase or decrease from
existing levels. The estimates presented above are in accordance with rules
adopted by the Securities and Exchange Commission.
Item 3. Legal Proceedings
The Partnership is not aware of any material pending legal proceedings
to which it is a party or of which any of its property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of limited partners during the
fourth quarter of the fiscal year covered by this report, except as discussed
above in Item 1. "Liquidation" section.
I-7
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
PART II
Item 5. Market Price of and Distributions on the Registrant's Units and
Related Limited Partner Matters
Market Information
Units in the Partnership were initially sold at a price of $100 per
Unit. Units are not traded on any exchange and there is no established public
trading market for the Units. Swift is aware of negotiated transfers of Units
between unrelated parties; however, these transfers have been limited and
sporadic. Due to the nature of these transactions, Swift has no verifiable
information regarding prices at which Units have been transferred.
Holders
As of December 31, 1997, there were 539 Limited Partners holding Units
in the Partnership.
Distributions
The Partnership generally makes distributions to Limited Partners on a
quarterly basis, subject to the restrictions set forth in the Limited
Partnership Agreement. In the fiscal years ended December 31, 1996 and 1997, the
Partnership distributed a total of $140,000 and $85,500, respectively to the
holders of its Units. Cash distributions constitute net proceeds from sale of
oil and gas production after payment of lease operating expenses and other
partnership expenses. Some or all of such amounts or any proceeds from the sale
of partnership properties could be deemed to constitute a return of investors'
capital.
Due to the liquidation of the Partnership, the last regular quarterly
distribution was made in January 1998. For information regarding liquidating
distributions, reference is made to Item 7. "Liquidity and Capital Resources"
section.
II-1
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
Item 6. Selected Financial Data
The following selected financial data, prepared in accordance with
generally accepted accounting principles as of December 31, 1997, 1996, 1995,
1994 and 1993, should be read in conjunction with the financial statements
included in Item 8:
1997 1996 1995 1994 1993
------------ ------------ ------------ ------------ ------------
Revenues $ 430,784 $ 672,124 $ 617,897 $ 916,168 $ 1,085,999
Income (Loss) $ 69,901 $ 65,688 $ (460,741) $ (1,140,169) $ 74,637
Total Assets $ $ 1,205,615 $ 1,945,806 $ 2,541,069 $ 4,100,321
Cash Distributions $ 115,223 $ 174,103 $ 96,281 $ 215,823 $ 678,656
Long Term Obligations $ $ -- $ -- $ 33,664 $ 168,323
Limited Partners' Net
Income (Loss) Per Unit $ 1.14 $ 1.10 $ (7.33) $ (17.65) $ .91
Limited Partners' Cash
Distributions Per Unit $ 1.50 $ 2.46 $ 1.28 $ 3.15 $ 11.04
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidation
In October 1997, the managing general partner informed the limited
partners of a proposal to sell all the Partnership's properties and dissolve and
liquidate the Partnership. The special meeting of Limited Partners was held on
November 25, 1997.
Of the total units held by the limited partners, a majority voted for
adoption of the proposal for sales of substantially all of the assets of the
Partnership and the dissolution, winding up and termination of the Partnership.
The Partnership adopted the liquidation basis of accounting for the period
subsequent to November 30, 1997.
Liquidity and Capital Resources
Oil and gas reserves are depleting assets and therefore often
experience significant production declines each year from the date of
acquisition through the end of the life of the property. The primary source of
liquidity to the Partnership comes almost entirely from the income generated
from the sale of oil and gas produced from ownership interests in oil and gas
properties and during liquidation from the sale of the ownership of interests in
oil and gas properties. Net cash provided by (used in) operating activities
totaled $(120,927), $(195,708) and $282,048 in 1997, 1996 and 1995,
respectively. Cash provided by property sales proceeds totaled $386,694,
$496,160 and $863 in 1997, 1996 and 1995, respectively. The Partnership has
expended all of the partner's net commitments available for property
acquisitions and development by acquiring producing oil and gas properties. The
partnership invests primarily in proved producing properties with nominal levels
of future costs of development for proven but undeveloped reserves. Significant
purchases of additional reserves or extensive drilling activity are not
anticipated. Capital expenditures in 1997, 1996 and 1995 totaled $0, $93,600 and
$51,581, respectively. Cash distributions to partners totaled $115,223, $174,103
and $96,281 in 1997, 1996 and 1995, respectively.
After sale of all its properties and settlement of its liabilities, the
Partnership's assets will consist solely of cash, which it will distribute to
its partners in complete liquidation. The Partnership will not realize gain or
loss upon such distribution of cash to its partners in liquidation. No capital
expenditures have been made in the eleven month period ending November 30, 1997,
and none are anticipated through the date of final liquidation.
Results of Operations
As a result of the limited partners' approval of the liquidation of the
Partnership, the Partnership has changed its basis of accounting, effective
December 1, 1997, from the historical cost basis to the liquidation basis.
During the process of liquidating the Partnership, the Partnership continued its
operations which primarily consisted of the production and sale of oil and gas
from producing properties. Under the liquidation basis of accounting, the
Partnership's financial results from these operations are included in the
Statement of Changes in Net Assets for the period from December 1, 1997 to
December 31, 1997. The Partnership's results from its oil and gas operations
presented herein are on a combined basis for the 1997 periods prior to and
subsequent to the adoption of the liquidation basis of accounting.
11-2
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
Oil and gas sales decreased 36 percent in 1997 vs. 1996. Production
volumes decreased 42 percent due to a 39 percent gas production decrease and a
69 percent oil production decline. The decrease in production, primarily due to
the sale of oil and gas assets as a part of the liquidation process, had a major
impact on partnership performance. An increase in the 1997 gas prices of 16
percent or $.32/MCF partially offset the production declines. The average sales
price per equivalent MCF increased 11 percent in 1997 as gas prices increased 16
percent and oil prices increased 1 percent.
Production cost per equivalent MCF increased 16 percent in 1997
compared to 1996, primarily due to the decline in production volumes; however,
total production costs decreased 33 percent in 1997.
Oil and gas sales increased 9 percent in 1996 vs. 1995. Increases in
both 1996 gas and oil prices were major contributors to the increased revenues.
The Partnership experienced an increase in gas prices of 40 percent or $.58/MCF
and an increase in oil prices of 21 percent or $3.26/BBL. The average sales
price per equivalent MCF increased 30 percent in 1996. Production volumes
decreased 15 percent due to a 41 percent oil production decrease and an 8
percent gas production decline. The partnership's sale of several low value
properties had an impact on partnership performance. The production declines
partially offset the effect of increased oil and gas prices impacting
partnership performance.
Production cost per equivalent MCF decreased 4 percent in 1996 compared
to 1995 and total production costs decreased 17 percent in 1996.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in 1995 of $417,905 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 paid for oil and gas properties resulting in a full
cost ceiling impairment.
From January 1, 1998 until the date the Partnership is liquidated,
Partnership revenues and costs will be shared between the limited partners and
general partners in a 90:10 ratio, based on the annualized rate of cash
distributions by the Partnership during a certain period prior to December 31,
1997.
Item 8. Financial Statements and Supplementary Data
See Part IV, Item 14(a) for index to financial statements.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
II-3
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
PART III
Item 10. Directors and Executive Officers of the Registrant
As a limited partnership, the Registrant has no directors or executive
officers. The business and affairs of the Registrant are managed by Swift as
Managing General Partner. Set forth below is certain information as of February
18, 1998 regarding the directors and executive officers of Swift.
Position(s) with
Name Age Swift and Other Companies
---- --- -------------------------
DIRECTORS
A. Earl Swift 64 Chief Executive Officer and
Chairman of the Board
Virgil N. Swift 69 Executive Vice President - Business
Development, Vice Chairman of the Board
G. Robert Evans 66 Director of Swift; Chairman of the Board,
Material Sciences Corporation;
Director, Consolidated Freightways, Inc.,
Fibreboard Corporation, Elco Industries,
and Old Second Bancorp
Raymond O. Loen 73 Director of Swift; President, R. O. Loen
Company
Henry C. Montgomery 62 Director of Swift; Chairman of the Board,
Montgomery Financial Services Corporation;
Director, Southwall Technology Corporation
Clyde W. Smith, Jr. 49 Director of Swift; President, Somerset
Properties, Inc.
Harold J. Withrow 70 Director of Swift
EXECUTIVE OFFICERS
Terry E. Swift 42 President, Chief Operating Officer
John R. Alden 52 Senior Vice President - Finance,
Chief Financial Officer and Secretary
Bruce H. Vincent 50 Senior Vice President - Funds Management
James M. Kitterman 53 Senior Vice President - Operations
Joe A. D'Amico 49 Senior Vice President- Exploration and
Development
Alton D. Heckaman, Jr. 40 Vice President - Finance and
Controller
III-1
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
From time to time, Swift as Managing General Partner of the Partnership
purchases Units in the Partnership from investors who offer the Units pursuant
to their right of presentment, which purchases are made pursuant to terms set
out in the Partnership's original Limited Partnership Agreement. Due to the
frequency and large number of these transactions, Swift reports these
transactions under Section 16 of the Securities Exchange Act of 1934 on an
annual rather than a monthly basis. In some cases such annual reporting may
constitute a late filing of the required Section 16 reports under the applicable
Section 16 rules.
Item 11. Executive Compensation
As noted in Item 10, "Directors and Executive Officers of the
Registrant," above, the Partnership has no executive officers. The executive
officers of Swift and VJM are not compensated by the Partnership.
Certain fees and allowances contemplated by the Limited Partnership
Agreement have been paid by the Partnership to Swift and VJM. See Note (4) in
Notes To Financial Statements (Related-Party Transactions) for further
discussion.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Swift Energy Company, the Managing General Partner, located at 16825
Northchase Drive, Suite 400, Houston, Texas 77060, owns 3,565 Limited
Partnership Units, which is 6.26 percent of all outstanding Limited Partnership
Units. All Limited Partnership Units owned by Swift were acquired from investors
who offered the Limited Partnership Units pursuant to their right of
presentment. As the Managing General Partner, Swift is not permitted generally,
under the Limited Partnership Agreement, to vote its Limited Partnership Units.
Swift also owns a general partnership interest of 9 percent of all partnership
interests in the Partnership.
Swift and VJM are not aware of any arrangement, the operation of which
may at a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions
As noted in Item 10, "Directors and Executive Officers of the
Registrant," above, the Partnership has no executive officers or directors, and
thus has not engaged in any transactions in which any such person had an
interest. The Partnership is permitted to engage in certain transactions with
Swift as Managing General Partner and VJM as Special General Partner, subject to
extensive guidelines and restrictions as described in the "Conflicts of
Interest" section of the Amended Prospectus contained in the Registration
Statement, which is incorporated herein by reference.
Summarized below are the principal transactions that have occurred
between the Partnership and Swift, VJM and their affiliates.
1. The oil and gas properties acquired by the Partnership, as described
in Item 2, "Properties" above, were typically acquired initially by Swift from
the seller thereof and subsequently transferred to the Partnership. Such
transfers were made by Swift at its Property Acquisition Costs (as defined in
the Limited Partnership Agreement), less any amounts received from sale of
production between the time of acquisition by Swift and the time of sale to the
Partnership.
2. Swift acts as operator for many of the wells in which the
Partnership has acquired interests and has received compensation for such
activities in accordance with standard industry operating agreements.
3. The Partnership paid to Swift and VJM certain fees as contemplated
by the Limited Partnership Agreement. See Note (4) in Notes To Financial
Statements (Related-Party Transactions) for further discussion.
III-2
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
a(1) FINANCIAL STATEMENTS PAGE NO.
--------
Report of Independent Public Accountants IV-3
Statement of Net Assets in Process of Liquidation
as of December 31, 1997 IV-4
Balance Sheet as of December 31, 1996 IV-5
Statement of Changes in Net Assets in Process of
Liquidation for the period from December 1, 1997
to December 31, 1997 IV-6
Statements of Operations for the period from
January 1, 1997 to November 30, 1997 and for
the years ended December 31, 1996 and 1995 IV-7
Statements of Partners' Capital for the period from
January 1, 1997 to November 30, 1997 and for the
years ended December 31, 1996 and 1995 IV-8
Statements of Cash Flows for the period from
January 1, 1997 to November 30, 1997 and for
the years ended December 31, 1996 and 1995 IV-9
Notes to Financial Statements IV-10
a(2) FINANCIAL STATEMENT SCHEDULES
All schedules required by the SEC are either inapplicable or the
required information is included in the Financial Statements, the
Notes thereto, or in other information included elsewhere in this
report.
a(3) EXHIBITS
3.1 Limited Partnership Agreement of Swift Energy Income
Partners 1990-C, Ltd., dated September 30, 1990. (Form
10-K for year ended December 31, 1990, Exhibit 3.1).
3.2 Certificate of Limited Partnership of Swift Energy Income
Partners 1990-C, Ltd., as filed September 27, 1990, with
the Texas Secretary of State. (Form 10-K for year ended
December 31, 1990, Exhibit 3.2).
10.1 Net Profits and Overriding Royalty Interest Agreement
between Swift Energy Income Partners 1990-C, Ltd. and
Swift Energy Managed Pension Assets Partnership 1990-C,
Ltd. dated September 30, 1990. (Form 10-K for year ended
December 31, 1990, Exhibit 10.1).
99.1 A copy of the following section of the Amended Prospectus
dated March 28, 1988, contained in Post-Effective
Amendment No. 1 to Registration Statement No. 33-11773 on
Form S-1 for Swift Energy Income Partners III, as filed on
March 25, 1988, which have been incorporated herein by
reference: "Proposed Activities" (pp 36 - 50) and
"Conflicts of Interest" (pp. 70 - 78). (Form 10-K for year
ended December 31, 1990, Exhibit 28.1).
IV-1
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
b(1) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter ended
December 31, 1997.
Supplemental Information to be Furnished with Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.
No annual report to security holders covering the Partnership's 1997
fiscal year, or proxy statement, form of proxy or other proxy soliciting
material has been sent to Limited Partners of the Partnership.
IV-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Swift Energy Income Partners 1990-C, Ltd.:
We have audited the accompanying balance sheet of Swift Energy Income
Partners 1990-C, Ltd., (a Texas limited partnership) as of December 31, 1996,
the related statements of operations, partners' capital and cash flows for the
period from January 1, 1997 to November 30, 1997 and the statements of
operations, partners' capital and cash flows for the years ended December 31,
1996 and 1995. In addition, we have audited the statement of net assets in
process of liquidation as of December 31, 1997, and the related statement of
changes in net assets in process of liquidation for the period from December 1,
1997 to December 31, 1997. These financial statements are the responsibility of
the Managing General Partner's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the limited
partners of Swift Energy Income Partners 1990-C, Ltd. approved a plan of
liquidation on November 25, 1997 and the Partnership commenced liquidation
shortly thereafter. As a result, the Partnership has changed its basis of
accounting for periods subsequent to November 30, 1997, from the historical cost
basis to the liquidation basis. Accordingly, the carrying value of the remaining
assets as of December 31, 1997, are presented at estimated realizable values and
all liabilities are presented at estimated settlement amounts.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Swift Energy Income
Partners 1990-C, Ltd., as of December 31, 1996, and the results of its
operations and its cash flows for the period from January 1, 1997 to November
30, 1997 and for the years ended December 31, 1996 and 1995, its net assets in
process of liquidation as of December 31, 1997, and the changes in its net
assets in process of liquidation for the period from December 1, 1997 to
December 31, 1997, in conformity with generally accepted accounting principles
applied on the bases described in the preceding paragraph.
As discussed in Note 1 to the financial statements, it is not presently
determinable whether the amounts realizable from the disposition of the
remaining assets or the amounts that creditors agree to accept in settlement of
the obligations due them will differ materially from the amounts shown in the
accompanying financial statements. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
ARTHUR ANDERSEN LLP
Houston, Texas
February 10, 1998
IV-3
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
STATEMENT OF NET ASSETS IN PROCESS OF LIQUIDATION - DECEMBER 31, 1997
1997
--------------
ASSETS:
Cash and cash equivalents $ 261,975
Oil and gas sales receivable 215,615
Gas Imbalance Receivable 15,212
Oil and Gas Properties 988,375
---------------
Total Assets 1,481,177
---------------
LIABILITIES:
Accounts Payable 43,177
Gas Imbalance Payable 20,084
---------------
Total Liabilities 63,261
---------------
Net Assets in Process of Liquidation $ 1,417,916
===============
See accompanying notes to financial statements.
IV-4
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
BALANCE SHEET
DECEMBER 31, 1996
1996
---------------
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,129
Oil and gas sales receivable 137,626
----------------
Total Current Assets 138,755
----------------
Gas Imbalance Receivable 18,347
---------------
Oil and Gas Properties, using full cost
accounting 5,849,487
Less-Accumulated depreciation, depletion
and amortization (4,800,974)
----------------
1,048,513
----------------
$ 1,205,615
================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 282,699
----------------
Deferred Revenues 23,268
Limited Partners' Capital (56,952 Limited Partnership Units;
$100 per unit) 837,020
General Partners' Capital 62,628
----------------
Total Partners' Capital 899,648
----------------
$ 1,205,615
================
See accompanying notes to financial statements.
IV-5
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
STATEMENT OF CHANGES IN NET ASSETS IN PROCESS OF LIQUIDATION
FOR THE PERIOD FROM DECEMBER 1, 1997 TO DECEMBER 31, 1997
LIQUIDATION TRANSACTIONS:
Increase (decrease) in net assets resulting from -
Sales of oil and gas properties $ (110,302)
Net changes in other assets and liabilities (286,593)
---------------
(396,895)
---------------
OPERATIONS:
Oil and gas sales $ 21,418
Lease operating costs (3,596)
Production taxes (1,552)
General and administrative costs 7,045
---------------
23,315
---------------
FINANCING:
Interest income --
Interest expense --
---------------
Change in Net Assets (373,580)
Net Assets in Process of Liquidation at December 1, 1997 1,791,496
---------------
Net Assets in Process of Liquidation at December 31, 1997 $ 1,417,916
===============
See accompanying notes to financial statements.
IV-6
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1997 THROUGH NOVEMBER 30, 1997 AND
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Eleven Months Year Year
Ended Ended Ended
November 30, December 31, December 31,
1997 1996 1995
--------------- --------------- ---------------
REVENUES:
Oil and gas sales $ 407,804 $ 668,937 $ 614,169
Interest income 60 94 187
Other 1,502 3,093 3,541
--------------- --------------- ---------------
409,366 672,124 617,897
--------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 137,985 199,839 251,627
Production taxes 19,844 42,747 40,204
Depreciation, depletion
and amortization -
Normal provision 126,732 236,648 236,382
Additional provision -- -- 417,905
General and administrative 72,589 100,780 69,371
Interest expense 5,630 26,422 63,149
--------------- --------------- ---------------
362,780 606,436 1,078,638
--------------- --------------- ---------------
Income (Loss) Before Adoption
Of Liquidation Basis Of Acccounting $ 46,586 $ 65,688 $ (460,741)
--------------- --------------- ---------------
Effect Of Adoption Of Liquidation
Basis Of Accounting 960,485 -- --
--------------- --------------- ---------------
Income (Loss) $ 1,007,071 $ 65,688 $ (460,741)
=============== =============== ===============
See accompanying notes to financial statements.
IV-7
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
STATEMENTS OF PARTNERS' CAPITAL
FOR THE PERIOD FROM JANUARY 1, 1997 THROUGH NOVEMER 30, 1997
AND FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Limited General Combining
Partners Partners Adjustment Total
--------------- --------------- --------------- ---------------
Balance,
December 31, 1994 $ 1,298,728 $ 78,474 $ 187,883 $ 1,565,085
Income (Loss) (417,253) 18,717 (62,205) (460,741)
Cash Distributions (72,700) (23,581) -- (96,281)
--------------- --------------- --------------- ---------------
Balance,
December 31, 1995 808,775 73,610 125,678 1,008,063
--------------- --------------- --------------- ---------------
Income (Loss) 62,424 23,121 (19,857) 65,688
Cash Distributions (140,000) (34,103) -- (174,103)
--------------- --------------- --------------- ---------------
Balance,
December 31, 1996 731,199 62,628 105,821 899,648
--------------- --------------- --------------- ---------------
Income (Loss) 912,650 107,601 (13,180) 1,007,071
Cash Distributions (85,500) (29,723) -- (115,223)
--------------- --------------- --------------- ---------------
Balance,
Novmeber 30, 1997 $ 1,558,349 $ 140,506 $ 92,641 $ 1,791,496
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit
1995 Income (Loss) $ (7.33)
============
1996 Income (Loss) $ 1.10
============
1997 Income (Loss) Before
Adoption Of Liquidation
Basis Of Accounting $ .85
---------------
Effect Of Adoption Of
Liquidation Basis Of
Accounting $ 15.17
---------------
Income (Loss) $ 16.02
===============
See accompanying notes to financial statements.
IV-8
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1997 THROUGH NOVEMBER 30, 1997
AND FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Eleven Months Year Year
Ended Ended Ended
November 30, December 31, December 31,
1997 1996 1995
--------------- --------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ 1,007 071 $ 65,688 $ (460,741)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Effect of adoption of liquidation basis of accounting (960,485) -- --
Depreciation, depletion and amortization 126,732 236,648 654,287
Change in gas imbalance receivable
and deferred revenues 228 78,711 3,721
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (201,849) 29,585 (13,809)
Increase (decrease) in accounts payable (243,118) (606,340) 98,590
--------------- --------------- ---------------
Net cash provided by (used in) operating activities (271,421) (195,708) 282,048
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties -- (93,600) (51,581)
Proceeds from sales of oil and gas properties 386,694 496,160 863
--------------- --------------- ---------------
Net cash provided by (used in) investing activities 386,694 402,560 (50,718)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (115,223) (174,103) (96,281)
Payments on note payable -- (33,665) (134,659)
--------------- --------------- ---------------
Net cash provided by (used in) financing activities (115,223) (207,768) (230,940)
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 50 (916) 390
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,129 2,045 1,655
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,179 $ 1,129 $ 2,045
=============== =============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 5,630 $ 26,982 $ 65,280
=============== =============== ===============
See accompanying notes to financial statements.
IV-9
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
NOTES TO FINANCIAL STATEMENTS
(1) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1990-C, Ltd., a Texas limited partnership
("the Partnership"), was formed on September 30, 1990, for the purpose of
purchasing and operating producing oil and gas properties within the continental
United States. Swift Energy Company ("Swift"), a Texas corporation, and VJM
Corporation ("VJM"), a California corporation, serve as Managing General Partner
and Special General Partner of the Partnership, respectively. The general
partners are required to contribute up to 1/99th of limited partner net
contributions. The 539 limited partners made total capital contributions of
$5,695,200.
The limited partners of the Partnership approved the dissolution of the
Partnership on November 25, 1997. As a result, the Partnership has changed its
basis of accounting, effective December 1, 1997, from the historical cost basis
to the liquidation basis. Under the liquidation basis of accounting, the
Partnership's assets at December 31, 1997 are reported at estimated net
realizable value, and the Partnership's liabilities are presented at estimated
settlement amounts. The net effect of the revaluation of the Partnership's
assets and liabilities due to the adoption of the liquidation basis of
accounting was an upward adjustment of $960,485.
Oil and gas properties at December 31, 1997 reflect the managing
general partner's estimate of value, in the absence of third party appraisals or
evaluations, based on future net revenues of the properties, discounted at 10%,
as of December 31, 1997. This estimate is based on its assessment of the impact
of selling existing assets based on current market conditions and estimated
disposal costs. The net proceeds from the sales of oil and gas properties may
vary substantially due to changes in oil and gas prices, subsequent production
and other factors which may be applied by buyers.
For all other assets and liabilities presented on the liquidation basis
of accounting, the managing general partner believes that historical cost
approximates fair value due to the short-term nature of such assets and
liabilities.
The accompanying statements of operations, partners' capital and cash
flows for the period from January 1, 1997 through November 30, 1997 were
prepared using the historical cost basis of accounting.
(2) Significant Accounting Policies -
Use of Estimates --
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
estimates.
Oil and Gas Properties --
The Partnership accounts for its ownership interest in oil and gas
properties using the proportionate consolidation method, whereby the
Partnership's share of assets, liabilities, revenues and expenses is included in
the appropriate classification in the financial statements.
For financial reporting purposes, the Partnership follows the
"full-cost" method of accounting for oil and gas property costs. Under this
method of accounting, all productive and nonproductive costs incurred in the
acquisition and development of oil and gas reserves are capitalized. Such costs
include lease acquisitions, geological and geophysical services, drilling,
completion, equipment and certain general and administrative costs directly
associated with acquisition and development activities. General and
administrative costs related to production and general overhead are expensed as
incurred. No general and administrative costs were capitalized during the years
ended December 31, 1997, 1996 and 1995.
IV-10
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Future development, site restoration, dismantlement and abandonment
costs, net of salvage values, are estimated on a property-by-property basis
based on current economic conditions and are amortized to expense as the
Partnership's capitalized oil and gas property costs are amortized.
The unamortized cost of oil and gas properties is limited to the
"ceiling limitation", (calculated separately for the Partnership, limited
partners, and general partners). The "ceiling limitation" is calculated on a
quarterly basis and represents the estimated future net revenues from proved
properties using current prices, discounted at ten percent. Proceeds from the
sale or disposition of oil and gas properties are treated as a reduction of oil
and gas property costs with no gains or losses being recognized except in
significant transactions.
The Partnership computes the provision for depreciation, depletion and
amortization of oil and gas properties on the units-of-production method. Under
this method, the provision is calculated by multiplying the total unamortized
cost of oil and gas properties, including future development, site restoration,
dismantlement and abandonment costs, by an overall amortization rate that is
determined by dividing the physical units of oil and gas produced during the
period by the total estimated units of proved oil and gas reserves at the
beginning of the period.
The calculation of the "ceiling limitation" and the provision for
depreciation, depletion, and amortization is based on estimates of proved
reserves. There are numerous uncertainties inherent in estimating quantities of
proved reserves and in projecting the future rates of production, timing and
plan of development. The accuracy of any reserve estimate is a function of the
quality of available data and of engineering and geological interpretation and
judgment. Results of drilling, testing and production subsequent to the date of
the estimate may justify revision of such estimate. Accordingly, reserve
estimates are often different from the quantities of oil and gas that are
ultimately recovered.
Cash and Cash Equivalents --
Highly liquid debt instruments with an initial maturity of three months
or less are considered to be cash equivalents.
Reclassifications --
Certain reclassifications have been made to the prior year balances to
conform with the current year presentation.
(3) Oil and Gas Capitalized Costs -
The following table sets forth capital expenditures related to the
Partnership's oil and gas operations:
Year Ended December 31,
-----------------------------------------
1997 1996 1995
-------- ------- --------
Acquisition of
proved properties $ -- $ -- $ --
Development -- 93,600 51,581
-------- ------- --------
$ -- $ 93,600 $ 51,581
-------- ------- --------
All oil and gas property acquisitions are made by Swift on behalf of
the Partnership. The costs of the properties include the purchase price plus any
costs incurred by Swift in the evaluation and acquisition of properties.
IV-11
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During 1995, the Partnership's unamortized oil and gas property costs
exceeded the quarterly calculations of the "ceiling limitation" resulting in an
additional provision for depreciation, depletion and amortization of $417,905.
In addition, the limited partners' share of unamortized oil and gas property
costs exceeded their "ceiling limitation" in 1995, resulting in a valuation
allowance of $370,152. This amount is included in the income (loss) attributable
to the limited partners shown in the statement of partners' capital together
with a "combining adjustment" for the difference between the limited partners'
valuation allowance and the Partnership's full cost ceiling write down. The
"combining adjustment" changes quarterly as the Partnership's total
depreciation, depletion and amortization provision is more or less than the
combined depreciation, depletion and amortization provision attributable to the
general and limited partners.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer Manager,
received $141,508 for managing and overseeing the offering of limited
partnership units.
A one-time management fee of $142,380 was paid to Swift in 1990 for
services performed for the Partnership. During 1997, 1996 and 1995, the
Partnership paid Swift $34,044, $78,034 and $46,966, respectively, as a general
and administrative overhead allowance.
Effective September 30, 1990, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement") with Swift
Energy Managed Pension Assets Partnership 1990-C, Ltd. ("Pension Partnership"),
managed by Swift for the purpose of acquiring working interests in producing oil
and gas properties. Under the terms of the NP/OR Agreement, the Partnership has
conveyed to the Pension Partnership a nonoperating interest in the aggregate net
profits (i.e., oil and gas sales net of related operating costs) of the
properties acquired equal to its proportionate share of the property acquisition
costs.
(5) Federal Income Taxes -
The Partnership is not a tax-paying entity. No provision is made in the
accounts of the Partnership for federal or state income taxes, since such taxes
are liabilities of the individual partners, and the amounts thereof depend upon
their respective tax situations.
The tax returns and the amount of distributable Partnership income are
subject to examination by the federal and state taxing authorities. If the
Partnership's ordinary income for federal income tax purposes is ultimately
changed by the taxing authorities, the tax liability of the limited partners
could be changed accordingly. Ordinary income reported on the Partnership's
federal return of income for the years ended December 31, 1997, 1996 and 1995
was $380,113, $429,938 and $202,609, respectively. The difference between
ordinary income for federal income tax purposes reported by the Partnership and
net income or loss reported herein primarily results from the exclusion of
depletion (as described below) from ordinary income reported in the
Partnership's federal return of income.
For federal income tax purposes, depletion with respect to production
of oil and gas is computed separately by the partners and not by the
Partnership. Since the amount of depletion on the production of oil and gas is
not computed at the Partnership level, depletion is not included in the
Partnership's income for federal income tax purposes but is charged directly to
the partners' capital accounts to the extent of the cost of the leasehold
interests, and thus is treated as a separate item on the partners' Schedule K-1.
Depletion for federal income tax purposes may vary from that computed for
financial reporting purposes in cases where a ceiling adjustment is recorded, as
such amount is not recognized for tax purposes.
IV-12
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(6) Gas Imbalances -
The Partnership recognizes its ownership interest in natural gas
production as revenue. Actual production quantities sold may be different than
the Partnership's ownership share in a given period. If the Partnership's sales
exceed its share of production, the differences are recorded as deferred
revenue. Gas balancing receivables are recorded when the Partnership's ownership
share of production exceeds sales.
(7) 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.
In the normal course of business, the Partnership extends credit,
primarily in the form of monthly oil and gas sales receivables, 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.
(8) 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.
IV-13
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD
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 1990-C, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
General Partner
Date: February 18, 1998 By: s/b A. Earl Swift
----------------- -----------------------------------
A. Earl Swift
Chief Executive Officer
Date: February 18, 1998 By: s/b John R. Alden
----------------- -----------------------------------
John R. Alden
Principal Financial Officer
Date: February 18, 1998 By: s/b Alton D. Heckaman, Jr.
----------------- -----------------------------------
Alton D. Heckaman, Jr.
Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SWIFT ENERGY INCOME
PARTNERS 1990-C, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
General Partner
Date: February 18, 1998 By: s/b A. Earl Swift
----------------- -----------------------------------
A. Earl Swift
Director and Principal
Executive Officer
Date: February 18, 1998 By: s/b Virgil N. Swift
----------------- -----------------------------------
Virgil N. Swift
Director and Executive
Vice President - Business
Development
IV-14
SWIFT ENERGY INCOME PARTNERS 1990-C, LTD
Date: February 18, 1998 By: s/b G. Robert Evans
----------------- -----------------------------------
G. Robert Evans
Director
Date: February 18, 1998 By: s/b Raymond O. Loen
----------------- -----------------------------------
Raymond O. Loen
Director
Date: February 18, 1998 By: s/b Henry C. Montgomery
----------------- -----------------------------------
Henry C. Montgomery
Director
Date: February 18, 1998 By: s/b Clyde W. Smith, Jr.
----------------- -----------------------------------
Clyde W. Smith, Jr.
Director
Date: February 18, 1998 By: s/b Harold J. Withrow
----------------- -----------------------------------
Harold J. Withrow
Director
IV-15