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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 JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________to ____________
Commission File number: 33-37983-24
SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
(Exact name of registrant as specified in its charter)
TEXAS 76-0441892
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
16825 NORTHCHASE DRIVE, SUITE 400
HOUSTON, TEXAS 77060
(Address of principal executive offices)
(Zip Code)
(713)874-2700
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- June 30, 1996 and December 31, 1995 3
Statements of Operations
- Three month and six month periods ended June 30, 1996 and 1995 4
Statements of Cash Flows
- Six month periods ended June 30, 1996 and 1995 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION 10
SIGNATURES 11
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1996 1995
--------------- --------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,649 $ 1,620
Nonoperating interests income receivable 72,960 18,974
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Total Current Assets 74,609 20,594
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Nonoperating interests in oil and gas
properties, using full cost accounting 3,648,877 3,654,093
Less-Accumulated amortization (1,287,182) (1,147,034)
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2,361,695 2,507,059
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$ 2,436,304 $ 2,527,653
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LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Payable related to property capital costs $ 5,622 $ 7,311
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Partners' Capital 2,430,682 2,520,342
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$ 2,436,304 $ 2,527,653
=============== ==============
See accompanying notes to financial statements.
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1996 1995 1996 1995
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REVENUES:
Income from nonoperating interests $ 144,768 $ 95,562 $ 273,876 $ 148,192
Interest income 21 22 29 23
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144,789 95,584 273,905 148,215
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COSTS AND EXPENSES:
Amortization 61,014 72,597 140,148 170,985
General and administrative 18,956 22,004 36,555 32,430
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79,970 94,601 176,703 203,415
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NET INCOME (LOSS) $ 64,819 $ 983 $ 97,202 $ (55,200)
============== ============== ============== ==============
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT $ .02 $ -- $ .03 $ (.02)
============== ============== ============== ==============
See accompanying note to financial statements.
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
--------------------------------------
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 97,202 $ (55,200)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 140,148 170,985
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income receivable (53,986) 176,739
Increase (decrease) in accounts payable
and accrued liabilities -- 1,040
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Net cash provided by (used in) operating activities 183,364 293,564
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperating interests in oil and gas properties (31,985) (70,234)
Proceeds from sales of nonoperating interests
in oil and gas properties 37,201 1,872
Payable related to property capital costs (1,689) --
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Net cash provided by (used in) investing activities 3,527 (68,362)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (186,862) (225,173)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29 29
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,620 1,531
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,649 $ 1,560
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Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 809 $ --
============== ===============
See accompanying notes to financial statements.
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) GENERAL INFORMATION -
The financial statements included herein have been prepared by
the Partnership and are unaudited except for the balance sheet at
December 31, 1995 which has been taken from the audited financial
statements at that date. The financial statements reflect
adjustments, all of which were of a normal recurring nature, which
are, in the opinion of the managing general partner necessary for a
fair presentation. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to
the rules and regulations of the Securities and Exchange Commission
("SEC"). The Partnership believes adequate disclosure is provided by
the information presented. The financial statements should be read in
conjunction with the audited financial statements and the notes
included in the latest Form 10-K.
(2) ORGANIZATION AND TERMS OF PARTNERSHIP AGREEMENT -
Swift Energy Pension Partners 1994-B, Ltd., a Texas limited
partnership (the Partnership), was formed on June 30, 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 323 Interest Holders made total
capital contributions of $3,535,809.
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.
(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.
NONOPERATING INTERESTS IN OIL AND GAS PROPERTIES --
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.
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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-B, 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.
(5) VULNERABILITY DUE TO CERTAIN CONCENTRATIONS -
The Company's revenues are primarily the result of sales of
its oil and natural gas production. Market prices of oil and natural
gas may fluctuate and adversely affect operating results.
The Partnership extends credit to various companies in the oil
and gas industry which results in a concentration of credit risk.
This concentration of credit risk may be affected by changes in
economic or other conditions and may accordingly impact the
Partnership's overall credit risk. However, the Managing General
Partner believes that the risk is mitigated by the size, reputation,
and nature of the companies to which the Partnership extends credit.
In addition, the Partnership generally does not require collateral or
other security to support customer receivables.
(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.
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SWIFT ENERGY PENSION PARTNERS 1994-B, 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 with 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.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has expended all of the Interest Holder's commitments
available for property acquisitions by acquiring nonoperating interests in
producing oil and gas properties.
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.
RESULTS OF OPERATIONS
The following analysis explains changes in the revenue and expense
categories for the quarter ended June 30, 1996 (current quarter) when compared
to the quarter ended June 30, 1995 (corresponding quarter), and for the six
months ended June 30, 1996 (current period), when compared to the six months
ended June 30, 1995 (corresponding period).
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Income from nonoperating interests increased 51 percent in the current
quarter of 1996 when compared to the second quarter in 1995. Oil and gas sales
increased $4,862 or 3 percent in the current quarter of 1996 when compared to
the corresponding quarter in 1995, primarily due to increased gas and oil
prices. An increase in gas prices of 54 percent or $.82/MCF and in oil prices
of 15 percent or $2.48/BBL had a significant impact on partnership performance.
Current quarter gas and oil production decreased 24 percent and 20 percent,
respectively, when compared to second quarter 1995 production volumes,
partially offsetting the effect of increased gas and oil prices.
Associated amortization expense decreased 16 percent or $11,583.
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Income from nonoperating interests increased 85 percent in the current
period of 1996 when compared to the corresponding period in 1995. Oil and gas
sales increased $43,893 or 13 percent in the first six months of 1996 over the
corresponding period in 1995. An increase in gas prices of 64 percent or
$.90/MCF and in oil prices of 16 percent or $2.51/BBL were major contributing
factors to the increased revenues for the period. Also, current period oil
production decreased 27 percent when compared to the corresponding period in
1995, partially offsetting the effect of increased gas and oil prices.
Associated amortization expense decreased 1 percent or $1,519.
The Partnership recorded an additional provision in amortization in the
first six months of 1995 for $29,318 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 1996, partnership revenues and costs will be shared between the
Interest Holders and general partners in an 85:15 ratio.
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SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
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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-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: August 9, 1996 By: /s/ John R. Alden
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John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: August 9, 1996 By: /s/ Alton D. Heckaman, Jr.
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Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
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Index to Exhibits
Exhibit
Number Description
- - -------- -----------
27 Financial Data Schedule