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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission File number 33-11773-12
SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
(Exact name of registrant as specified in its charter)
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<S> <C>
Texas 76-0307428
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
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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 1990-A, LTD.
INDEX
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PART I. FINANCIAL INFORMATION PAGE
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ITEM 1. Financial Statements
Balance Sheets
- March 31, 1998 and December 31, 1997 3
Statements of Operations
- Three month periods ended March 31, 1998 and 1997 4
Statements of Cash Flows
- Three month periods ended March 31, 1998 and 1997 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 10
SIGNATURES 11
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
BALANCE SHEETS
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<CAPTION>
March 31, December 31,
1998 1997
--------------- ---------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 390,410 $ 424,196
Oil and gas sales receivable 494,755 325,413
Other 12,988 8,469
-------------- --------------
Total Current Assets 898,153 758,078
-------------- --------------
Gas Imbalance Receivable 230,990 231,004
-------------- --------------
Oil and Gas Properties, using full cost
accounting 6,496,299 6,725,723
Less-Accumulated depreciation, depletion
and amortization (5,435,727) (5,388,963)
-------------- --------------
1,060,572 1,336,760
-------------- --------------
$ 2,189,715 $ 2,325,842
============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 62,822 $ 69,462
--------------- --------------
Deferred Revenues 281,393 281,393
Limited Partners' Capital (57,384 Limited Partnership Units;
$100 per unit) 1,780,611 1,897,031
General Partners' Capital 64,889 77,956
-------------- --------------
Total Partners' Capital 1,845,500 1,974,987
-------------- --------------
$ 2,189,715 $ 2,325,842
============== ==============
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See accompanying notes to financial statements.
3
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
--------------- ---------------
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REVENUES:
Oil and gas sales $ 171,606 $ 380,037
Interest income 5,573 2,388
Other 426 729
--------------- ---------------
177,605 383,154
--------------- ---------------
COSTS AND EXPENSES:
Lease operating 46,874 51,643
Production taxes 10,257 21,435
Depreciation, depletion
and amortization 46,764 99,031
General and administrative 23,189 31,047
--------------- ---------------
127,084 203,156
--------------- ---------------
NET INCOME (LOSS) $ 50,521 $ 179,998
=============== ===============
</TABLE>
Limited Partners' net income (loss)
per unit
March 31, 1998 $ .88
===============
March 31, 1997 $ 3.14
===============
See accompanying note to financial statements.
4
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
Three Months Ended
March 31,
---------------------------------------
1998 1997
----------------- ---------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 50,521 $ 179,998
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 46,764 99,031
Change in gas imbalance receivable
and deferred revenues 14 (26,236)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (169,342) (16,264)
(Increase) decrease in other current assets (4,519) (1,906)
Increase (decrease) in accounts payable (6,640) (22,364)
---------------- --------------
Net cash provided by (used in) operating activities (83,202) 212,259
---------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (16,306) (58,747)
Proceeds from sales of oil and gas properties 245,730 --
---------------- ---------------
Net cash provided by (used in) investing activities 229,424 (58,747)
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (180,008) (140,398)
---------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (33,786) 13,114
---------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 424,196 183,092
---------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 390,410 $ 196,206
================ ===============
</TABLE>
See accompanying notes to financial statements.
5
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SWIFT ENERGY INCOME PARTNERS 1990-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 Income Partners 1990-A, 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 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 568 limited partners made total capital contributions
of $5,738,400.
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. 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.
6
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 statements.
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 three months ended
March 31, 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 $143,460 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $143,460 was
paid to Swift for services performed for the Partnership.
7
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Effective April 17, 1990, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Managed Pension Assets Partnership 1990-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 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 its 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.
(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
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Partnership was formed for the purpose of investing in 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.
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. Net cash provided by (used in) operating activities totaled
$(83,202) and $212,259 for the three months ended March 31, 1998 and 1997,
respectively. 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 the 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.
The Partnership has expended all of the partner's 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. Cash distributions totaled $180,008 and $140,398
for the three months ended March 31, 1998 and 1997, respectively.
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 $208,431 or 55 percent in the first quarter
of 1998 when compared to the corresponding quarter in 1997, primarily due to
decreased gas and oil production. Gas production decreased 41 percent and oil
production declined 30 percent. The decrease in production volumes had a
significant impact on partnership performance. The partnership's sale of several
properties in the fourth quarter of 1997 had an impact on 1998 partnership
production volumes. Also, first quarter gas and oil prices declined 22 percent
or $.60/MCF and 37 percent or $7.55/BBL, respectively, further contributing to
decreased revenues.
Associated depreciation expense decreased 53 percent or $52,267 in 1998
compared to first quarter 1997, also related to the decline in production
volumes.
During 1998, partnership revenues and costs will be shared between the
limited partners and general partners in an 90:10 ratio.
9
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
10
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SWIFT ENERGY INCOME
PARTNERS 1990-A, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 5, 1998 By: /s/ John R. Alden
----------- ---------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 5, 1998 By: /s/ Alton D. Heckaman, Jr.
----------- ---------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
11
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Income Partners 1990-A, Ltd.'s balance sheet and statement of operations con-
tained in its Form 10-Q for the quarter ended March 31, 1998 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 390,410
<SECURITIES> 0
<RECEIVABLES> 494,755
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 898,153
<PP&E> 6,496,299
<DEPRECIATION> (5,435,727)
<TOTAL-ASSETS> 2,189,715
<CURRENT-LIABILITIES> 62,822
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,845,500
<TOTAL-LIABILITY-AND-EQUITY> 2,189,715
<SALES> 171,606
<TOTAL-REVENUES> 177,605
<CGS> 0
<TOTAL-COSTS> 103,895<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 50,521
<INCOME-TAX> 0
<INCOME-CONTINUING> 50,521
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,521
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes lease operating expenses, production taxes and depreciation,
depletion and amortization expense. Excludes gene al and administrative and
interest expense.
</FN>
</TABLE>
