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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 33-1875-01
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0185864
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF ORGANIZATION) 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
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SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- September 30, 1995 and December 31, 1994 3
Statements of Operations
- Three month and nine month periods ended September 30,
1995 and 1994 4
Statements of Cash Flows
- Nine month periods ended September 30, 1995 and 1994 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 1986-A, LTD.
BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1995 1994
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(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,462 $ 1,415
Oil and gas sales receivable 24,516 37,947
----------- -----------
Total Current Assets 25,978 39,362
----------- -----------
Oil and Gas Properties, using full cost
accounting 3,653,077 3,653,274
Less-Accumulated depreciation, depletion
and amortization (3,488,005) (3,403,088)
----------- -----------
165,072 250,186
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$ 191,050 $ 289,548
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 79,423 $ 121,183
----------- -----------
Deferred Revenues 4,373 4,426
Partners' Capital 107,254 163,939
----------- -----------
$ 191,050 $ 289,548
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ------------ ------------
REVENUES:
Oil and gas sales $ 26,658 $ 44,571 $ 87,534 $ 230,616
Interest income 21 12 47 26
Other income 9 -- 9 15
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26,688 44,583 87,590 230,657
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COSTS AND EXPENSES:
Lease operating 5,114 11,181 22,644 23,895
Production taxes 2,142 2,023 6,683 10,127
Depreciation, depletion
and amortization -
Normal provision 14,392 36,827 51,501 157,401
Additional provision -- 132,446 33,416 238,958
General and administrative 4,232 5,061 13,681 17,259
Interest expense 1,315 -- 3,825 --
------------------------------------------------------
27,195 187,538 131,750 447,640
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NET INCOME (LOSS) $ (507) $(142,955) $(44,160) $(216,983)
============ ============ ============ ============
Limited Partners' net income
(loss) per unit $ (.13) $ (37.86) $ (11.69) $ (57.46)
============ ============ ============ ============
SEE ACCOMPANYING NOTE TO FINANCIAL STATEMENTS.
4
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ (44,160) $(216,983)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 84,917 396,359
Deferred revenues (53) (624)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 13,431 76,582
Increase (decrease) in accounts payable
and accrued liabilities (41,760) (182,106)
-------------------------------
Net cash provided by (used in)
operating activities 12,375 73,228
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties -- (11,809)
Proceeds from sales of oil and gas properties 197 2,656
-------------------------------
Net cash provided by (used in)
investing activities 197 (9,153)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (12,525) (64,049)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 47 26
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,415 1,363
-------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,462 $ 1,389
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
SWIFT ENERGY INCOME PARTNERS 1986-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,
1994 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 note included in the latest Form 10-K.
(2) DEFERRED REVENUES -
Deferred Revenues represent a gas imbalance liability assumed as
part of property acquisitions. The imbalance is 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 deferred revenues.
(3) CONCENTRATION OF CREDIT RISK -
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.
6
SWIFT ENERGY INCOME PARTNERS 1986-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 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 the acquisition of producing oil and gas
properties, expending all of the limited partners' net 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, 1995 (current quarter) when
compared to the quarter ended September 30, 1994 (corresponding quarter), and
for the nine months ended September 30, 1995 (current period), when compared
to the nine months ended September 30, 1994 (corresponding period).
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Oil and gas sales declined $17,914 or 40 percent in the current quarter
of 1995 when compared to the corresponding quarter in 1994, primarily due to
decreased gas production. Current quarter gas production declined 31
percent, when compared to third quarter 1994 production volumes. A decline
in gas prices of 13 percent or $.24/MCF further contributed to decreased
revenues.
Associated depreciation expense decreased 61 percent or $22,435.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the third quarter of 1994 for $132,446 when the
present value, discounted at ten percent, of estimated future net revenues
from oil and gas properties based on the prices in effect at the filing date,
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 September 30, 1994, the Partnership
would have recorded an additional provision at September 30, 1994 in the
amount of $179,186.
7
SWIFT ENERGY INCOME PARTNERS 1986-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Oil and gas sales decreased $143,083 or 62 percent in the first nine
months of 1995 over the corresponding period in 1994. A decline of 51
percent in gas production was a contributing factor to the decreased revenues
for the period. Also, current period gas prices decreased 37 percent or
$.82/MCF compared to the corresponding period in 1994, further contributing
to decreased income.
Associated depreciation expense decreased 67 percent or $105,900.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first nine months of 1995 and 1994 for
$33,416 and $238,958, respectively, 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.
During 1995, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
8
SWIFT ENERGY INCOME PARTNERS 1986-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 1986-A, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: November 13, 1995 By: /s/ John R. Alden
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John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: November 13, 1995 By: /s/ Alton D. Heckaman, Jr.
----------------------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10