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 0-19251
SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0307500
(State or other jurisdiction (I.R.S. Employer Identification No.)
of organization)
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(Address of principal executive offices)
(Zip Code)
(281)874-2700
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
INDEX
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
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 9
PART II. OTHER INFORMATION 11
SIGNATURES 12
</TABLE>
<PAGE>
SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- -----------
(Unaudited)
ASSETS:
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 171,210 $ 185,528
Nonoperating interests income receivable 72,015 70,532
Other 7,368 6,892
----------- -----------
Total Current Assets 250,593 262,952
----------- -----------
Nonoperating interests in oil and gas
properties, using full cost accounting 3,968,314 3,967,058
Less-Accumulated amortization (3,517,093) (3,502,080)
----------- -----------
451,221 464,978
----------- -----------
$ 701,814 $ 727,930
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 5,078 $ 8,574
----------- -----------
Limited Partners' Capital (32,590 Limited Partnership
Units; $100 per unit) 688,634 711,385
General Partners' Capital 8,102 7,971
----------- -----------
Total Partners' Capital 696,736 719,356
----------- -----------
$ 701,814 $ 727,930
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
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REVENUES:
<S> <C> <C>
Income from nonoperating interests $ 50,459 $ 30,591
Interest income 2,629 3,316
----------- -----------
53,088 33,907
----------- -----------
COSTS AND EXPENSES:
Amortization 15,013 20,088
General and administrative 16,894 18,709
----------- -----------
31,907 38,797
----------- -----------
NET INCOME (LOSS) $ 21,181 $ (4,890)
=========== ===========
Limited Partners' net income (loss)
per unit $ 0.55 $ (0.18)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
4
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Income (loss) $ 21,181 $ (4,890)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 15,013 20,088
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income receivable (1,483) (26,551)
(Increase) decrease in other current assets (476) (2,260)
Increase (decrease) in accounts payable (3,496) 1,853
--------- ---------
Net cash provided by (used in) operating activities 30,739 (11,760)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperating interests in oil and gas properties (1,256) (788)
Proceeds from sales of nonoperating interests in oil and gas properties -- 11
--------- ---------
Net cash provided by (used in) investing activities (1,256) (777)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Distributions to partners (43,801) (39,166)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (14,318) (51,703)
--------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 185,528 258,558
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 171,210 $ 206,855
========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 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, 1999 which has been taken from the audited financial
statements at that date. The financial statements reflect adjustments,
all of which were of a normal recurring nature, which are in the opinion
of the managing general partner necessary for a fair presentation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). The
Partnership believes adequate disclosure is provided by the information
presented. The financial statements should be read in conjunction with
the audited financial statements and the notes included in the latest
Form 10-K.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Managed Pension Assets Partnership 1990-B, Ltd.,
a Texas limited partnership ("the Partnership"), was formed on June 30,
1990, for the purpose of purchasing net profits interests, overriding
royalty interests and royalty interests (collectively, "nonoperating
interests") in 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 345 limited partners
made total capital contributions of $3,259,002.
Nonoperating interests 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, 1992 and 1991, the cash distribution rate (as defined in the
Partnership Agreement) exceeded 17.5 percent and thus, in 1994, 1993 and
1992, the continuing costs and revenues were shared 85 percent by the
limited partners and 15 percent by the general partners. During 1999,
1998, 1997, 1996, 1995 and 1994, the cash distribution rate fell below
17.5 percent and thus, in 2000, 1999, 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. Payout occurred
as of April 1, 2000; therefore, for the last three quarters of 2000 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.
During the first quarter of 2000, the Managing General Partner
mailed proxy material to the limited partners proposing to sell all the
Partnership's nonoperating 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.
(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.
6
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Oil and Gas Revenues --
Oil and gas revenues are reported using the entitlement method
in which the Partnership recognizes its interest in oil and natural gas
production as revenue.
Nonoperating Interests in Oil and Gas Properties --
The Partnership accounts for its ownership in oil and gas
properties using the proportionate consolidation method, whereby the
Partnership's share of assets, liabilities, revenues and expenses is
included in the appropriate classification in the financial statement.
For financial reporting purposes the Partnership follows the
"full-cost" method of accounting for nonoperating interests in oil and
gas property costs. Under this method of accounting, all costs incurred
in the acquisition of nonoperating interests in oil and gas properties
are capitalized. The unamortized cost of nonoperating interests in oil
and gas properties is limited to the "ceiling limitation" (calculated
separately for the Partnership, limited partners and general partners).
The "ceiling limitation" is calculated on a quarterly basis and
represents the estimated future net revenues from nonoperating interests
in proved properties using current prices, discounted at ten percent.
Proceeds from the sale or disposition of nonoperating interests in oil
and gas properties are treated as a reduction of the cost of the
nonoperating interests with no gains or losses recognized except in
significant transactions.
The Partnership computes the provision for amortization of 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 by an overall rate determined by dividing the
physical units of oil and gas produced during the period by the total
estimated 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 $81,475 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $81,475 was
paid to Swift for services performed for the Partnership.
The Partnership entered into a Net Profits and Overriding
Royalty Interests Agreement ("NP/OR Agreement") with Swift Energy Income
Partners 1990-B, Ltd. ("Operating Partnership"), managed by Swift, for
the purpose of acquiring nonoperating interests in producing oil and gas
properties. Under terms of the NP/OR Agreement, the Partnership has been
conveyed a nonoperating interest in the aggregate net profits (i.e., oil
and gas sales net of related operating costs) of the properties acquired
equal to its proportionate share of the property acquisition costs.
7
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, 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 MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Partnership is formed for the purpose of investing in nonoperating
interests in producing oil and gas properties located within the continental
United States. In order to accomplish this, the Partnership goes through two
distinct yet overlapping phases with respect to its liquidity and results of
operations. When the Partnership is formed, it commences its "acquisition"
phase, with all funds placed in short-term investments until required for the
acquisition of nonoperating interests. Therefore, the interest earned on these
pre-acquisition investments becomes the primary cash flow source for initial
partner distributions. As the Partnership acquires nonoperating interests in
producing properties, net cash from ownership of nonoperating interests becomes
available for distribution, along with the investment income. After all
partnership funds have been expended on nonoperating interests in producing oil
and gas properties, the Partnership enters its "operations" phase. During this
phase, income from nonoperating interests in oil and gas sales generates
substantially all revenues, and distributions to partners reflect those revenues
less all associated partnership expenses. The Partnership may also derive
proceeds from the sale of nonoperating interests in acquired oil and gas
properties, when the sale of such interests is economically appropriate or
preferable to continued operations.
LIQUIDATION
During the first quarter of 2000, the Managing General Partner mailed
proxy material to the limited partners proposing to sell all the Partnership's
nonoperating 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 expenses, 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 $30,739 and
$(11,760) for the three months ended March 31, 2000 and 1999, respectively. Cash
distributions totaled $43,801 and $39,166 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. Under the NP/OR Agreement, the Managing
General Partner acquires interests in oil and gas properties from outside
parties and sells these interests to an affiliated operating partnership, who in
turn creates and sells to the Partnership nonoperating interests in these same
oil and gas properties. The Managing General Partner expects funds available
from net profits interests to be distributed to the partners.
RESULTS OF OPERATIONS
Income from nonoperating interests increased 65 percent in the first
quarter of 2000 when compared to the same quarter in 1999. Oil and gas sales
increased $24,085 or 46 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 141 percent
or $16.87/BBL to an average of $28.87/BBL and gas prices increased 58 percent or
$0.97/MCF to an average of $2.65/MCF for the quarter. Current quarter production
volumes decreased 21 percent as oil and gas production declined 10 percent and
22 percent, respectively, when compared to first quarter 1999 production
volumes.
9
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Corresponding production costs per equivalent MCF increased 52 percent in
the first quarter of 2000 compared to the first quarter of 1999 and total
production costs increased 19 percent.
Total amortization expense decreased 25 percent or $5,075 in 2000 compared
to first quarter 1999.
Partnership payout occurred as of April 1, 2000. During the last three
quarters of 2000, partnership revenues and costs will be shared between the
limited partners and general partners in an 85:15 ratio.
10
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
11
<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 MANAGED PENSION
ASSETS PARTNERSHIP 1990-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 8, 2000 By: /s/ John R. Alden
----------- ----------------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 8, 2000 By: /s/ Alton D. Heckaman, Jr.
----------- ----------------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Managed Pension Assets Partnership 1990-B, 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> 171,210
<SECURITIES> 0
<RECEIVABLES> 72,015
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 250,593
<PP&E> 3,968,314
<DEPRECIATION> (3,517,093)
<TOTAL-ASSETS> 701,814
<CURRENT-LIABILITIES> 5,078
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 696,736
<TOTAL-LIABILITY-AND-EQUITY> 701,814
<SALES> 50,459
<TOTAL-REVENUES> 53,088
<CGS> 0
<TOTAL-COSTS> 15,013<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,181
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,181
<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>
