FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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: 0-25948
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0431884
(State or other jurisdiction (I.R.S. Employer Identification No.)
of organization)
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(Address of principal executive offices)
(Zip Code)
(281)874-2700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
Statement of Net Assets in Process of Liquidation
- March 31, 2000 3
Balance Sheet
- December 31, 1999 4
Statement of Changes in Net Assets in Process of Liquidation
- For the period from February 1, 2000 to March 31, 2000 5
Statements of Operations
- One month period ended January 31, 2000 and three month period ended March 31, 1999 6
Statements of Cash Flows
- One month period ended January 31, 2000 and three month period ended March 31, 1999 7
Notes to Financial Statements 8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION 13
SIGNATURES 14
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
STATEMENT OF NET ASSETS IN PROCESS OF LIQUIDATION
(Unaudited)
March 31,
2000
-----------
ASSETS:
Cash and cash equivalents $ 1,129
Nonoperating interests income receivable 22,932
Nonoperating interests in oil and gas properties 1,216,069
-----------
Total Assets 1,240,130
-----------
LIABILITIES:
Accounts Payable 3,957
-----------
Total Liabilities 3,957
-----------
Net Assets in Process of Liquidation $ 1,236,173
===========
See accompanying notes to financial statements.
3
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
BALANCE SHEET
December 31,
1999
-----------
ASSETS:
Current Assets:
Cash and cash equivalents $ 19,720
Nonoperating interests income receivable 25,865
-----------
Total Current Assets 45,585
-----------
Nonoperating interests in oil and gas
properties, using full cost accounting 1,743,955
Less-Accumulated amortization (1,336,236)
-----------
407,719
-----------
$ 453,304
===========
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 12,243
-----------
Interest Holders' Capital (2,635,723 Interest Holders'
SDIs; $1.00 per SDI) 416,314
General Partners' Capital 24,747
-----------
Total Partners' Capital 441,061
-----------
$ 453,304
===========
See accompanying notes to financial statements.
4
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
STATEMENT OF CHANGES IN NET ASSETS IN PROCESS OF LIQUIDATION
FOR THE PERIOD FROM FEBRUARY 1, 2000 TO MARCH 31, 2000
(Unaudited)
LIQUIDATION TRANSACTIONS:
Increase (decrease) in net assets resulting from -
Sales of oil and gas properties $ (146)
Net changes in other assets and liabilities
(43,914)
-----------
(44,060)
-----------
OPERATIONS:
Income from nonoperating interests $ 15,058
General and administrative costs (11,907)
-----------
3,151
-----------
FINANCING:
Interest income $ 86
Interest expense --
-----------
Change in Net Assets (40,823)
Net Assets in Process of Liquidation at February 1, 2000 1,195,350
-----------
Net Assets in Process of Liquidation at March 31, 2000 $ 1,236,173
===========
See accompanying notes to financial statements.
5
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
One Month Three Months
Ended Ended
January 31, March 31,
2000 1999
----------- -----------
REVENUES:
Income from nonoperating interests $ 7,764 $ 35,391
Interest income 43 6
----------- -----------
7,807 35,397
----------- -----------
COSTS AND EXPENSES:
Amortization 1,833 20,688
General and administrative 3,250 13,302
----------- -----------
5,083 33,990
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Income (Loss) Before Adoption
Of Liquidation Basis Of Accounting $ 2,724 $ 1,407
----------- -----------
Effect Of Adoption Of Liquidation
Basis Of Accounting 762,066 --
----------- -----------
Income (Loss) $ 764,790 $ 1,407
=========== ===========
Interest Holders' net income (loss)
per SDI
Income (Loss) Before Adoption
of Liquidation Basis of Accounting $ -- $ --
=========== ===========
Effect of Adoption of Liquidation
Basis of Accounting $ 0.25 $ --
=========== ===========
Income (Loss) $ 0.25 $ --
=========== ===========
See accompanying notes to financial statements.
6
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
STATEMENT OF CASH FLOWS
(Unaudited)
One Month Three Months
Ended Ended
January 31, March 31,
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 764,790 $ 1,407
Adjustments to reconcile income (loss) to
net cash provided by operations:
Effect of adoption of liquidation basis of accounting (762,066) --
Amortization 1,833 20,688
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income receivable 4,703 (3,776)
Increase (decrease) in accounts payable (6,070) (47,729)
----------- -----------
Net cash provided by (used in) operating activities 3,190 (29,410)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperating interests in oil and gas properties (3,673) (8,184)
Proceeds from sales of nonoperating interests in oil and gas properties -- 47,499
----------- -----------
Net cash provided by (used in) investing activities (3,673) 39,315
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Distributions to partners (10,501) (9,900)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (10,984) 5
----------- -----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,720 1,299
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,736 $ 1,304
=========== ===========
See accompanying notes to financial statements.
7
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) General Information -
The interest holders of the Partnership approved the
dissolution of the Partnership on February 15, 2000. As a result, the
Partnership has changed its basis of accounting, effective February 1,
2000, from historical cost basis to the liquidation basis. Under the
liquidation basis of accounting, the Partnership's assets at March 31,
2000 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 $762,066.
Oil and gas properties at March 31, 2000 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 March 31, 2000. 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 market value due to the
short-term nature of such assets and liabilities.
The accompanying statements of operations and cash flows were
prepared using the historical cost basis of accounting.
The financial statements included herein have been prepared by
the Partnership and are unaudited except for the balance sheet at
December 31, 1999 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) Organization and Terms of Partnership Agreement -
Swift Energy Pension Partners 1994-A, Ltd., a Texas limited
partnership ("the Partnership"), was formed on April 20, 1994, for the
purpose of purchasing net profits interest, overriding royalty interests
and royalty interests (collectively, "nonoperating interests") in
producing oil and gas properties within the continental United States
and Canada. 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 sole limited partner of the Partnership is Swift Depositary Company,
which has assigned all of its beneficial (but not of record) rights and
interest as limited partner to the investors in the Partnership
("Interest Holders"), in the form of Swift Depositary Interests
("SDIs").
The Managing General Partner has paid or will pay out of its
own corporate funds (as a capital contribution to the Partnership) all
selling commissions, offering expenses, printing, legal and accounting
fees and other formation costs incurred in connection with the offering
of SDIs and the formation of the Partnership, for which the Managing
General Partner will receive an interest in continuing costs and
revenues of the Partnership. The 266 Interest Holders made total capital
contributions of $2,635,723.
Generally, all continuing costs (including general and
administrative reimbursements and direct expenses) and revenues are
allocated 85 percent to the Interest Holders and 15 percent to the
general partners. After partnership payout, as defined in the
Partnership Agreement, continuing costs and revenues will be shared 75
percent by the Interest Holders, and 25 percent by the general partners.
8
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(3) 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 Revenues --
Oil and gas revenues are reported using the entitlement method
in which the Partnership recognizes its interest in oil and natural gas
production as revenue.
Nonoperating Interests in Oil and Gas Properties --
The Partnership accounts for its ownership 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 statement.
For financial reporting purposes, the Partnership follows the
"full-cost" method of accounting for nonoperating interests in oil and
gas property costs. Under this method of accounting, all costs incurred
in the acquisition of nonoperating interests in oil and gas properties
are capitalized. The unamortized cost of nonoperating interests in oil
and gas properties is limited to the "ceiling limitation", (calculated
separately for the partnership, limited partner, and general partners).
The "ceiling limitation" is calculated on a quarterly basis and
represents the estimated future net revenues from nonoperating interests
in proved properties using current prices, discounted at ten percent.
Proceeds from the sale or disposition of nonoperating interests in oil
and gas properties are treated as a reduction of the cost of the
nonoperating interests with no gains or losses recognized except in
significant transactions.
The Partnership computes the provision for amortization of
nonoperating interests in oil and gas properties on the
units-of-production method. Under this method, the provision is
calculated by multiplying the total unamortized cost of nonoperating
interests in oil and gas properties by an overall rate 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 attributable to
the Partnership's nonoperating interests 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.
(4) Related-Party Transactions -
The Partnership entered into a Net Profits and Overriding
Royalty Interest Agreement ("NP/OR Agreement") with Swift Energy
Operating Partners 1994-A, Ltd. ("Operating Partnership"), an affiliated
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 been conveyed 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 the
Partnership's proportionate share of the property acquisition costs.
9
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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.
(6) 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.
10
SWIFT ENERGY PENSION PARTNERS 1994-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 nonoperating
interests in producing oil and gas properties located within the continental
United States and Canada. 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 was formed, it commenced its
"acquisition" phase, with all funds placed in short-term investments until
required for the acquisition of nonoperating interests. Therefore, the interest
earned on these pre-acquisition investments becomes the primary cash flow source
for initial partner distributions. As the Partnership acquires nonoperating
interests in producing properties, net cash from ownership of nonoperating
interests becomes available for distribution, along with the investment income.
After all partnership funds have been expended on nonoperating interests in
producing oil and gas properties, the Partnership enters its "operations" phase.
During this phase, income from nonoperating interests in oil and gas sales
generates substantially all revenues, and distributions to Interest Holders
reflect those revenues less all associated partnership expenses. The Partnership
may also derive proceeds from the sale of nonoperating interests in acquired oil
and gas properties, when the sale of such interests is economically appropriate
or preferable to continued operations.
LIQUIDATION
In December 1999, the Managing General Partner informed the interest
holders of a proposal to sell all of the Partnership's nonoperating interests in
oil and gas properties and dissolve and liquidate the Partnership. The special
meeting of limited partners was held on February 15, 2000.
Of the total SDIs held by the interest holders, 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 February 1, 2000.
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 nonoperating interests in oil and gas properties.
Cash distributions to partners are determined quarterly, based upon net proceeds
from sales of oil and gas production after payment of lease operating expense,
taxes and development costs, less general and administrative expenses. In
addition, future partnership cash requirements are taken into account to
determine necessary cash reserves.
Net cash provided by (used in) operating activities totaled $2,441 and
$(29,410) for the three months ended March 31, 2000 and 1999, respectively. Cash
provided by proceeds from the sale of nonoperating interests in properties
totaled $47,499 for the three months ended March 31, 1999. Cash distributions
totaled $10,501 and $9,900 for the three months ended March 31, 2000 and 1999,
respectively.
The Partnership has expended all of the partners' 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. The Partnership does not allow for
additional assessments from the partners or Interest Holders to fund capital
requirements. However, funds are available from partnership revenues 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.
After sale of all its nonoperating interests in oil and gas 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.
11
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
As a result of the interest holders' approval of the liquidation of the
Partnership, the Partnership has changed its basis of accounting, effective
February 1, 2000, 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 in Process of Liquidation for the period from
February 1, 2000, to March 31, 2000. The Partnership's results from its oil and
gas operations presented herein are on a combined basis for the 2000 periods
prior to and subsequent to the adoption of the liquidation basis of accounting.
Income from nonoperating interests decreased 36 percent in the first
quarter of 2000 when compared to the same quarter in 1999. Oil and gas sales
declined $18,130 or 29 percent in the first quarter of 2000 when compared to the
corresponding quarter in 1999 primarily due to decreased oil and gas production
as a result of property sales during 1999. Current quarter production volumes
decreased 68 percent as oil and gas production declined 39 percent and 86
percent, respectively, when compared to first quarter 1999 production volumes.
Oil prices increased 125 percent or $13.13/BBL to an average of $23.62/BBL and
gas prices increased 50 percent or $0.81/MCF to an average of $2.43/MCF for the
quarter. Increased oil and gas prices helped offset the effect of decreased
production.
The partnership's sale of several properties in 1999 had a significant
impact on the partnership's production decline and performance. Substantially
all of the total production decline for the partnership in the first quarter of
2000 when compared to the corresponding quarter in 1999 was related to property
sales. Revenues in the first quarter of 1999 attributable to the properties
subsequently sold in 1999 comprised 64 percent of the total revenues in the
first quarter.
Corresponding production costs per equivalent MCF increased 210 percent in
the first quarter of 2000 compared to the first quarter of 1999 and total
production costs decreased 2 percent.
Total amortization expense decreased 73 percent or $15,189 in 2000
compared to first quarter 1999, related to the decline in production volumes.
During 2000, partnership revenues and costs will be shared between the
Interest Holders and general partners in an 85:15 ratio.
12
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
13
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 PENSION
PARTNERS 1994-A, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 8, 2000 By: /s/ John R. Alden
----------- -------------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 8, 2000 By: /s/ Alton D. Heckaman, Jr.
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Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
14