FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-17721
SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0261832
(State or other jurisdiction of organization) (I.R.S. Employer
Identification No.)
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(Address of principal executive offices)
(Zip Code)
(281)874-2700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
<S> <C>
Balance Sheets
- March 31, 2000 and December 31, 1999 3
Statements of Operations
- Three month periods ended March 31, 2000 and 1999 4
Statements of Cash Flows
- Three month periods ended March 31, 2000 and 1999 5
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 9
SIGNATURES 10
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SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
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(Unaudited)
ASSETS:
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 65,884 $ 62,311
Oil and gas sales receivable 35,681 24,024
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Total Current Assets 101,565 86,335
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Gas Imbalance Receivable 6,075 6,075
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Oil and Gas Properties, using full cost
accounting 4,790,146 4,788,421
Less-Accumulated depreciation, depletion
and amortization (4,352,093) (4,337,181)
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438,053 451,240
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$ 545,693 $ 543,650
============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 7,769 $ 8,078
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Deferred Revenues 22,108 22,108
Limited Partners' Capital (51,091 Limited Partnership
Units; $100 per unit) 503,862 503,331
General Partners' Capital 11,954 10,133
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Total Partners' Capital 515,816 513,464
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$ 545,693 $ 543,650
============== ==============
</TABLE>
See accompanying notes to financial statements.
3
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SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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2000 1999
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REVENUES:
<S> <C> <C>
Oil and gas sales $ 61,023 $ 37,245
Interest income 778 226
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61,801 37,471
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COSTS AND EXPENSES:
Lease operating 10,684 9,083
Production taxes 3,611 2,395
Depreciation, depletion
and amortization 14,912 16,141
General and administrative 13,591 15,474
--------------- ---------------
42,798 43,093
--------------- ---------------
NET INCOME (LOSS) $ 19,003 $ (5,622)
=============== ===============
Limited Partners' net income (loss)
per unit $ 0.31 $ (0.13)
=============== ===============
</TABLE>
See accompanying notes to financial statements.
4
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SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Income (loss) $ 19,003 $ (5,622)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 14,912 16,141
Change in gas imbalance receivable
and deferred revenues -- (285)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (11,657) (42,929)
Increase (decrease) in accounts payable (309) 3,804
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Net cash provided by (used in) operating activities 21,949 (28,891)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (1,725) (176)
Proceeds from sales of oil and gas properties -- 43,058
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Net cash provided by (used in) investing activities (1,725) 42,882
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Distributions to partners (16,651) (10,639)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,573 3,352
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 62,311 16,158
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 65,884 $ 19,510
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-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, 1999 which has been taken from the audited financial
statements at that date. The financial statements reflect adjustments,
all of which were of a normal recurring nature, which are in the opinion
of the managing general partner necessary for a fair presentation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). The
Partnership believes adequate disclosure is provided by the information
presented. The financial statements should be read in conjunction with
the audited financial statements and the notes included in the latest
Form 10-K.
During the first quarter of 2000, the Managing General Partner
mailed proxy material to the limited partners proposing to sell all the
Partnership's interests in oil and gas properties and dissolve and
liquidate the Partnership. In May 2000, the limited partners of the
Partnership approved the proposal to liquidate the Partnership. The
Managing General Partner anticipates liquidation will be substantially
completed within the next two years.
(2) 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.
(3) 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.
(4) 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.
6
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SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Partnership was formed for the purpose of investing in producing oil
and gas properties located within the continental United States. In order to
accomplish this, the Partnership goes through two distinct yet overlapping
phases with respect to its liquidity and result of operations. When the
Partnership is formed, it commences its "acquisition" phase, with all funds
placed in short-term investments until required for such property acquisitions.
The interest earned on these pre-acquisition investments becomes the primary
cash flow source for initial partner distributions. As the Partnership acquires
producing properties, net cash from operations becomes available for
distribution, along with the investment income. After partnership funds have
been expended on producing oil and gas properties, the Partnership enters its
"operations" phase. During this phase, oil and gas sales generate substantially
all revenues, and distributions to partners reflect those revenues less all
associated partnership expenses. The Partnership may also derive proceeds from
the sale of acquired oil and gas properties, when the sale of such properties is
economically appropriate or preferable to continued operation.
The Partnership entered into a NP/OR Agreement with its companion pension
partnership, Swift Energy Managed Pension Assets Partnership 1988-B, Ltd. in the
manner described in the notes to the financial statements in the latest Form
10-K.
Liquidation
During the first quarter of 2000, the Managing General Partner mailed
proxy material to the limited partners proposing to sell all the Partnership's
interests in oil and gas properties and dissolve and liquidate the Partnership.
In May 2000, the limited partners of the Partnership approved the proposal to
liquidate the Partnership. The Managing General Partner anticipates liquidation
will be substantially completed within the next two years.
Liquidity and Capital Resources
Oil and gas reserves are depleting assets and therefore often experience
significant production declines each year from the date of acquisition through
the end of the life of the property. The primary source of liquidity to the
Partnership comes almost entirely from the income generated from the sale of oil
and gas produced from ownership interests in oil and gas properties. This source
of liquidity and the related results of operations, and in turn cash
distributions, will decline in future periods as the oil and gas produced from
these properties also declines while production and general and administrative
costs remain relatively stable making it unlikely that the Partnership will hold
the properties until they are fully depleted, but will likely liquidate when a
substantial majority of the reserves have been produced. Cash distributions to
partners are determined quarterly, based upon net proceeds from sales of oil and
gas production after payment of lease operating expense, taxes and development
costs, less general and administrative expenses. In addition, future partnership
cash requirements are taken into account to determine necessary cash reserves.
Net cash provided by (used in) operating activities totaled $21,949 and
$(28,891) for the three months ended March 31, 2000 and 1999, respectively. Cash
provided by property sales proceeds totaled $43,058 for the three months ended
March 31, 1999. Cash distributions totaled $16,651 and $10,639 for the three
months ended March 31, 2000 and 1999, respectively.
The Partnership has expended all of the partners' net commitments
available for property acquisitions and development by acquiring producing oil
and gas properties. The partnership invests primarily in proved producing
properties with nominal levels of future costs of development for proven but
undeveloped reserves. Significant purchases of additional reserves or extensive
drilling activity are not anticipated. The Partnership does not allow for
additional assessments from the partners to fund capital requirements. The
Managing General Partner anticipates that the Partnership will have adequate
liquidity from income from continuing operations to satisfy any future capital
expenditure requirements. Funds generated from bank borrowings and proceeds from
the sale of oil and gas properties will be used to supplement this effort if
deemed necessary.
Results of Operations
Oil and gas sales increased $23,778 or 64 percent in the first quarter of
2000 when compared to the corresponding quarter in 1999. Increased oil and gas
prices had a significant impact on Partnership performance. Oil prices increased
115 percent or $12.93/BBL to an average of $24.18/BBL and gas prices increased
59 percent or $0.98/MCF to an average of $2.65/MCF for the quarter. Current
quarter production volumes decreased 3 percent as oil production increased 29
percent and gas production declined 7 percent when compared to first quarter
1999 production volumes.
7
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SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Corresponding production costs per equivalent MCF increased 26 percent in
the first quarter of 2000 compared to the first quarter of 1999 as total
production costs increased 25 percent.
Associated depreciation expense decreased 8 percent or $1,229 in 2000
compared to first quarter 1999.
The Partnership records an additional provision in depreciation, depletion
and amortization when the present value, discounted at ten percent, of estimated
future net revenues from oil and gas properties, using the guidelines of the
Securities and Exchange Commission, is below the fair market value originally
paid for oil and gas properties. Using prices in effect at March 31, 1999, the
Partnership would have recorded an additional provision at March 31, 1999 in the
amount of $12,050. However, these temporarily low quarter-end prices rebounded
and by using prices in effect at the filing date, the Partnership's unamortized
cost of oil and gas properties were not limited by this calculation.
During 2000, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
8
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SWIFT ENERGY INCOME PARTNERS 1988-C, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SWIFT ENERGY INCOME
PARTNERS 1988-C, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 8, 2000 By: /s/ John R. Alden
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John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 8, 2000 By: /s/ Alton D. Heckaman, Jr.
--------------
----------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Income Partners 1988-C, Ltd.'s balance sheet and statement of operations
contained in its Form 10-Q for the quarter ended March 31, 2000 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 65,884
<SECURITIES> 0
<RECEIVABLES> 35,681
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 101,565
<PP&E> 4,790,146
<DEPRECIATION> (4,352,093)
<TOTAL-ASSETS> 545,693
<CURRENT-LIABILITIES> 7,769
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 515,816
<TOTAL-LIABILITY-AND-EQUITY> 545,693
<SALES> 61,023
<TOTAL-REVENUES> 61,801
<CGS> 0
<TOTAL-COSTS> 29,207<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,003
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,003
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,003
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes lease operating expenses, production taxes and depreciation,
depletion and amortization expense. Excludes general and administrative and
interest expense.
</FN>
</TABLE>
