<PAGE> 1
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 JUNE 30, 1996
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 33-15998-12
SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD.
(Exact name of registrant as specified in its charter)
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<S> <C>
TEXAS 76-0325631
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
</TABLE>
16825 NORTHCHASE DRIVE, SUITE 400
HOUSTON, TEXAS 77060
(Address of principal executive offices)
(Zip Code)
(713)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 1991-A, LTD.
INDEX
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<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
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ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- June 30, 1996 and December 31, 1995 3
Statements of Operations
- Three month and six months periods ended June 30, 1996 and 1995 4
Statements of Cash Flows
- Six month periods ended June 30,1996 and 1995 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
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD.
BALANCE SHEETS
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<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
--------------- ---------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 1,170 $ 1,149
Nonoperating interests income receivable 13,111 18,318
-------------- --------------
Total Current Assets 14,281 19,467
-------------- --------------
Nonoperating interests in oil and gas
properties, using full cost accounting 1,664,853 1,650,976
Less-Accumulated amortization (1,247,864) (1,050,589)
-------------- --------------
416,989 600,387
-------------- --------------
$ 431,270 $ 619,854
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 52,482 $ 35,350
Payable related to property capital costs 338,400 345,062
-------------- --------------
Total Current Liabilities 390,882 380,412
-------------- --------------
Partners' Capital 40,388 239,442
-------------- --------------
$ 431,270 $ 619,854
=============== ==============
</TABLE>
See accompanying notes to financial statements.
3
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
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REVENUES:
Income from nonoperating interests $ 5,710 $ 4,404 $ 11,112 $ 19,163
Interest income 15 15 20 20
-------------- -------------- -------------- --------------
5,725 4,419 11,132 19,183
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Amortization 185,312 17,133 197,275 71,031
General and administrative 5,710 1,025 11,112 3,978
-------------- -------------- -------------- --------------
191,022 18,158 208,387 75,009
-------------- -------------- -------------- --------------
NET INCOME (LOSS) $ (185,297) $ (13,739) $ (197,255) $ (55,826)
============== ============== ============== ==============
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT $ (12.79) $ (.95) $ (13.61) $ (3.85)
============== ============== ============== ==============
</TABLE>
See accompanying note to financial statements.
4
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------------------
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (197,255) $ (55,826)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 197,275 71,031
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income receivable 5,207 11,124
Increase (decrease) in accounts payable
and accrued liabilities 17,132 (1,852)
-------------- ---------------
Net cash provided by (used in) operating activities 22,359 24,477
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperating interests in oil and gas properties (14,037) (8,130)
Proceeds from sales of nonoperating interests
in oil and gas properties 160 --
Payable related to property captial costs (6,663) 7,585
-------------- ---------------
Net cash provided by (used in) investing activities (20,540) (545)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (1,798) (23,912)
-------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 21 20
-------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,149 1,087
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,170 $ 1,107
============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 15,830 $ 10,199
============== ===============
</TABLE>
See accompanying notes to financial statements.
5
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-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, 1995 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 1991-A, Ltd.,
a Texas limited partnership (the Partnership), was formed on March 31, 1991,
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 173 limited partners made total capital contributions of
$1,448,986.
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.
(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 1991-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NONOPERATING INTERESTS IN OIL AND GAS PROPERTIES --
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 $36,225 for managing and overseeing the offering of the
limited partnership units. A one-time management fee of $36,225 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 1991-A, 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 Operating Partnership
will convey to the Partnership nonoperating interests 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 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
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(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
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, 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.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has completed acquisition of nonoperating interests in
producing oil and gas properties, expending all of the limited partners' net
commitments available for property acquisitions.
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
The following analysis explains changes in the revenue and expense
categories for the quarter ended June 30, 1996 (current quarter) when compared
to the quarter ended June 30, 1995 (corresponding quarter), and for the six
months ended June 30, 1996 (current period), when compared to the six months
ended June 30, 1995 (corresponding period).
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Income from nonoperating interests increased 30 percent in the current
quarter of 1996 when compared to the first quarter in 1995. However, oil and
gas sales declined $980 or 4 percent in the second quarter of 1996 when
compared to the corresponding quarter in 1995, primarily due to decreased gas
production. A decline of 45 percent in gas production had a significant impact
on partnership performance. Current quarter gas and oil prices increased 61
percent or $.82/MCF and 17 percent or $2.79/BBL, respectively, partially
offsetting the revenue declines.
Associated amortization expense increased 5 percent or $822.
The Partnership recorded an additional provision in amortization in the
second quarter of 1996 for $167,357 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, was below the fair
market value originally paid for oil and gas properties. The additional
provision results from the Managing General Partner's determination that the
fair market value paid for properties may or may not coincide with reserve
valuations determined according to guidelines of the Securities and Exchange
Commission.
9
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Income from nonoperating interests decreased 42 percent in the current
period of 1996 when compared to the first six months in 1995. Oil and gas
sales declined $10,679 or 17 percent in the first six months of 1996 when
compared to the corresponding period in 1995, primarily due to decreased gas
production. A decline of 62 percent in gas production had a significant impact
on partnership performance. Current period gas and oil prices increased 90
percent or $1.27/MCF and 15 percent or $2.41/BBL, respectively, partially
offsetting the revenue declines.
Associated amortization expense decreased 28 percent or $11,742.
The Partnership recorded an additional provision in amortization in the
first six months of 1996 and 1995 for $167,357 and $29,371, respectively, 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, was below the fair market value originally paid for oil
and gas properties. The additional provision results from the Managing General
Partner's determination that the fair market value paid for properties may or
may not coincide with reserve valuations determined according to guidelines of
the Securities and Exchange Commission.
During 1996, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
10
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SWIFT ENERGY MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
11
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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 MANAGED PENSION
ASSETS PARTNERSHIP 1991-A, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: August 9, 1996 By: /s/ John R. Alden
-------------- ---------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: August 9, 1996 By: /s/ Alton D. Heckaman, Jr.
-------------- ---------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
12
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SWIFT ENERGY
MANAGED PENSION ASSETS PARTNERSHIP 1991-A LTD.'S BALANCE SHEET AND STATEMENT OF
OPERATIONS CONTAINED IN ITS FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,170
<SECURITIES> 0
<RECEIVABLES> 13,111
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,281
<PP&E> 1,664,853
<DEPRECIATION> (1,247,864)
<TOTAL-ASSETS> 431,270
<CURRENT-LIABILITIES> 390,882
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 40,388
<TOTAL-LIABILITY-AND-EQUITY> 431,270
<SALES> 11,112
<TOTAL-REVENUES> 11,132
<CGS> 0
<TOTAL-COSTS> 197,275<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (197,255)
<INCOME-TAX> 0
<INCOME-CONTINUING> (197,255)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (197,255)
<EPS-PRIMARY> 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>
