<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 SEPTEMBER 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: 33-37983-23
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
(Exact name of registrant as specified in its charter)
TEXAS 76-0431884
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
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
--- ---
<PAGE> 2
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- September 30, 1996 and December 31, 1995 3
Statements of Operations
- Three month and nine month periods
ended September 30, 1996 and 1995 4
Statements of Cash Flows
- Nine month periods ended September 30, 1996 and 1995 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
PART II. OTHER INFORMATION 10
SIGNATURES 11
<PAGE> 3
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,146 $ 1,113
Nonoperating interests income receivable 66,894 102,364
------------ ------------
Total Current Assets 68,040 103,477
------------ ------------
Nonoperating interests in oil and gas
properties, using full cost accounting 2,755,577 2,757,966
Less-Accumulated amortization (956,271) (816,338)
------------ ------------
1,799,306 1,941,628
------------ ------------
$ 1,867,346 $ 2,045,105
============ ============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 4,060 $ 129,154
------------ ------------
Partners' Capital 1,863,286 1,915,951
------------ ------------
$ 1,867,346 $ 2,045,105
============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Income from nonoperating interests $ 101,097 $ 66,456 $ 308,641 $ 176,029
Interest income 14 16 33 34
---------- ---------- ---------- ----------
101,111 66,472 308,674 176,063
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Amortization 41,168 55,088 139,933 192,549
General and administrative 13,367 18,676 41,872 45,362
---------- ---------- ---------- ----------
54,535 73,764 181,805 237,911
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 46,576 $ (7,292) $ 126,869 $ (61,848)
========== ========== ========== ==========
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT $ .02 $ -- $ .05 $ (.02)
========== ========== ========== ==========
</TABLE>
See accompanying note to financial statements.
4
<PAGE> 5
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ 126,869 $ (61,848)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 139,933 192,549
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income
receivable 35,470 106,799
Increase (decrease) in accounts payable
and accrued liabilities (125,094) 107,059
---------- ----------
Net cash provided by (used in) operating activities 177,178 344,559
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperaring interests in oil
and gas properties (28,531) (87,720)
Proceeds from sales of nonoperating in oil
and gas properties 30,920 2,471
---------- ----------
Net cash provided by (used in) investing activities 2,389 (85,249)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (179,534) (259,276)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 33 34
---------- ----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,113 1,053
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,146 $ 1,087
========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 857 $ 1,019
========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
SWIFT ENERGY PENSION PARTNERS 1994-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 Pension Partners 1994-A, Ltd., a Texas limited
partnership (the Partnership), was formed on April 20, 1994, 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 266 Interest Holders made total capital contributions of
$2,635,723.
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.
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.
6
<PAGE> 7
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The Partnership computes the provision for amortization of
nonoperating interests in oil and gas properties on the
units-of-production method. Under this method, the provision is calculated
by multiplying the total unamortized cost of nonoperating interests in 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 attributable to the Partnership's nonoperating
interests 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 1994-A, 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 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 the
Partnership's 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.
(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
<PAGE> 8
SWIFT ENERGY PENSION PARTNERS 1994-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 nonoperating
interests in producing oil and gas properties located with 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
The Partnership has expended all of the Interest Holders' commitments
available for property acquisitions by acquiring producing oil and gas
properties.
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
The following analysis explains changes in the revenue and expense
categories for the quarter ended September 30, 1996 (current quarter) when
compared to the quarter ended September 30, 1995 (corresponding quarter), and
for the nine months ended September 30, 1996 (current period), when compared to
the nine months ended September 30, 1995 (corresponding period).
Three Months Ended September 30, 1996 and 1995
Income from nonoperating interests increased 52 percent in the current
quarter of 1996 when compared to the third quarter in 1995. Oil and gas sales
declined $9,778 or 7 percent in the third quarter of 1996 when compared to the
corresponding quarter in 1995, primarily due to decreased gas and oil prices. A
decline of 27 percent in gas production and 42 percent in oil production had a
significant impact on partnership performance. Current quarter gas and oil
prices increased 57 percent or $.91/MCF and 42 percent or $5.95/BBL,
respectively, partially offsetting the revenue declines.
Associated amortization expense decreased 25 percent or $13,920.
8
<PAGE> 9
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Nine Months Ended September 30, 1996 and 1995
Income from nonoperating interests increased 75 percent in the current
period of 1996 when compared to the corresponding period in 1995. Oil and gas
sales increased $32,346 or 8 percent in the first nine months of 1996 over the
corresponding period in 1995. An increase in gas prices of 63 percent or
$.93/MCF and in oil prices of 25 percent or $3.79/BBL were major contributing
factors to the increased revenues for the period. Also, current period oil and
gas production decreased 35 percent and 9 percent, respectively, when compared
to the corresponding period in 1995, partially offsetting the effect of
increased gas and oil prices.
Associated amortization expense decreased 9 percent or $13,501.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first nine months of 1995 for $39,115 when
the present value, discounted at ten percent, of estimated future net revenues
from oil and gas properties based on the prices in effect at the filing date,
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
Interest Holders and general partners in an 85:15 ratio.
9
<PAGE> 10
SWIFT ENERGY PENSION PARTNERS 1994-A, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
10
<PAGE> 11
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 1994-A, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: November 6, 1996 By: /s/ John R. Alden
---------------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: November 6, 1996 By: /s/ Alton D. Heckaman, Jr.
---------------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
11
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SWIFT ENERGY
PENSION PARTNERS 1994A LTD'S BALANCE SHEET AND STATEMENT OF OPERATIONS CONTAINED
IN ITS FORM 10-Q FOR THE QUARTER ENDED SEP-30-1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,146
<SECURITIES> 0
<RECEIVABLES> 66,894
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68,040
<PP&E> 2,755,577
<DEPRECIATION> (956,271)
<TOTAL-ASSETS> 1,867,346
<CURRENT-LIABILITIES> 4,060
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,863,286
<TOTAL-LIABILITY-AND-EQUITY> 1,867,346
<SALES> 308,641
<TOTAL-REVENUES> 308,674
<CGS> 0
<TOTAL-COSTS> 139,933<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 126,869
<INCOME-TAX> 0
<INCOME-CONTINUING> 126,869
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126,869
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES LEASE OPERATING EXPENSES, PRODUCTION TAXES AND DEPRECIATION AND
AMORTIZATION EXPENSE. EXCLUDES GENERAL AND ADMINISTRATIVE AND INTEREST EXPENSE.
</FN>
</TABLE>
