<PAGE>
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, 1999
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 0-20154
SWIFT ENERGY PENSION PARTNERS 1991-C, LTD.
(Exact name of registrant as specified in its charter)
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<S> <C>
Texas 76-0350269
(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)
(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 PENSION PARTNERS 1991-C, LTD.
INDEX
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<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
ITEM 1. Financial Statements
Balance Sheets
- March 31, 1999 and December 31, 1998 3
Statements of Operations
- Three month periods ended March 31, 1999 and 1998 4
Statements of Cash Flows
- Three month periods ended March 31, 1999 and 1998 5
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 12
SIGNATURES 13
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SWIFT ENERGY PENSION PARTNERS 1991-C, LTD.
BALANCE SHEETS
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<CAPTION>
March 31, December 31,
1999 1998
-------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,678 $ 1,671
Nonoperating interests income receivable 11,942 17,617
Nonoperating receivable due to property disposition -- 24,303
Other -- 2,992
--------------- ---------------
Total Current Assets 13,620 46,583
--------------- ---------------
Nonoperating interests in oil and gas
properties, using full cost accounting 4,135,909 4,131,910
Less-Accumulated amortization (3,508,530) (3,477,234)
--------------- ---------------
627,379 654,676
--------------- ---------------
$ 640,999 $ 701,259
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 8,560 $ 42,800
--------------- ---------------
Interest Holders' Capital (3,664,333 Interest Holders' SDIs;
$1.00 per SDI) 597,312 626,555
General Partners' Capital 35,127 31,904
--------------- ---------------
Total Partners' Capital 632,439 658,459
--------------- ---------------
$ 640,999 $ 701,259
=============== ===============
</TABLE>
See accompanying notes to financial statements.
3
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SWIFT ENERGY PENSION PARTNERS 1991-C, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
Three Months Ended
March 31,
---------------------------------
1999 1998
-------------- ---------------
<S> <C> <C>
REVENUES:
Income from nonoperating interests $ 42,077 $ 69,425
Interest income 392 239
--------------- ---------------
42,469 69,664
--------------- ---------------
COSTS AND EXPENSES:
Amortization 31,296 37,171
General and administrative 18,892 15,379
--------------- ---------------
50,188 52,550
--------------- ---------------
NET INCOME (LOSS) $ (7,719) $ 17,114
=============== ===============
</TABLE>
Limited Partners' net income (loss)
per SDI
March 31, 1999 $ --
============
March 31, 1998 $ --
============
See accompanying note to financial statements.
4
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SWIFT ENERGY PENSION PARTNERS 1991-C, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
Three Months Ended
March 31,
---------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (7,719) $ 17,114
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 31,296 37,171
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income receivable 5,675 1,477
(Increase) decrease in other current assets 27,295 --
Increase (decrease) in accounts payable (34,240) (1,024)
-------------- --------------
Net cash provided by (used in) operating activities 22,307 54,738
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperating interests in oil and gas properties (4,005) (10,813)
Proceeds from sale of nonoperating interests in oil and gas properties 6 37,977
-------------- --------------
Net cash provided by (used in) investing activities (3,999) 27,164
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (18,301) (81,895)
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7 7
-------------- --------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,671 1,585
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,678 $ 1,592
============== ==============
</TABLE>
See accompanying notes to financial statements.
5
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SWIFT ENERGY PENSION PARTNERS 1991-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, 1998 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 Pension Partners 1991-C, Ltd., a Texas limited
partnership ("the Partnership"), was formed on December 30, 1991, for
the purpose of purchasing net profits interest, overriding royalty
interests and royalty interests (collectively, "nonoperating interests")
in producing oil and gas properties within the continental United States
and Canada. 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 sole limited partner of the Partnership is Swift Depositary Company,
which has assigned all of its beneficial (but not of record) rights and
interest as limited partner to the investors in the Partnership
("Interest Holders"), in the form of Swift Depositary Interests
("SDIs").
The Managing General Partner has paid or will pay out of its
own corporate funds (as a capital contribution to the Partnership) all
selling commissions, offering expenses, printing, legal and accounting
fees and other formation costs incurred in connection with the offering
of SDIs and the formation of the Partnership, for which the Managing
General Partner will receive an interest in continuing costs and
revenues of the Partnership. The 350 Interest Holders made total capital
contributions of $3,664,333.
Generally, all continuing costs (including general and
administrative reimbursements and direct expenses) and revenues are
allocated 85 percent to the interest holders and 15 percent to the
general partners. After partnership payout, as defined in the
Partnership Agreement, continuing costs and revenues will be shared 75
percent by the interest holders, and 25 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 PENSION PARTNERS 1991-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Nonoperating Interests in 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 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 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 -
The Partnership entered into a Net Profits and Overriding
Royalty Interest Agreement ("NP/OR Agreement") with Swift Energy
Operating Partners 1991-C, Ltd. ("Operating Partnership"), an affiliated
partnership managed by Swift for the purpose of acquiring working
interests in producing oil and gas properties. Under the 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 the
Partnership's proportionate share of the property acquisition costs.
7
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SWIFT ENERGY PENSION PARTNERS 1991-C, 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.
(7) Year 2000 -
The Year 2000 issue results from computer programs and
embedded computer chips with date fields that cannot distinguish between
the years 1900 and 2000. The Managing General Partner is currently
implementing the steps necessary to make its operations and the related
operations of the Partnership capable of addressing the Year 2000. These
steps include upgrading, testing and certifying its computer systems and
field operation services and obtaining Year 2000 compliance
certification from all important business suppliers. The Managing
General Partner formed a task force during 1998 to address the Year 2000
issue and prepare its business systems for the Year 2000. By mid-1999,
the Managing General Partner expects the mission critical systems to be
either replaced or updated and testing to be virtually completed.
The Managing General Partner's business systems are almost
entirely comprised of off-the-shelf software. Most of the necessary
changes in computer instructional code can be made by upgrading this
software. The Managing General Partner is currently in the process of
either upgrading the off-the-shelf software or receiving certification
as to Year 2000 compliance from vendors or third party consultants. A
testing phase is being conducted as the software is updated or certified
and is expected to be completed by mid-1999.
8
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SWIFT ENERGY PENSION PARTNERS 1991-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The Managing General Partner does not believe that costs
incurred to address the Year 2000 issue with respect to its business
systems will have a material effect on the Partnership's results of
operations, or its liquidity and financial condition. The estimated
total cost to the Managing General Partner to address Year 2000 issues
is projected to be less than $150,000, most of which will be spent
during the testing phase. The Partnership's share of this cost is
expected to be insignificant.
The failure to correct a material Year 2000 problem could
result in an interruption, or failure of certain normal business
activities or operations. Based on activities to date, the Managing
General Partner believes that it will be able to resolve any Year 2000
problems concerning its financial and administrative systems. It is
undeterminable how all the aspects of the Year 2000 will impact the
Partnership. The most reasonably likely worst case scenario would
involve a prolonged disruption of external power sources upon which core
equipment relies, resulting in a substantial decrease in the
Partnership's oil and gas production activities. In addition, the
pipeline operators to whom the Managing General Partner sells the
Partnership's natural gas, as well as other customers and suppliers,
could be prone to Year 2000 problems that could not be assessed or
detected by the Managing General Partner. The Managing General Partner
is contacting its major purchasers, customers, suppliers, financial
institutions and others with whom it conducts business to determine
whether they will be able to resolve in a timely manner any Year 2000
problems directly affecting the Managing General Partner or Partnership
and to inform them of the Managing General Partner's internal assessment
of its Year 2000 review. There can be no assurance that such third
parties will not fail to appropriately address their Year 2000 issues or
will not themselves suffer a Year 2000 disruption that could have a
material adverse effect on the Partnership's activities, financial
condition or operating results. Based upon these responses and any
problems that arise during the testing phase, contingency plans or
back-up systems would be determined and addressed.
9
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SWIFT ENERGY PENSION PARTNERS 1991-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 nonoperating
interests in producing oil and gas properties located within the continental
United States and Canada. 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 was formed, it commenced 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 Interest Holder 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 Interest Holders 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
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 operating activities totaled $22,307 and $54,738 for the three
months ended March 31, 1999 and 1998, 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 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. 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. Cash distributions
totaled $18,301 and $81,895 for the three months ended March 31, 1999 and 1998,
respectively.
The Partnership does not allow for additional assessments from the
partners or interest holders to fund capital requirements. However, funds are
available from partnership revenues or proceeds from the sale of partnership
property. The Managing General Partner believes that the funds currently
available to the Partnership will be adequate to meet any anticipated capital
requirements.
RESULTS OF OPERATIONS
Income from nonoperating interests decreased 39 percent in the first
quarter of 1999 when compared to the same quarter in 1998. Oil and gas sales
declined $45,323 or 44 percent in the first quarter of 1999 when compared to the
corresponding quarter in 1998, primarily due to the normal production decline
from the Partnership's wells in conjunction with lower oil prices. Current
quarter gas and oil production declined 11 percent and 3 percent, respectively,
when compared to first quarter 1998 production volumes. Gas prices remained flat
at an average $1.66/MCF, however, oil prices declined 51 percent or $6.16 to an
average $6.04/BBL for the quarter, further contributing to the decline in
revenues. The majority of the Partnership's oil production is located in
Wyoming, which saw a significant drop in oil prices during the quarter.
Corresponding production costs per equivalent MCF decreased 50 percent in
the first quarter of 1999 compared to the first quarter of 1998 as total
production costs decreased 54 percent, offsetting a portion of the revenue
decline.
Total amortization expense decreased 16 percent or $5,875 in 1999 compared
to first quarter 1998
10
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SWIFT ENERGY PENSION PARTNERS 1991-C, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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 $22,204. 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 1999, partnership revenues and costs will be shared between the
Interest Holders and general partners in an 85:15 ratio.
11
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SWIFT ENERGY PENSION PARTNERS 1991-C, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
12
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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 PENSION
PARTNERS 1991-C, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 5, 1999 By: /s/ John R. Alden
----------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 5, 1999 By: /s/ Alton D. Heckaman, Jr.
----------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
13
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Pension Partners 1991-C, Ltd.'s balance sheet and statement of operations
contained in its Form 10-Q for the quarter ended March 31, 1999 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,678
<SECURITIES> 0
<RECEIVABLES> 11,942
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,620
<PP&E> 4,135,909
<DEPRECIATION> (3,508,530)
<TOTAL-ASSETS> 640,999
<CURRENT-LIABILITIES> 8,560
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 632,439
<TOTAL-LIABILITY-AND-EQUITY> 640,999
<SALES> 42,077
<TOTAL-REVENUES> 42,469
<CGS> 0
<TOTAL-COSTS> 31,296<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,719)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,719)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,719)
<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>
