<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (or Date of Earliest Event Reported): August 18, 1998
SWIFT ENERGY COMPANY
(Exact name of Registrant as specified in its charter)
TEXAS 1-8754 74-2073055
(State of incorporation (Commission File Number) (IRS Employer
or organization) Identification No.)
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(Address of principal executive offices)
(281) 874-2700
(Registrant's telephone number)
<PAGE>
ITEM 7. Financial Statements and Exhibits.
Swift Energy Company (the "Company" or "Swift") has filed a
Registration Statement on Form S-4 (Registration No. 333-50637) relating to the
proposal by the Company to purchase substantially all of the assets of 63
partnerships of which the Company is the Managing General Partner. Of these 63
partnerships, 24 are not required to file reports pursuant to Section 13 or
15(d) of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"). The unaudited financial statements for the quarter ended June 30, 1998
for each of the 24 partnerships not subject to the informational requirements of
the Exchange Act are set forth herein.
2
<PAGE>
DOCUMENT DESCRIPTION
--------------------
1. SWIFT ENERGY INCOME PARTNERS 1988-1, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
2. SWIFT ENERGY INCOME PARTNERS 1988-2, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
3. SWIFT ENERGY INCOME PARTNERS 1988-3, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
4. SWIFT ENERGY INCOME PARTNERS 1988-D, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
5. SWIFT ENERGY INCOME PARTNERS 1989-1, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
6. SWIFT ENERGY INCOME PARTNERS 1989-2, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
7. SWIFT ENERGY INCOME PARTNERS 1989-3, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
8. SWIFT ENERGY INCOME PARTNERS 1989-4, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
9. SWIFT ENERGY INCOME PARTNERS 1989-A, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
10. SWIFT ENERGY INCOME PARTNERS 1989-C, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
11. SWIFT ENERGY INCOME PARTNERS 1989-D, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
12. SWIFT ENERGY INCOME PARTNERS 1990-1, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
3
<PAGE>
DOCUMENT DESCRIPTION
--------------------
13. SWIFT ENERGY INCOME PARTNERS 1990-2, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
14. SWIFT ENERGY INCOME PARTNERS 1990-B, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
15. SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
16. SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
17. SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
18. SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
19. SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
20. SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
21. SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
22. SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
23. SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
24. SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD. QUARTERLY REPORT FOR THE PERIOD
ENDED 06/30/98.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 79,994 $ 98,491
Oil and gas sales receivable 21,024 22,681
--------------- ---------------
Total Current Assets 101,018 121,172
--------------- ---------------
Gas Imbalance Receivable 2,000 2,221
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 1,614,977 1,614,337
Less-Accumulated depreciation, depletion
and amortization (1,471,894) (1,465,040)
--------------- ---------------
143,083 149,297
--------------- ---------------
$ 246,101 $ 272,690
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 6,244 $ 6,520
--------------- ---------------
Deferred Revenues 11,520 11,905
Limited Partners' Capital (18,643 Limited Partnership Units;
$100 per unit) 228,241 250,459
General Partners' Capital 96 3,806
--------------- ---------------
Total Partners' Capital 228,337 254,265
--------------- ---------------
$ 246,101 $ 272,690
=============== ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 8,837 $ 15,090 $ 16,530 $ 51,119
Interest income 1,126 738 2,369 966
--------------- --------------- --------------- ---------------
9,963 15,828 18,899 52,085
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 3,148 4,269 5,888 12,193
Production taxes 546 916 992 3,174
Depreciation, depletion
and amortization 3,365 5,601 6,854 14,517
General and administrative 3,189 3,877 7,623 7,837
--------------- --------------- --------------- ---------------
10,248 14,663 21,357 37,721
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (285) $ 1,165 $ (2,458) $ 14,364
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.02) $ .06 $ (.13) $ .77
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (2,458) $ 14,364
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 6,854 14,517
Change in gas imbalance receivable
and deferred revenues (164) 550
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 1,657 6,054
Increase (decrease) in accounts payable (276) (859)
--------------- ---------------
Net cash provided by (used in) operating activities 5,613 34,626
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (640) --
Proceeds from sales of oil and gas properties -- 67,859
--------------- ---------------
Net cash provided by (used in) investing activities (640) 67,859
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (23,470) (18,650)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (18,497) 83,835
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 98,491 13,905
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 79,994 $ 97,740
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1988-1, Ltd., a Texas limited
partnership ("the Partnership"), was formed on August 9, 1988, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 196 limited partners made total capital contributions
of $1,864,300.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent.
(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 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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $46,608 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $46,608 was
paid to Swift for services performed for the Partnership.
Effective September 14, 1988, the Partnership entered into a
Net Profits and Overriding Royalty Interests Agreement ("NP/OR
Agreement") with Swift Energy Managed Pension Assets Partnership 1988-1,
Ltd. ("Pension Partnership"), managed by Swift, for the purpose of
acquiring working interests in producing oil and gas properties. Under
terms of the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-1, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 55,447 $ 71,570
Oil and gas sales receivable 32,234 41,402
--------------- ---------------
Total Current Assets 87,681 112,972
--------------- ---------------
Gas Imbalance Receivable 19,621 20,611
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 1,119,437 1,108,067
Less-Accumulated depreciation, depletion
and amortization (839,204) (819,500)
--------------- ---------------
280,233 288,567
--------------- ---------------
$ 387,535 $ 422,150
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 14,437 $ 15,760
--------------- ---------------
Deferred Revenues 18,177 19,311
Limited Partners' Capital (11,914 Limited Partnership Units;
$100 per unit) 354,032 387,008
General Partners' Capital 889 71
--------------- ---------------
Total Partners' Capital 354,921 387,079
--------------- ---------------
$ 387,535 $ 422,150
=============== ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 27,975 $ 25,087 $ 54,350 $ 72,496
Interest income 820 883 1,690 1,773
Other 178 188 312 459
--------------- --------------- --------------- ---------------
28,973 26,158 56,352 74,728
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 9,147 11,978 16,314 21,357
Production taxes 1,649 1,143 2,959 3,289
Depreciation, depletion
and amortization 10,362 8,998 19,704 20,551
General and administrative 6,161 5,142 10,968 11,062
--------------- --------------- --------------- ---------------
27,319 27,261 49,945 56,259
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 1,654 $ (1,103) $ 6,407 $ 18,469
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .14 $ (.09) $ .54 $ 1.55
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 6,407 $ 18,469
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 19,704 20,551
Change in gas imbalance receivable
and deferred revenues (144) 1,378
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 9,168 12,821
Increase (decrease) in accounts payable (1,323) (1,335)
--------------- ---------------
Net cash provided by (used in) operating activities 33,812 51,884
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (11,370) (4,190)
Proceeds from sales of oil and gas properties -- 484
--------------- ---------------
Net cash provided by (used in) investing activities (11,370) (3,706)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (38,565) (63,831)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (16,123) (15,653)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 71,570 80,805
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 55,447 $ 65,152
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1988-2, Ltd., a Texas limited
partnership ("the Partnership"), was formed on October 3, 1988, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 107 limited partners made total capital contributions
of $1,191,400.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. Payout had
occurred as of December 31, 1996; therefore, for 1997 and each year
remaining in the life of the partnership, the continuing costs and
revenues will be shared 85 percent by the limited partners and 15
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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $29,410 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $29,785 was
paid to Swift for services performed for the Partnership.
Effective February 10, 1989, the Partnership entered into a
Net Profits and Overriding Royalty Interests Agreement ("NP/OR
Agreement") with Swift Energy Managed Pension Assets Partnership 1988-2,
Ltd. ("Pension Partnership"), managed by Swift, for the purpose of
acquiring working interests in producing oil and gas properties. Under
terms of the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-2, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 75,767 $ 100,684
Oil and gas sales receivable 47,436 61,170
--------------- ----------------
Total Current Assets 123,203 161,854
--------------- ----------------
Gas Imbalance Receivable 27,417 28,801
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 1,640,329 1,624,782
Less-Accumulated depreciation, depletion
and amortization (1,209,142) (1,178,436)
--------------- ----------------
431,187 446,346
--------------- ----------------
$ 581,807 $ 637,001
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 20,967 $ 22,079
--------------- ----------------
Deferred Revenues 25,421 27,007
Limited Partners' Capital (16,652 Limited Partnership Units;
$100 per unit) 534,819 587,841
General Partners' Capital 600 74
--------------- ----------------
Total Partners' Capital 535,419 587,915
--------------- ----------------
$ 581,807 $ 637,001
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 41,456 $ 39,402 $ 80,149 $ 110,707
Interest income 1,124 1,300 2,331 2,606
Other 347 404 619 947
--------------- --------------- --------------- ---------------
42,927 41,106 83,099 114,260
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 14,024 18,052 25,118 32,468
Production taxes 2,466 1,907 4,467 5,240
Depreciation, depletion
and amortization 16,079 14,356 30,706 32,393
General and administrative 8,160 7,265 14,865 15,573
--------------- --------------- --------------- ---------------
40,729 41,580 75,156 85,674
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 2,198 $ (474) $ 7,943 $ 28,586
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .13 $ (.03) $ .48 $ 1.72
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 7,943 $ 28,586
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 30,706 32,393
Change in gas imbalance receivable
and deferred revenues (202) 1,911
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 13,734 18,127
Increase (decrease) in accounts payable (1,112) (94)
--------------- ---------------
Net cash provided by (used in) operating activities 51,069 80,923
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (15,547) (6,206)
Proceeds from sales of oil and gas properties -- 678
--------------- ---------------
Net cash provided by (used in) investing activities (15,547) (5,528)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (60,439) (94,779)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (24,917) (19,384)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 100,684 115,396
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 75,767 $ 96,012
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1988-3, Ltd., a Texas limited
partnership ("the Partnership"), was formed on January 6, 1989, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 144 limited partners made total capital contributions
of $1,665,200.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. Payout had
occurred as of December 31, 1996; therefore, for 1997 and each year
remaining in the life of the partnership, the continuing costs and
revenues will be shared 85 percent by the limited partners and 15
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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $41,130 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $41,630 was
paid to Swift for services performed for the Partnership.
Effective February 10, 1989, the Partnership entered into a
Net Profits and Overriding Royalty Interests Agreement ("NP/OR
Agreement") with Swift Energy Managed Pension Assets Partnership 1988-2,
Ltd. ("Pension Partnership"), managed by Swift, for the purpose of
acquiring working interests in producing oil and gas properties. Under
terms of the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-3, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,158 $ 37,405
Oil and gas sales receivable 52,210 105,763
--------------- ---------------
Total Current Assets 53,368 143,168
--------------- ---------------
Gas Imbalance Receivable 26,172 27,280
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 4,247,443 4,222,551
Less-Accumulated depreciation, depletion
and amortization (3,445,963) (3,398,167)
--------------- ---------------
801,480 824,384
--------------- ---------------
$ 881,020 $ 994,832
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 40,373 $ 40,725
--------------- ---------------
Deferred Revenues 18,675 19,696
Limited Partners' Capital (43,610.70 Limited Partnership Units;
$100 per unit) 821,868 934,340
General Partners' Capital 104 71
--------------- ---------------
Total Partners' Capital 821,972 934,411
--------------- ---------------
$ 881,020 $ 994,832
=============== ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 79,622 $ 75,317 $ 137,866 $ 211,152
Interest income 35 789 267 1,538
Other 382 414 668 1,019
--------------- --------------- --------------- ---------------
80,039 76,520 138,801 213,709
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 23,940 30,716 42,866 55,980
Production taxes 4,725 3,430 7,547 10,678
Depreciation, depletion
and amortization 26,325 25,348 47,796 59,244
General and administrative 18,853 14,563 36,476 30,691
--------------- --------------- --------------- ---------------
73,843 74,057 134,685 156,593
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 6,196 $ 2,463 $ 4,116 $ 57,116
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .14 $ .06 $ .09 $ 1.31
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 4,116 $ 57,116
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 47,796 59,244
Change in gas imbalance receivable
and deferred revenues 87 5,108
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 53,553 73,406
Increase (decrease) in accounts payable (352) (51,677)
--------------- ---------------
Net cash provided by (used in) operating activities 105,200 143,197
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (24,892) (7,083)
Proceeds from sales of oil and gas properties -- 1,711
--------------- ---------------
Net cash provided by (used in) investing activities (24,892) (5,372)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (116,555) (170,464)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (36,247) (32,639)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 37,405 97,575
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,158 $ 64,936
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 00 $ --
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D, LTD.
NOTESS 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1988-D, Ltd., a Texas limited
partnership ("the Partnership"), was formed on Dfecember 31, 1988, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 400 limited partners made total capital contributions
of $4,361,070.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent.
(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 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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $106,527 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $109,027 was
paid to Swift for services performed for the Partnership.
Effective December 31, 1988, the Partnership entered into a
Net Profits and Overriding Royalty Interests Agreement ("NP/OR
Agreement") with Swift Energy Managed Pension Assets Partnership 1988-C,
Ltd. ("Pension Partnership"), managed by Swift, for the purpose of
acquiring working interests in producing oil and gas properties. Under
terms of the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,278 $ 28,690
Oil and gas sales receivable 50,307 82,002
--------------- ----------------
Total Current Assets 51,585 110,692
--------------- ----------------
Gas Imbalance Receivable 10,776 10,946
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 1,924,134 1,893,426
Less-Accumulated depreciation, depletion
and amortization (1,266,954) (1,218,682)
--------------- ----------------
657,180 674,744
--------------- ----------------
$ 719,541 $ 796,382
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 54,981 $ 30,030
--------------- ----------------
Deferred Revenues 4,793 4,982
Limited Partners' Capital (19,083 Limited Partnership Units;
$100 per unit) 654,464 756,424
General Partners' Capital 5,303 4,946
--------------- ----------------
Total Partners' Capital 659,767 761,370
--------------- ----------------
$ 719,541 $ 796,382
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 53,114 $ 70,336 $ 107,532 $ 168,955
Interest income 99 782 99 1,393
Other 169 159 296 411
--------------- --------------- --------------- ---------------
53,382 71,277 107,927 170,759
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 17,389 24,398 33,837 43,589
Production taxes 2,807 3,269 5,416 8,042
Depreciation, depletion
and amortization 23,407 23,096 48,272 48,983
General and administrative 9,291 9,759 17,516 20,677
Interest expense 24 -- 24 --
--------------- --------------- --------------- ---------------
52,918 60,522 105,065 121,291
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 464 $ 10,755 $ 2,862 $ 49,468
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .02 $ .56 $ .15 $ 2.59
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 2,862 $ 49,468
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 48,272 48,983
Change in gas imbalance receivable
and deferred revenues (19) 3,264
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 31,695 29,866
Increase (decrease) in accounts payable 24,951 (17,290)
--------------- ---------------
Net cash provided by (used in) operating activities 107,761 114,291
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (30,708) (9,801)
Proceeds from sales of oil and gas properties -- 1,014
(Increase) decrease in receivable due to property disposition -- 14,762
--------------- ---------------
Net cash provided by (used in) investing activities (30,708) 5,975
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (104,465) (119,875)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (27,412) 391
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 28,690 68,940
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,278 $ 69,331
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 24 $ --
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-1, Ltd., a Texas limited
partnership ("the Partnership"), was formed on March 31, 1989, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 181 limited partners made total capital contributions
of $1,908,300.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent.
(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 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 statement.
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 six months ended June
30, 1998 and 1997.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Affiliates of the Special General Partner, as Dealer Manager,
have received $47,708 for managing and overseeing the offering of the
limited partnership units. A one-time management fee of $47,708 was paid
to Swift for services performed for the Partnership.
(5) 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 ownership 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.
(6) 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-1, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(7) 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.
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 43,522 $ 205,800
Oil and gas sales receivable 125,776 177,188
--------------- ----------------
Total Current Assets 169,298 382,988
--------------- ----------------
Gas Imbalance Receivable 43,334 44,416
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 3,785,602 3,727,132
Less-Accumulated depreciation, depletion
and amortization (2,501,542) (2,408,741)
--------------- ----------------
1,284,060 1,318,391
--------------- ----------------
$ 1,496,692 $ 1,745,795
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 50,826 $ 59,564
--------------- ----------------
Deferred Revenues 27,975 29,492
Limited Partners' Capital (36,512 Limited Partnership Units;
$100 per unit) 1,400,664 1,634,355
General Partners' Capital 17,227 22,384
--------------- ----------------
Total Partners' Capital 1,417,891 1,656,739
--------------- ----------------
$ 1,496,692 $ 1,745,795
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 112,168 $ 142,405 $ 229,185 $ 367,258
Interest income 877 3,383 2,561 6,086
Other 635 744 1,161 1,764
--------------- --------------- --------------- ---------------
113,680 146,532 232,907 375,108
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 36,814 53,811 72,908 96,606
Production taxes 6,282 7,001 12,313 18,628
Depreciation, depletion
and amortization 45,390 45,938 92,801 101,813
General and administrative 16,894 20,101 31,541 42,420
--------------- --------------- --------------- ---------------
105,380 126,851 209,563 259,467
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 8,300 $ 19,681 $ 23,344 $ 115,641
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .23 $ .54 $ .64 $ 3.17
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 23,344 $ 115,641
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 92,801 101,813
Change in gas imbalance receivable
and deferred revenues (435) 8,146
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 51,412 69,881
Increase (decrease) in accounts payable (8,738) (33,135)
--------------- ---------------
Net cash provided by (used in) operating activities 158,384 262,346
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (58,470) (22,976)
Proceeds from sales of oil and gas properties -- 1,949
(Increase) decrease in receivable due to property disposition -- 54,292
--------------- ---------------
Net cash provided by (used in) investing activities (58,470) 33,265
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (262,192) (276,662)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (162,278) 18,949
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 205,800 248,757
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 43,522 $ 267,706
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-2, Ltd., a Texas limited
partnership ("the Partnership"), was formed on June 30, 1989, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 250 limited partners made total capital contributions
of $3,651,200.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1992 and 1991, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1993 and 1992, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996,
1995, 1994 and 1993, the cash distribution rate fell below 17.5 percent
and thus, in 1997, 1996, 1995 and 1994, the continuing costs and
revenues were shared 90 percent by the limited partners and 10 percent
by the general partners. Payout occurred in January, 1998; therefore,
for 1998 and each year remaining in the life of the partnership, the
continuing costs and revenues will be shared 85 percent by the limited
partners and 15 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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Affiliates of the Special General Partner, as Dealer Manager,
have received $89,780 for managing and overseeing the offering of the
limited partnership units. A one-time management fee of $91,280 was be
paid to Swift for services performed for the Partnership.
Effective June 30, 1989, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Managed Pension Assets Partnership 1989-1, Ltd.
("Pension Partnership"), managed by Swift for the purpose of acquiring
working interests in producing oil and gas properties. Under terms of
the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-2, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 93,269 $ 137,885
Oil and gas sales receivable 43,339 83,864
--------------- ----------------
Total Current Assets 136,608 221,749
--------------- ----------------
Gas Imbalance Receivable 19,403 18,146
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 1,956,089 1,948,922
Less-Accumulated depreciation, depletion
and amortization (1,659,393) (1,633,437)
--------------- ----------------
296,696 315,485
--------------- ----------------
$ 452,707 $ 555,380
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 15,263 $ 23,670
--------------- ----------------
Deferred Revenues 10,332 11,039
Limited Partners' Capital (21,812 Limited Partnership Units;
$100 per unit) 426,896 520,643
General Partners' Capital 216 28
--------------- ----------------
Total Partners' Capital 427,112 520,671
--------------- ----------------
$ 452,707 $ 555,380
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 30,494 $ 53,160 $ 68,188 $ 142,240
Interest income 1,377 2,576 3,041 3,571
Other 132 169 244 386
--------------- --------------- --------------- ---------------
32,003 55,905 71,473 146,197
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 6,450 19,235 19,139 39,156
Production taxes 2,027 2,181 3,926 6,582
Depreciation, depletion
and amortization 11,997 13,682 25,956 31,192
General and administrative 9,679 11,051 18,434 23,406
--------------- --------------- --------------- ---------------
30,153 46,149 67,455 100,336
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 1,850 $ 9,756 $ 4,018 $ 45,861
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .08 $ .45 $ .18 $ 2.10
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 4,018 $ 45,861
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 25,956 31,192
Change in gas imbalance receivable
and deferred revenues (1,964) 169
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 40,525 89,095
Increase (decrease) in accounts payable (8,407) (57,932)
--------------- ---------------
Net cash provided by (used in) operating activities 60,128 108,385
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (7,167) (7,959)
(Increase) decrease in receivable due to property disposition -- 161,517
--------------- ---------------
Net cash provided by (used in) investing activities (7,167) 153,558
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (97,577) (158,302)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (44,616) 103,641
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 137,885 90,435
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 93,269 $ 194,076
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-3, Ltd., a Texas limited
partnership ("the Partnership"), was formed on September 30, 1989, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 160 limited partners made total capital contributions
of $2,181,200.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1992 and 1991, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1993 and 1992, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996,
1995, 1994 and 1993, the cash distribution rate fell below 17.5 percent
and thus, in 1998, 1997, 1996, 1995 and 1994, the continuing costs and
revenues will be (were) shared 90 percent by the limited partners and 10
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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Affiliates of the Special General Partner, as Dealer Manager,
have received $54,530 for managing and overseeing the offering of the
limited partnership units. A one-time management fee of $54,530 was paid
to Swift for services performed for the Partnership.
Effective September 30, 1989, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Managed Pension Assets Partnership 1989-2,
Ltd. ("Pension Partnership"), managed by Swift for the purpose of
acquiring working interests in producing oil and gas properties. Under
terms of the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-3, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 7,543 $ 1,184
Oil and gas sales receivable 48,750 56,754
--------------- ----------------
Total Current Assets 56,293 57,938
--------------- ----------------
Gas Imbalance Receivable 23,580 25,028
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 1,516,135 1,533,340
Less-Accumulated depreciation, depletion
and amortization (1,232,805) (1,208,865)
--------------- ----------------
283,330 324,475
--------------- ----------------
$ 363,203 $ 407,441
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 18,587 $ 23,419
--------------- ----------------
Deferred Revenues 28,490 31,275
Limited Partners' Capital (15,158 Limited Partnership Units;
$100 per unit) 309,318 342,792
General Partners' Capital 6,808 9,955
--------------- ----------------
Total Partners' Capital 316,126 352,747
--------------- ----------------
$ 363,203 $ 407,441
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 37,907 $ 45,795 $ 68,891 $ 114,632
Interest income 118 92 212 161
Other 471 632 885 1,424
--------------- --------------- --------------- ---------------
38,496 46,519 69,988 116,217
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 12,858 15,680 22,699 29,266
Production taxes 2,527 2,732 4,762 7,120
Depreciation, depletion
and amortization 12,364 14,360 23,940 31,436
General and administrative 7,323 5,797 13,411 12,526
Interest expense -- -- -- 65
--------------- --------------- --------------- ---------------
35,072 38,569 64,812 80,413
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 3,424 $ 7,950 $ 5,176 $ 35,804
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .23 $ .52 $ .34 $ 2.36
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 5,176 $ 35,804
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 23,940 31,436
Change in gas imbalance receivable
and deferred revenues (1,337) (2,268)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 8,004 27,795
Increase (decrease) in accounts payable (4,832) (32,263)
--------------- ---------------
Net cash provided by (used in) operating activities 30,951 60,504
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (794) (9,044)
Proceeds from sales of oil and gas properties 17,999 3,475
--------------- ---------------
Net cash provided by (used in) investing activities 17,205 (5,569)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (41,797) (54,916)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,359 19
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,184 1,124
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,543 $ 1,143
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ 65
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-4, Ltd., a Texas limited
partnership ("the Partnership"), was formed on December 31, 1989, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 107 limited partners made total capital contributions
of $1,515,800.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1994, 1993 and 1992, the cash distribution rate (as defined in the
Partnership Agreement) exceeded 17.5 percent and thus, in 1995, 1994 and
1993, the continuing costs and revenues were shared 85 percent by the
limited partners and 15 percent by the general partners. During 1997,
1996 and 1995, the cash distribution rate fell below 17.5 percent and
thus, in 1998, 1997 and 1996, the continuing costs and revenues will be
(were) shared 90 percent by the limited partners and 10 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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Affiliates of the Special General Partner, as Dealer Manager,
have received $37,520 for managing and overseeing the offering of the
limited partnership units. A one-time management fee of $37,895 was paid
to Swift for services performed for the Partnership.
(5) 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 ownership 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.
(6) 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-4, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-A, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-A, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-A, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,476 $ 143,645
Oil and gas sales receivable 112,420 264,694
--------------- ----------------
Total Current Assets 113,896 408,339
--------------- ----------------
Gas Imbalance Receivable 47,470 48,599
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 5,490,552 5,402,779
Less-Accumulated depreciation, depletion
and amortization (3,606,369) (3,464,374)
--------------- ----------------
1,884,183 1,938,405
--------------- ----------------
$ 2,045,549 $ 2,395,343
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 76,282 $ 94,176
--------------- ----------------
Deferred Revenues 30,141 31,763
Limited Partners' Capital (51,792.81 Limited Partnership Units;
$100 per unit) 1,909,908 2,245,932
General Partners' Capital 29,218 23,472
--------------- ----------------
Total Partners' Capital 1,939,126 2,269,404
--------------- ----------------
$ 2,045,549 $ 2,395,343
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 165,612 $ 227,956 $ 338,802 $ 558,185
Interest income 54 3,246 577 5,855
Other 1,012 1,195 1,857 2,790
--------------- --------------- --------------- ---------------
166,678 232,397 341,236 566,830
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 56,458 78,789 112,403 142,120
Production taxes 9,176 11,484 18,122 28,379
Depreciation, depletion
and amortization 68,756 70,135 141,995 150,556
General and administrative 23,754 29,795 44,626 62,441
--------------- --------------- --------------- ---------------
158,144 190,203 317,146 383,496
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 8,534 $ 42,194 $ 24,090 $ 183,334
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .16 $ .81 $ .47 $ 3.54
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 24,090 $ 183,334
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 141,995 150,556
Change in gas imbalance receivable
and deferred revenues (493) 9,155
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 152,274 95,295
Increase (decrease) in accounts payable (17,894) (48,415)
--------------- ---------------
Net cash provided by (used in) operating activities 299,972 389,925
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (87,773) (39,399)
(Increase) decrease in receivable due to property disposition -- 62,443
--------------- ---------------
Net cash provided by (used in) investing activities (87,773) 23,044
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (354,368) (407,402)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (142,169) 5,567
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 143,645 262,455
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,476 $ 268,022
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-A, Ltd., a Texas limited
partnership ("the Partnership"), was formed on March 31, 1989, 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 455 limited partners made total capital contributions of $5,179,281.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1992 and 1991, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1993 and 1992, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996,
1995, 1994 and 1993, the cash distribution rate fell below 17.5 percent
and thus, in 1997, 1996, 1995 and 1994, the continuing costs and
revenues were shared 90 percent by the limited partners and 10 percent
by the general partners. Payout occurred in January, 1998; therefore,
for 1998 and each year remaining in the life of the partnership, the
continuing costs and revenues will be shared 85 percent by the limited
partners and 15 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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $128,607 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $129,482 was
paid to Swift for services performed for the Partnership.
Effective March 31, 1989, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Managed Pension Assets Partnership 1989-A, Ltd.
("Pension Partnership"), managed by Swift for the purpose of acquiring
working interests in producing oil and gas properties. Under terms of
the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 209,214 $ 302,308
Oil and gas sales receivable 80,240 136,384
--------------- ----------------
Total Current Assets 289,454 438,692
--------------- ----------------
Gas Imbalance Receivable 38,829 36,428
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 3,682,885 3,669,178
Less-Accumulated depreciation, depletion
and amortization (3,126,972) (3,076,893)
--------------- ----------------
555,913 592,285
--------------- ----------------
$ 884,196 $ 1,067,405
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 28,423 $ 21,111
--------------- ----------------
Deferred Revenues 21,285 22,741
Limited Partners' Capital (40,899 Limited Partnership Units;
$100 per unit) 834,006 1,023,551
General Partners' Capital 482 2
--------------- ----------------
Total Partners' Capital 834,488 1,023,553
--------------- ----------------
$ 884,196 $ 1,067,405
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 54,409 $ 101,643 $ 126,337 $ 272,183
Interest income 3,074 5,473 6,750 7,675
Other 345 457 638 1,026
--------------- --------------- --------------- ---------------
57,828 107,573 133,725 280,884
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 12,189 36,779 37,617 75,204
Production taxes 3,666 4,309 7,298 12,603
Depreciation, depletion
and amortization 22,897 26,290 50,079 59,267
General and administrative 17,463 21,274 34,035 44,495
--------------- --------------- --------------- ---------------
56,215 88,652 129,029 191,569
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 1,613 $ 18,921 $ 4,696 $ 89,315
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .04 $ .46 $ .11 $ 2.18
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 4,696 $ 89,315
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 50,079 59,267
Change in gas imbalance receivable
and deferred revenues (3,857) 245
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 56,144 229,370
Increase (decrease) in accounts payable 7,312 (163,510)
--------------- ---------------
Net cash provided by (used in) operating activities 114,374 214,687
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (13,707) (15,966)
(Increase) decrease in receivable due to property disposition -- 309,919
--------------- ---------------
Net cash provided by (used in) investing activities (13,707) 293,953
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (193,761) (297,878)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (93,094) 210,762
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 302,308 193,408
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 209,214 $ 404,170
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-C, Ltd., a Texas limited
partnership (the Partnership), was formed on September 30, 1989, 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 449 limited partners made total capital contributions
of $4,089,900.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1992 and 1991, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1993 and 1992, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996,
1995, 1994 and 1993, the cash distribution rate fell below 17.5 percent
and thus, in 1998, 1997, 1996, 1995 and 1994, the continuing costs and
revenues will be (were) shared 90 percent by the limited partners and 10
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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $100,788 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $102,247 was
paid to Swift for services performed for the Partnership.
Effective September 30, 1989, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Managed Pension Assets Partnership 1989-C,
Ltd. (Pension Partnership), managed by Swift for the purpose of
acquiring working interests in producing oil and gas properties. Under
terms of the NP/OR Agreement, the Partnership will convey 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) 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 28,224 $ 10,173
Oil and gas sales receivable 133,191 139,699
--------------- ----------------
Total Current Assets 161,415 149,872
--------------- ----------------
Gas Imbalance Receivable 64,990 68,976
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 3,997,284 4,027,187
Less-Accumulated depreciation, depletion
and amortization (3,248,805) (3,185,789)
--------------- ----------------
748,479 841,398
--------------- ----------------
$ 974,884 $ 1,060,246
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 48,380 $ 33,990
--------------- ----------------
Deferred Revenues 78,524 85,388
Limited Partners' Capital (39,938.01 Limited Partnership Units;
$100 per unit) 829,321 914,457
General Partners' Capital 18,659 26,411
--------------- ---------------
Total Partners' Capital 847,980 940,868
--------------- ----------------
$ 974,884 $ 1,060,246
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 103,796 $ 123,176 $ 188,142 $ 306,948
Interest income 544 230 797 410
Other 847 1,689 1,975 3,838
--------------- --------------- --------------- ---------------
105,187 125,095 190,914 311,196
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 35,299 41,672 61,938 77,971
Production taxes 6,977 7,483 13,129 19,205
Depreciation, depletion
and amortization 32,591 37,142 63,016 80,566
General and administrative 17,469 15,473 33,649 32,436
--------------- --------------- --------------- ---------------
92,336 101,770 171,732 210,178
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 12,851 $ 23,325 $ 19,182 $ 101,018
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .32 $ .58 $ .48 $ 2.53
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 19,182 $ 101,018
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 63,016 80,566
Change in gas imbalance receivable
and deferred revenues (2,878) (6,231)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 6,508 71,110
Increase (decrease) in accounts payable 14,390 (85,939)
--------------- ---------------
Net cash provided by (used in) operating activities 100,218 160,524
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (2,255) (24,881)
Proceeds from sales of oil and gas properties 32,158 9,479
--------------- ---------------
Net cash provided by (used in) investing activities 29,903 (15,402)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (112,070) (145,105)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,051 17
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,173 1,015
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,224 $ 1,032
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-D, Ltd., a Texas limited
partnership ("the Partnership"), was formed on December 31, 1989, 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 447 limited partners made total capital contributions
of $3,993,801.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1994, 1993 and 1992, the cash distribution rate (as defined in the
Partnership Agreement) exceeded 17.5 percent and thus, in 1995, 1994 and
1993, the continuing costs and revenues were shared 85 percent by the
limited partners and 15 percent by the general partners. During 1997,
1996 and 1995, the cash distribution rate fell below 17.5 percent and
thus, in 1998, 1997 and 1996, the continuing costs and revenues will be
(were) shared 90 percent by the limited partners and 10 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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $99,845 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $99,845 was
paid to Swift for services performed for the Partnership.
Effective December 31, 1989, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Managed Pension Assets Partnership 1989-D,
Ltd. ("Pension Partnership"), managed by Swift for the purpose of
acquiring working interests in producing oil and gas properties. Under
terms of the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 144,314 $ 109,771
Oil and gas sales receivable 62,692 86,103
--------------- ----------------
Total Current Assets 207,006 195,874
--------------- ----------------
Gas Imbalance Receivable 55,267 59,604
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 1,676,712 1,732,433
Less-Accumulated depreciation, depletion
and amortization (1,412,651) (1,389,253)
--------------- ----------------
264,061 343,180
--------------- ----------------
$ 526,334 $ 598,658
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 17,392 $ 17,794
--------------- ----------------
Deferred Revenues 66,776 72,604
Limited Partners' Capital (14,767.50 Limited Partnership Units;
$100 per unit) 429,260 489,329
General Partners' Capital 12,906 18,931
--------------- ----------------
Total Partners' Capital 442,166 508,260
--------------- ----------------
$ 526,334 $ 598,658
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 37,783 $ 45,245 $ 81,877 $ 142,920
Interest income 1,925 814 3,367 1,448
Other 112 163 221 350
--------------- --------------- --------------- ---------------
39,820 46,222 85,465 144,718
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 11,987 15,914 24,060 29,188
Production taxes 2,540 2,825 5,184 8,335
Depreciation, depletion
and amortization 11,416 17,931 23,398 43,323
General and administrative 7,495 7,577 13,454 16,125
--------------- --------------- --------------- ---------------
33,438 44,247 66,096 96,971
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 6,382 $ 1,975 $ 19,369 $ 47,747
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .43 $ .13 $ 1.31 $ 3.23
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 19,369 $ 47,747
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 23,398 43,323
Change in gas imbalance receivable
and deferred revenues (1,491) (4,049)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 23,411 7,040
Increase (decrease) in accounts payable (402) 2,606
--------------- ---------------
Net cash provided by (used in) operating activities 64,285 96,667
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (7,105) --
Proceeds from sales of oil and gas properties 62,826 66
--------------- ---------------
Net cash provided by (used in) investing activities 55,721 66
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (85,463) (80,130)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 34,543 16,603
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 109,771 48,238
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 144,314 $ 64,841
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1990-1, Ltd., a Texas limited
partnership ("the Partnership"), was formed on April 17, 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 140 limited partners made total capital contributions
of $1,476,650.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1993 and 1992, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1994 and 1993, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996, 1995
and 1994, the cash distribution rate fell below 17.5 percent and thus,
in 1998, 1997, 1996 and 1995, the continuing costs and revenues will be
(were) shared 90 percent by the limited partners and 10 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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Affiliates of the Special General Partner, as Dealer Manager,
have received $36,916 for managing and overseeing the offering of the
limited partnership units. A one-time management fee of $36,916 was paid
to Swift for services performed for the Partnership.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-1, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 87,360 $ 49,115
Oil and gas sales receivable 42,559 60,881
--------------- ----------------
Total Current Assets 129,919 109,996
--------------- ----------------
Gas Imbalance Receivable 36,305 39,195
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 1,334,848 1,381,086
Less-Accumulated depreciation, depletion
and amortization (1,151,581) (1,135,400)
--------------- ----------------
183,267 245,686
--------------- ----------------
$ 349,491 $ 394,877
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 12,306 $ 12,498
--------------- ----------------
Deferred Revenues 43,865 47,748
Limited Partners' Capital (10,265 Limited Partnership Units;
$100 per unit) 284,756 321,268
General Partners' Capital 8,564 13,363
--------------- ----------------
Total Partners' Capital 293,320 334,631
--------------- ----------------
$ 349,491 $ 394,877
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 26,412 $ 33,215 $ 58,017 $ 103,888
Interest income 1,119 134 1,854 236
Other 80 117 158 257
--------------- --------------- --------------- ---------------
27,611 33,466 60,029 104,381
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 8,154 11,510 16,963 21,251
Production taxes 1,751 2,037 3,588 5,996
Depreciation, depletion
and amortization 7,811 12,953 16,181 32,242
General and administrative 5,543 5,406 9,655 11,652
--------------- --------------- --------------- ---------------
23,259 31,906 46,387 71,141
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 4,352 $ 1,560 $ 13,642 $ 33,240
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .42 $ .15 $ 1.33 $ 3.24
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 13,642 $ 33,240
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 16,181 32,242
Change in gas imbalance receivable
and deferred revenues (993) (2,275)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 18,322 6,666
Increase (decrease) in accounts payable (192) (13,093)
--------------- ---------------
Net cash provided by (used in) operating activities 46,960 56,780
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (5,398) --
Proceeds from sales of oil and gas properties 51,636 2,261
--------------- ---------------
Net cash provided by (used in) investing activities 46,238 2,261
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (54,953) (49,807)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 38,245 9,234
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 49,115 1,024
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 87,360 $ 10,258
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1990-2, Ltd., a Texas limited
partnership ("the Partnership"), was formed on June 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 Partners, Ltd. ("VJM"), a Texas limited
partnership, serve as Managing General Partner and Special General
Partner of the Partnership, respectively. The Managing General Partner
is required to contribute up to 1/99th of limited partner net
contributions. The 78 limited partners made total capital contributions
of $1,026,500.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1993 and 1992, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1994 and 1993, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996, 1995
and 1994, the cash distribution rate fell below 17.5 percent and thus,
in 1998, 1997, 1996 and 1995, the continuing costs and revenues will be
(were) shared 90 percent by the limited partners and 10 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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Affiliates of the Special General Partner, as Dealer Manager,
received $25,662 for managing and overseeing the offering of the limited
partnership units. A one-time management fee of $25,662 was paid to
Swift for services performed for the Partnership.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-2, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-B, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-B, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-B, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 259,800 $ 132,431
Oil and gas sales receivable 137,226 207,126
Other 8,100 --
--------------- ----------------
Total Current Assets 405,126 339,557
--------------- ----------------
Gas Imbalance Receivable 125,056 134,839
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 4,543,187 4,696,100
Less-Accumulated depreciation, depletion
and amortization (3,906,353) (3,850,287)
--------------- ----------------
636,834 845,813
--------------- ----------------
$ 1,167,016 $ 1,320,209
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 39,545 $ 42,691
--------------- ----------------
Deferred Revenues 151,098 164,245
Limited Partners' Capital (34,642.06 Limited Partnership Units;
$100 per unit) 945,919 1,066,971
General Partners' Capital 30,454 46,302
--------------- ----------------
Total Partners' Capital 976,373 1,113,273
--------------- ----------------
$ 1,167,016 $ 1,320,209
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 91,119 $ 113,422 $ 199,741 $ 354,975
Interest income 3,320 436 5,221 781
Other 275 392 542 870
--------------- --------------- --------------- ---------------
94,714 114,250 205,504 356,626
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 28,043 39,208 58,182 72,357
Production taxes 6,064 6,988 12,363 20,502
Depreciation, depletion
and amortization 27,062 44,553 56,066 109,069
General and administrative 16,292 17,879 30,311 37,454
--------------- --------------- --------------- ---------------
77,461 108,628 156,922 239,382
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 17,253 $ 5,622 $ 48,582 $ 117,244
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .50 $ .16 $ 1.40 $ 3.38
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 48,582 $ 117,244
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 56,066 109,069
Change in gas imbalance receivable
and deferred revenues (3,364) (7,841)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 69,900 24,193
(Increase) decrease in other current assets (8,100) --
Increase (decrease) in accounts payable (3,146) (81,181)
--------------- ---------------
Net cash provided by (used in) operating activities 159,938 161,484
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (18,596) --
Proceeds from sales of oil and gas properties 171,509 7,767
--------------- ---------------
Net cash provided by (used in) investing activities 152,913 7,767
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (185,482) (168,550)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 127,369 701
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 132,431 1,447
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 259,800 $ 2,148
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1990-B, Ltd., a Texas limited
partnership ("the Partnership"), was formed on June 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 375 limited partners made total capital contributions
of $3,464,206.
Property acquisition costs and the management fee are borne 99
percent by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited
partners.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 90 percent to the limited partners
and ten percent to the general partners. If prior to partnership payout,
however, the cash distribution rate for a certain period equals or
exceeds 17.5 percent, then for the following calendar year, these
continuing costs and revenues will be allocated 85 percent to the
limited partners and 15 percent to the general partners. After
partnership payout, continuing costs and revenues will be shared 85
percent by the limited partners, and 15 percent by the general partners,
even if the cash distribution rate is less than 17.5 percent. During
1993 and 1992, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1994 and 1993, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996, 1995
and 1994, the cash distribution rate fell below 17.5 percent and thus,
in 1998, 1997, 1996 and 1995, the continuing costs and revenues will be
(were) shared 90 percent by the limited partners and 10 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.
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 statement.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $86,605 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $86,605 was
paid to Swift for services performed for the Partnership.
Effective June 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-B, Ltd.
("Pension Partnership"), managed by Swift for the purpose of acquiring
working interests in producing oil and gas properties. Under terms of
the NP/OR Agreement, the Partnership will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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 ownership 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.
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,679 $ 1,649
Oil and gas sales receivable 140,981 176,351
--------------- ----------------
Total Current Assets 142,660 178,000
--------------- ----------------
Gas Imbalance Receivable 74,360 79,419
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 5,045,182 5,109,574
Less-Accumulated depreciation, depletion
and amortization (3,617,932) (3,530,952)
--------------- ----------------
1,427,250 1,578,622
--------------- ----------------
$ 1,644,270 $ 1,836,041
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 62,297 $ 69,828
--------------- ----------------
Deferred Revenues 91,043 100,767
Interest Holders' Capital (4,453,469 Interest Holders' SDIs;
$1.00 per SDI) 1,445,844 1,604,364
General Partners' Capital 45,086 61,082
--------------- ----------------
Total Partners' Capital 1,490,930 1,665,446
--------------- ----------------
$ 1,644,270 $ 1,836,041
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 108,763 $ 158,309 $ 233,751 $ 423,834
Interest income 347 269 637 478
Other 522 724 910 1,703
--------------- --------------- --------------- ---------------
109,632 159,302 235,298 426,015
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 51,189 59,475 86,385 122,682
Production taxes 6,566 7,622 12,660 23,482
Depreciation, depletion
and amortization 42,012 51,121 86,980 127,514
General and administrative 19,961 21,941 38,029 48,863
--------------- --------------- --------------- ---------------
119,728 140,159 224,054 322,541
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (10,096) $ 19,143 $ 11,244 $ 103,474
=============== =============== =============== ====== =========
Limited Partners' net income (loss)
per unit $ -- $ -- $ -- $ .02
=============== =============== =============== ====== =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 11,244 $ 103,474
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 86,980 127,514
Change in gas imbalance receivable
and deferred revenues (4,665) (7,395)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 35,370 124,287
Increase (decrease) in accounts payable (7,531) (114,650)
--------------- ---------------
Net cash provided by (used in) operating activities 121,398 233,230
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (18,149) (5,502)
Proceeds from sales of oil and gas properties 82,541 --
--------------- ---------------
Net cash provided by (used in) investing activities 64,392 (5,502)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (185,760) (227,702)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 30 26
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,649 1,566
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,679 $ 1,592
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, 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, 1997 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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Operating Partners 1991-C, Ltd., a Texas limited
partnership ("the Partnership"), was formed on December 30, 1991, for
the purpose of purchasing and operating 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 325 interest holders made total capital
contributions of $4,453,469.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective December 30, 1991, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Pension Partners 1991-C, Ltd. ("Pension
Partnership"), an affiliated partnership managed by Swift for the
purpose of acquiring nonoperating interests in producing oil and gas
properties. Under the terms of the NP/OR Agreement, the Partnership will
convey 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 the Pension Partnership's
proportionate share of the property acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1991-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 92,472 $ 110,328
Oil and gas sales receivable 159,271 217,520
Other 7,153 5,100
--------------- ----------------
Total Current Assets 258,896 332,948
--------------- ----------------
Gas Imbalance Receivable 147,070 157,041
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 4,873,908 4,967,181
Less-Accumulated depreciation, depletion
and amortization (3,988,330) (3,893,374)
--------------- ----------------
885,578 1,073,807
--------------- ----------------
$ 1,291,544 $ 1,563,796
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 58,217 $ 75,509
--------------- ----------------
Deferred Revenues 178,377 194,680
Interest Holders' Capital (4,639,621 Interest Holders' SDIs;
$1.00 per SDI) 1,033,890 1,255,347
General Partners' Capital 21,060 38,260
--------------- ----------------
Total Partners' Capital 1,054,950 1,293,607
--------------- ----------------
$ 1,291,544 $ 1,563,796
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 93,501 $ 133,022 $ 200,120 $ 398,627
Interest income 1,524 1,432 2,716 3,094
Other 1,685 2,112 2,878 4,942
--------------- --------------- --------------- ---------------
96,710 136,566 205,714 406,663
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 44,826 58,642 87,286 113,751
Production taxes 5,983 8,210 11,904 22,567
Depreciation, depletion
and amortization 46,469 57,682 94,956 140,667
General and administrative 18,980 20,107 38,113 45,308
--------------- --------------- --------------- ---------------
116,258 144,641 232,259 322,293
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (19,548) $ (8,075) $ (26,545) $ 84,370
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ -- $ -- $ (.01) $ .02
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (26,545) $ 84,370
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 94,956 140,667
Change in gas imbalance receivable
and deferred revenues (6,332) (13,961)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 58,249 27,033
(Increase) decrease in other current assets (2,053) (5,153)
Increase (decrease) in accounts payable (17,292) 3,375
--------------- ---------------
Net cash provided by (used in) operating activities 100,983 236,331
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (14,900) (14,599)
Proceeds from sales of oil and gas properties 108,173 --
--------------- ---------------
Net cash provided by (used in) investing activities 93,273 (14,599)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (212,112) (308,926)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (17,856) (87,194)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 110,328 168,316
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 92,472 $ 81,122
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-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, 1997 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 Operating Partners 1992-A, Ltd., a Texas limited
partnership ("the Partnership"), was formed on March 31, 1992, for the
purpose of purchasing and operating 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 366 interest holders made total capital
contributions of $4,639,621.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective March 31, 1992, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Pension Partners 1992-A, Ltd. ("Pension Partnership"),
an affiliated partnership managed by Swift for the purpose of acquiring
nonoperating interests in producing oil and gas properties. Under the
terms of the NP/OR Agreement, the Partnership will convey 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 the Pension Partnership's proportionate share of the
property acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,208 $ 51,891
Oil and gas sales receivable 76,936 143,153
--------------- ----------------
Total Current Assets 78,144 195,044
--------------- ----------------
Gas Imbalance Receivable 16,470 16,525
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 3,483,231 3,460,820
Less-Accumulated depreciation, depletion
and amortization (1,887,897) (1,784,011)
--------------- ----------------
1,595,334 1,676,809
--------------- ----------------
$ 1,689,948 $ 1,888,378
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 57,390 $ 40,921
--------------- ----------------
Deferred Revenues 18,039 17,983
Interest Holders' Capital (3,431,267 Interest Holders' SDIs;
$1.00 per SDI) 1,596,658 1,801,799
General Partners' Capital 17,861 27,675
--------------- ----------------
Total Partners' Capital 1,614,519 1,829,474
--------------- ----------------
$ 1,689,948 $ 1,888,378
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 81,702 $ 116,490 $ 129,849 $ 363,530
Interest income -- 483 208 863
Other 730 553 1,356 2,079
--------------- --------------- --------------- ---------------
82,432 117,526 131,413 366,472
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 28,664 30,514 63,829 71,316
Production taxes 4,766 2,465 5,315 16,407
Depreciation, depletion
and amortization -
Normal provision 46,864 55,862 81,153 131,629
Additional provision 22,733 -- 22,733 --
General and administrative 15,084 13,757 27,995 31,248
--------------- --------------- --------------- ---------------
118,111 102,598 201,025 250,600
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (35,679) $ 14,928 $ (69,612) $ 115,872
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.01) $ -- $ (.02) $ .03
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (69,612) $ 115,872
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 103,886 131,629
Change in gas imbalance receivable
and deferred revenues 111 (7)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 66,217 46,727
Increase (decrease) in accounts payable 16,469 (19,884)
--------------- ---------------
Net cash provided by (used in) operating activities 117,071 274,337
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (23,987) (85,186)
Proceeds from sales of oil and gas properties 1,576 --
--------------- ---------------
Net cash provided by (used in) investing activities (22,411) (85,186)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (145,343) (210,240)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (50,683) (21,089)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 51,891 70,301
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,208 $ 49,212
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, 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, 1997 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 Operating Partners 1992-D, Ltd., a Texas limited
partnership ("the Partnership"), was formed on December 28, 1992, for
the purpose of purchasing and operating 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 290 interest holders made total capital
contributions of $3,431,267.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective December 28, 1992, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Pension Partners 1992-D, Ltd. ("Pension
Partnership"), an affiliated partnership managed by Swift for the
purpose of acquiring 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 the Pension Partnership's proportionate
share of the property acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1992-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,027 $ 3,334
Oil and gas sales receivable 108,651 222,953
--------------- ----------------
Total Current Assets 109,678 226,287
--------------- ----------------
Gas Imbalance Receivable 20,661 20,677
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 4,759,959 4,646,076
Less-Accumulated depreciation, depletion
and amortization (2,469,404) (2,258,584)
--------------- ----------------
2,290,555 2,387,492
--------------- ----------------
$ 2,420,894 $ 2,634,456
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 201,688 $ 74,703
--------------- ----------------
Deferred Revenues 25,001 24,984
Interest Holders' Capital (4,384,150 Interest Holders' SDIs;
$1.00 per SDI) 2,136,797 2,463,364
General Partners' Capital 57,408 71,405
--------------- ----------------
Total Partners' Capital 2,194,205 2,534,769
--------------- ----------------
$ 2,420,894 $ 2,634,456
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 115,409 $ 159,539 $ 192,510 $ 501,483
Interest income 20 17 27 22
Other 789 -- 1,417 1,964
--------------- --------------- --------------- ---------------
116,218 159,556 193,954 503,469
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 48,958 45,634 92,712 112,829
Production taxes 6,758 3,360 8,351 23,280
Depreciation, depletion
and amortization -
Normal 69,556 75,727 122,752 178,903
Additional 88,068 -- 88,068 --
General and administrative 19,153 17,920 35,766 40,715
Interest expense 1,132 -- 1,132 --
--------------- --------------- --------------- ---------------
233,625 142,641 348,781 355,727
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (117,407) $ 16,915 $ (154,827) $ 147,742
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.03) $ -- $ (.04) $ .03
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (154,827) $ 147,742
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 210,820 178,903
Change in gas imbalance receivable
and deferred revenues 33 (2)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 114,302 58,824
Increase (decrease) in accounts payable 126,985 (27,358)
--------------- ---------------
Net cash provided by (used in) operating activities 297,313 358,109
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (114,548) (117,361)
Proceeds from sales of oil and gas properties 665 --
--------------- ---------------
Net cash provided by (used in) investing activities (113,883) (117,361)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distribution to partners (185,737) (240,726)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,307) 22
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,334 1,319
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,027 $ 1,341
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,132 $ --
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-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, 1997 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 Operating Partners 1993-A, Ltd., a Texas limited
partnership ("the Partnership"), was formed on March 31, 1993, for the
purpose of purchasing and operating 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 333 interest holders made total capital
contributions of $4,384,150.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective March 31, 1993, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Pension Partners 1993-A, Ltd. ("Pension Partnership"),
an affiliated partnership managed by Swift for the purpose of acquiring
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 the Pension Partnership's proportionate share of the property
acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 5,052 $ 108,137
Oil and gas sales receivable 133,304 306,015
--------------- ----------------
Total Current Assets 138,356 414,152
--------------- ----------------
Gas Imbalance Receivable 18,730 18,839
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 5,879,072 5,800,890
Less-Accumulated depreciation, depletion
and amortization (3,900,504) (3,432,630)
--------------- ----------------
1,978,568 2,368,260
--------------- ----------------
$ 2,135,654 $ 2,801,251
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 77,928 $ 104,625
--------------- ----------------
Deferred Revenues 18,357 18,247
Interest Holders' Capital (5,810,456 Interest Holders' SDIs;
$1.00 per SDI) 2,028,731 2,652,469
General Partners' Capital 10,638 25,910
--------------- ----------------
Total Partners' Capital 2,039,369 2,678,379
--------------- ----------------
$ 2,135,654 $ 2,801,251
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 122,891 $ 182,557 $ 215,636 $ 530,481
Interest income 366 1,047 1,258 2,221
Other 1,785 1,576 3,287 4,691
--------------- --------------- --------------- ---------------
125,042 185,180 220,181 537,393
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 50,478 51,729 105,761 123,885
Production taxes 7,466 6,228 10,955 26,869
Depreciation, depletion
and amortization -
Normal 72,290 97,558 137,108 218,266
Additional 171,763 -- 330,766 --
General and administrative 23,789 21,804 45,742 48,942
--------------- --------------- --------------- ---------------
325,786 177,319 630,332 417,962
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (200,744) $ 7,861 $ (410,151) $ 119,431
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.03) $ -- $ (.07) $ .02
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (410,151) $ 119,431
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 467,874 218,266
Change in gas imbalance receivable
and deferred revenues 219 (14)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 172,711 49,771
Increase (decrease) in accounts payable (26,697) (32,958)
--------------- ---------------
Net cash provided by (used in) operating activities 203,956 354,496
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (81,388) (95,453)
Proceeds from sales of oil and gas properties 3,206 --
--------------- ---------------
Net cash provided by (used in) investing activities (78,182) (95,453)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (228,859) (337,570)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (103,085) (78,527)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 108,137 171,415
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,052 $ 92,888
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, 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, 1997 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 Operating Partners 1993-C, Ltd., a Texas limited
partnership ("the Partnership"), was formed on September 30, 1993, for
the purpose of purchasing and operating 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 434 interest holders made total capital
contributions of $5,810,456.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective September 30, 1993, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Pension Partners 1993-C, Ltd. ("Pension
Partnership"), an affiliated partnership managed by Swift for the
purpose of acquiring 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 the Pension Partnership's proportionate
share of the property acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,408 $ 1,383
Oil and gas sales receivable 121,543 211,490
--------------- ----------------
Total Current Assets 122,951 212,873
--------------- ----------------
Gas Imbalance Receivable 8,594 8,594
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 5,738,625 5,611,347
Less-Accumulated depreciation, depletion
and amortization (3,749,549) (3,384,516)
--------------- ----------------
1,989,076 2,226,831
--------------- ----------------
$ 2,120,621 $ 2,448,298
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 231,542 $ 99,439
--------------- ----------------
Deferred Revenues 20,532 20,532
Interest Holders' Capital (5,324,435 Interest Holders' SDIs;
$1.00 per SDI) 1,824,264 2,265,961
General Partners' Capital 44,283 62,366
--------------- ----------------
Total Partners' Capital 1,868,547 2,328,327
--------------- ----------------
$ 2,120,621 $ 2,448,298
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 129,966 $ 180,267 $ 259,098 $ 499,515
Interest income 18 17 25 22
Other 991 -- 1,746 2,398
--------------- --------------- --------------- ---------------
130,975 180,284 260,869 501,935
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 57,431 48,660 99,400 127,582
Production taxes 8,423 8,513 15,685 28,763
Depreciation, depletion
and amortization -
Normal 80,013 94,495 159,931 202,990
Additional 205,102 -- 205,102 --
General and administrative 24,752 20,593 45,449 45,892
Interest expense 1,146 47 1,148 464
--------------- --------------- --------------- ---------------
376,867 172,308 526,715 405,691
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (245,892) $ 7,976 $ (265,846) $ 96,244
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.05) $ -- $ (.05) $ .02
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (265,846) $ 96,244
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 365,033 202,990
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 89,947 72,015
Increase (decrease) in accounts payable 132,103 (46,724)
--------------- --------------
Net cash provided by (used in) operating activities 321,237 324,525
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (128,011) (71,879)
Proceeds from sales of oil and gas properties 733 --
--------------- --------------
Net cash provided by (used in) investing activities (127,278) (71,879)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (193,934) (252,624)
--------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 25 22
--------------- --------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,383 1,313
--------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,408 $ 1,335
=============== ==============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,148 $ 464
=============== ==============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, 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, 1997 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 Operating Partners 1993-D, Ltd., a Texas limited
partnership ("the Partnership"), was formed on December 31, 1993, for
the purpose of purchasing and operating 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 406 interest holders made total capital
contributions of $5,324,435.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective December 31, 1993, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Pension Partners 1993-D, Ltd. ("Pension
Partnership"), an affiliated partnership managed by Swift for the
purpose of acquiring 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 the Pension Partnership's proportionate
share of the property acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,285 $ 1,263
Oil and gas sales receivable 115,348 195,628
--------------- ----------------
Total Current Assets 116,633 196,891
--------------- ----------------
Gas Imbalance Receivable 1,648 1,648
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 5,070,519 4,773,434
Less-Accumulated depreciation, depletion
and amortization (2,937,789) (2,145,143)
--------------- ----------------
2,132,730 2,628,291
--------------- ----------------
$ 2,251,011 $ 2,826,830
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 468,877 $ 182,928
--------------- ----------------
Deferred Revenues 7,137 7,137
Interest Holders' Capital (4,487,431 Interest Holders' SDIs;
$1.00 per SDI) 1,743,779 2,596,493
General Partners' Capital 31,218 40,272
--------------- ----------------
Total Partners' Capital 1,774,997 2,636,765
--------------- ----------------
$ 2,251,011 $ 2,826,830
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 122,864 $ 172,069 $ 261,620 $ 394,944
Interest income 17 15 23 20
Other 1,098 31 1,951 2,247
--------------- --------------- --------------- ---------------
123,979 172,115 263,594 397,211
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 67,618 71,610 105,223 142,872
Production taxes 7,516 9,502 15,713 23,245
Depreciation, depletion
and amortization -
Normal provision 58,032 64,072 119,241 129,597
Additional provision 493,131 -- 673,405 192,153
General and administrative 19,816 19,590 37,569 43,182
Interest expense 4,728 432 4,785 432
--------------- --------------- --------------- ---------------
650,841 165,206 955,936 531,481
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (526,862) $ 6,909 $ (692,342) $ (134,270)
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.12) $ -- $ (.15) $ (.03)
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (692,342) $ (134,270)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 792,646 321,750
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 80,280 68,489
Increase (decrease) in accounts payable 285,949 44,354
--------------- ---------------
Net cash provided by (used in) operating activities 466,533 300,323
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (297,226) (40,323)
Proceeds from sales of oil and gas properties 141 --
--------------- ---------------
Net cash provided by (used in) investing activities (297,085) (40,323)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (169,426) (259,980)
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 22 20
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,263 1,199
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,285 $ 1,219
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 4,785 $ 432
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-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, 1997 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 Operating Partners 1994-A, Ltd., a Texas limited
partnership ("the Partnership"), was formed on April 20, 1994, for the
purpose of purchasing and operating 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 331 interest holders made total capital
contributions of $4,487,431.
Generally, all continuing costs (including development costs,
operating costs, 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.
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
statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective April 20, 1994, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Pension Partners 1994-A, Ltd. ("Pension Partnership"),
an affiliated partnership managed by Swift for the purpose of acquiring
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 the Pension Partnership's proportionate share of the property
acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,299 $ 1,276
Oil and gas sales receivable 155,754 270,176
--------------- ----------------
Total Current Assets 157,053 271,452
--------------- ----------------
Gas Imbalance Receivable 2,607 2,607
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 6,326,470 5,954,955
Less-Accumulated depreciation, depletion
and amortization (3,504,756) (2,624,675)
--------------- ----------------
2,821,714 3,330,280
--------------- ----------------
$ 2,981,374 $ 3,604,339
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 599,024 $ 255,568
--------------- ----------------
Deferred Revenues 7,042 7,042
Interest Holders' Capital (5,698,300 Interest Holders' SDIs;
$1.00 per SDI) 2,331,226 3,284,397
General Partners' Capital 44,082 57,332
--------------- ----------------
Total Partners' Capital 2,375,308 3,341,729
--------------- ----------------
$ 2,981,374 $ 3,604,339
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 166,145 $ 231,355 $ 354,163 $ 530,308
Interest income 17 15 23 21
Other 1,737 783 3,086 3,291
--------------- --------------- --------------- ---------------
167,899 232,153 357,272 533,620
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 85,498 93,761 134,130 186,494
Production taxes 10,391 12,646 21,691 31,192
Depreciation, depletion
and amortization -
Normal 87,263 94,872 177,707 184,245
Additional 629,393 -- 702,374 --
General and administrative 25,013 24,937 47,595 55,043
Interest expense 6,099 1,041 6,243 1,040
--------------- --------------- ---------------- ---------------
843,657 227,257 1,089,740 458,014
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (675,758) $ 4,896 $ (732,468) $ 75,606
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.12) $ -- $ (.13) $ .01
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (732,468) $ 75,606
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 880,081 184,245
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 114,422 97,488
Increase (decrease) in accounts payable 343,456 65,509
--------------- ---------------
Net cash provided by (used in) operating activities 605,491 422,848
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (371,737) (57,282)
Proceeds from sales of oil and gas properties 222 --
--------------- ---------------
Net cash provided by (used in) investing activities (371,515) (57,282)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (233,953) (365,546)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 23 20
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,276 1,212
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,299 $ 1,232
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 6,243 $ 1,040
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING 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, 1997 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 Operating Partners 1994-B, Ltd., a Texas limited
partnership ("the Partnership"), was formed on June 30, 1994, for the
purpose of purchasing and operating 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 354 interest holders made total capital
contributions of $5,698,300.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective June 30, 1994, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Pension Partners 1994-b, Ltd. ("Pension Partnership"),
an affiliated partnership managed by Swift for the purpose of acquiring
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 the Pension Partnership's proportionate share of the property
acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,113 $ 28,762
Oil and gas sales receivable 125,245 185,051
--------------- ----------------
Total Current Assets 126,358 213,813
--------------- ----------------
Gas Imbalance Receivable 397 397
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 5,668,932 5,257,507
Less-Accumulated depreciation, depletion
and amortization (2,868,820) (1,972,763)
--------------- ----------------
2,800,112 3,284,744
--------------- ----------------
$ 2,926,867 $ 3,498,954
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 572,276 $ 118,816
--------------- ----------------
Deferred Revenues 9,988 9,988
Interest Holders' Capital (5,125,411 Interest Holders' SDIs;
$100 per SDI) 2,303,713 3,324,611
General Partners' Capital 40,890 45,539
--------------- ----------------
Total Partners' Capital 2,344,603 3,370,150
--------------- ----------------
$ 2,926,867 $ 3,498,954
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 131,826 $ 174,448 $ 276,989 $ 397,464
Interest income 97 1,329 113 3,393
Other 1,853 1,758 3,267 4,030
--------------- --------------- --------------- ---------------
133,776 177,535 280,369 404,887
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 83,513 84,807 142,721 175,458
Production taxes 6,581 7,732 13,398 19,639
Depreciation, depletion
and amortization -
Normal provision 43,075 44,118 83,573 94,382
Additional provision 750,146 64,726 812,484 909,854
General and administrative 22,861 24,524 42,719 53,788
Interest expense 5,376 -- 5,376 --
--------------- --------------- --------------- ---------------
911,552 225,907 1,100,271 1,253,121
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (777,776) $ (48,372) $ (819,902) $ (848,234)
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.15) $ (.01) $ (.16) $ (.17)
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (819,902) $ (848,234)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 896,057 1,004,236
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 59,806 89,235
Increase (decrease) in accounts payable 453,460 29,344
--------------- ---------------
Net cash provided by (used in) operating activities 589,421 274,581
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (411,459) (30,659)
Proceeds from sales of oil and gas properties 34 --
--------------- ---------------
Net cash provided by (used in) investing activities (411,425) (30,659)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (205,645) (356,027)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (27,649) (112,105)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 28,762 210,403
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,113 $ 98,298
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 5,376 $ --
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, 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, 1997 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 Operating Partners 1994-C, Ltd., a Texas limited
partnership ("the Partnership"), was formed on September 30, 1994, for
the purpose of purchasing and operating 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 364 interest holders made total capital
contributions of $5,125,411.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective September 30, 1994, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Pension Partners 1994-C, Ltd. ("Pension
Partnership"), an affiliated partnership managed by Swift for the
purpose of acquiring 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 the Pension Partnership's proportionate
share of the property acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
(a Texas Limited Partnership)
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998
WITH NOTES
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
FINANCIAL STATEMENTS:
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
</TABLE>
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 92,762 $ 393,495
Oil and gas sales receivable 125,028 204,187
--------------- ----------------
Total Current Assets 217,790 597,682
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 4,870,954 4,546,962
Less-Accumulated depreciation, depletion
and amortization (2,168,043) (1,527,279)
--------------- ----------------
2,702,911 3,019,683
--------------- ----------------
$ 2,920,701 $ 3,617,365
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 180,916 $ 87,057
--------------- ----------------
Deferred Revenues 8,093 8,093
Interest Holders' Capital (4,775,604 Interest Holders' SDIs;
$1.00 per SDI) 2,696,659 3,477,005
General Partners' Capital 35,033 45,210
--------------- ----------------
Total Partners' Capital 2,731,692 3,522,215
--------------- ----------------
$ 2,920,701 $ 3,617,365
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 128,194 $ 187,762 $ 267,886 $ 465,106
Interest income 3,284 5,448 7,500 10,914
Other 1,498 1,465 2,642 3,358
--------------- --------------- --------------- ---------------
132,976 194,675 278,028 479,378
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 68,631 66,925 118,728 141,471
Production taxes 6,450 1,448 9,994 14,956
Depreciation, depletion
and amortization -
Normal provision 42,922 48,418 84,681 115,159
Additional provision 525,618 56,761 556,083 768,909
General and administrative 21,759 24,428 40,515 53,945
--------------- --------------- --------------- ---------------
665,380 197,980 810,001 1,094,440
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (532,404) $ (3,305) $ (531,973) $ (615,062)
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.11) $ -- $ (.11) $ (.13)
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (531,973) $ (615,062)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 640,764 884,068
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 79,159 61,028
(Increase) decrease in other current assets -- (5,448)
Increase (decrease) in accounts payable 93,859 26,532
--------------- ---------------
Net cash provided by (used in) operating activities 281,809 351,118
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (323,992) (24,509)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (258,550) (385,393)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (300,733) (58,784)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 393,495 485,796
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 92,762 $ 427,012
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, 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, 1997 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 Operating Partners 1994-D, Ltd., a Texas limited
partnership ("the Partnership"), was formed on December 30, 1994, for
the purpose of purchasing and operating 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 321 interest holders made total capital
contributions of $4,775,604.
Generally, all continuing costs (including development costs,
operating costs, 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.
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 statement.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 six months ended June
30, 1998 and 1997.
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, and the lower of cost or fair value of unproved properties.
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.
(4) Related-Party Transactions -
Effective December 30, 1994, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Pension Partners 1994-D, Ltd. ("Pension
Partnership"), an affiliated partnership managed by Swift for the
purpose of acquiring 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 the Pension Partnership's proportionate
share of the property acquisition costs.
(5) 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 ownership 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
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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.
(7) 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.
8
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
Dated: August 18, 1998
Swift Energy Company
By:--------------------------------
Name: John R. Alden
Title: Senior Vice President
