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 0-19248
SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0307428
(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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<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-A, 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 9
PART II. OTHER INFORMATION 11
SIGNATURES 12
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------------- ---------------
(Unaudited)
ASSETS:
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 320,608 $ 353,193
Oil and gas sales receivable 188,832 182,456
Other 14,694 13,744
-------------- ---------------
Total Current Assets 524,134 549,393
-------------- ---------------
Gas Imbalance Receivable 188,531 184,856
-------------- ---------------
Oil and Gas Properties, using full cost
accounting 6,571,449 6,568,611
Less-Accumulated depreciation, depletion
and amortization (5,731,777) (5,703,566)
-------------- ---------------
839,672 865,045
-------------- ---------------
$ 1,552,337 $ 1,599,294
============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 22,269 $ 26,898
-------------- ---------------
Deferred Revenues 227,969 224,300
Limited Partners' Capital (57,384 Limited Partnership
Units; $100 per unit) 1,269,964 1,316,980
General Partners' Capital 32,135 31,116
-------------- ---------------
Total Partners' Capital 1,302,099 1,348,096
-------------- ---------------
$ 1,552,337 $ 1,599,294
============== ===============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
2000 1999
--------------- ---------------
REVENUES:
<S> <C> <C>
Oil and gas sales $ 143,842 $ 95,365
Interest income 5,023 6,460
--------------- ---------------
148,865 101,825
--------------- ---------------
COSTS AND EXPENSES:
Lease operating 41,613 36,618
Production taxes 8,552 5,767
Depreciation, depletion
and amortization 28,211 36,239
General and administrative 29,159 33,060
--------------- ---------------
107,535 111,684
--------------- ---------------
NET INCOME (LOSS) $ 41,330 $ (9,859)
=============== ===============
Limited Partners' net income (loss)
per unit $ 0.56 $ (0.22)
=============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
2000 1999
--------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Income (loss) $ 41,330 $ (9,859)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 28,211 36,239
Change in gas imbalance receivable
and deferred revenues (6) (2,937)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (6,376) (19,195)
(Increase) decrease in other current assets (950) (4,456)
Increase (decrease) in accounts payable (4,629) (3,105)
--------------- --------------
Net cash provided by (used in) operating activities 57,580 (3,313)
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (2,838) (3,168)
Proceeds from sales of oil and gas properties -- 22
--------------- --------------
Net cash provided by (used in) investing activities (2,838) (3,146)
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Distributions to partners (87,327) (72,792)
--------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (32,585) (79,251)
--------------- --------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 353,193 489,659
--------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 320,608 $ 410,408
=============== ==============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
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, 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 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. Payout occurred as of July 1, 1998; therefore, for the
second half of 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.
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.
(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 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.
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 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 three months ended
March 31, 2000 and 1999.
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.
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.
7
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SWIFT ENERGY INCOME PARTNERS 1990-A, 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-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.
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 $57,580 and
$(3,313) for the three months ended March 31, 2000 and 1999, respectively. Cash
distributions totaled $87,327 and $72,792 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 $48,477 or 51 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
137 percent or $16.70/BBL to an average of $28.86/BBL and gas prices increased
56 percent or $0.95/MCF to an average of $2.64/MCF for the quarter. Current
quarter production volumes decreased 17 percent as oil and gas production
declined 5 percent and 18 percent, respectively, when compared to first quarter
1999 production volumes. Production declines were offset by increased oil and
gas prices.
9
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SWIFT ENERGY INCOME PARTNERS 1990-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Corresponding production costs per equivalent MCF increased 43 percent in
the first quarter of 2000 compared to the first quarter of 1999 and total
production costs increased 18 percent.
Associated depreciation expense decreased 22 percent or $8,028 in 2000
compared to first quarter 1999, related to the decline in production volumes.
Partnership payout occurred as of July 1, 1998. During 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 INCOME PARTNERS 1990-A, 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 INCOME
PARTNERS 1990-A, 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
Income Partners 1990-A, 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> 320,608
<SECURITIES> 0
<RECEIVABLES> 188,832
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 524,134
<PP&E> 6,571,449
<DEPRECIATION> (5,731,777)
<TOTAL-ASSETS> 1,552,337
<CURRENT-LIABILITIES> 22,269
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,302,099
<TOTAL-LIABILITY-AND-EQUITY> 1,552,337
<SALES> 143,842
<TOTAL-REVENUES> 148,865
<CGS> 0
<TOTAL-COSTS> 78,376<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 41,330
<INCOME-TAX> 0
<INCOME-CONTINUING> 41,330
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,330
<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>
