<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: 33-37983-24
SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
(Exact name of registrant as specified in its charter)
TEXAS 76-0441892
(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-B, 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-B, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,669 $ 1,620
Nonoperating interests income receivable 75,136 18,974
------------ -----------
Total Current Assets 76,805 20,594
------------ -----------
Nonoperating interests in oil and gas
properties, using full cost account 3,662,493 3,654,093
Less-Accumulated amortization (1,349,177) (1,147,034)
------------ -----------
2,313,316 2,507,059
------------ -----------
$ 2,390,121 $ 2,527,653
============ ===========
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Payable related to property capital $ 5,173 $ 7,311
------------ -----------
Partners' Capital 2,384,948 2,520,342
------------ -----------
$ 2,390,121 $ 2,527,653
============ ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
1996 1996 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Income from nonoperating interests $140,700 $ 86,271 $414,577 $ 234,463
Interest income 20 23 49 45
-------- -------- -------- ---------
140,720 86,294 414,626 234,508
-------- -------- -------- ---------
COSTS AND EXPENSES:
Amortization 61,995 111,800 202,143 282,785
General and administrative 17,131 25,638 53,687 58,067
-------- -------- -------- ---------
79,126 137,438 255,830 340,852
-------- -------- -------- ---------
NET INCOME (LOSS) $ 61,594 $(51,144) $158,796 $(106,344)
======== ======== ======== =========
Limited Partners' net income (loss)
per unit $ .02 $ (.01) $ .04 $ (.03)
======== ======== ========= =========
</TABLE>
See accompanying note to financial statements.
4
<PAGE> 5
SWIFT ENERGY PENSION PARTNERS 1994-B, 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) $ 158,796 $(106,344)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 202,143 282,785
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income
receivable (56,162) 142,022
Increase (decrease) in accounts payable
and accrued liabilities -- 157
--------- ---------
Net cash provided by (used in) operating activities 304,777 318,620
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperaring interests in oil
and gas properties (45,486) (77,753)
Proceeds from sale of nonoperating interests
in oil and gas properties 37,086 1,872
Payable related to property capital costs (2,138) 89,617
--------- ---------
Net cash provided by (used in) investing activities (10,538) 13,736
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (294,190) (332,304)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 49 52
--------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,620 1,531
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,669 $ 1,583
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 889 $ 131
========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
SWIFT ENERGY PENSION PARTNERS 1994-B, 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-B, Ltd., a Texas limited
partnership (the Partnership), was formed on June 30, 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 323 Interest Holders made total
capital contributions of $3,535,809.
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-B, 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-B, 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-B, 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 nonoperating interests in
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 30,1 996 and 1995
Income from nonoperating interests increased 63 percent in the current
quarter of 1996 when compared to the third quarter in 1995. Oil and gas sales
increased $10,187 or 6 percent in the current quarter of 1996 when compared to
the corresponding quarter in 1995, primarily due to increased gas and oil
prices. An increase in gas prices of 58 percent or $.92/MCF and in oil prices
of 42 percent or $6.00/BBL had a significant impact on partnership performance.
Also, current quarter oil and gas production decreased 38 percent and 19
percent, respectively, when compared to third quarter 1995 production volumes,
partially offsetting the effect of increased gas and oil prices.
Associated amortization expense decreased 18 percent or $13,398.
The Partnership recorded an additional provision in amortization in the
third quarter of 1995 for $36,407 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.
8
<PAGE> 9
SWIFT ENERGY PENSION PARTNERS 1994-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Nine Months Ended September 30, 1996 and 1995
Income from nonoperating interests increased 77 percent in the current
period of 1996 when compared to the corresponding period in 1995. Oil and gas
sales increased $54,080 or 10 percent in the first nine months of 1996 over the
corresponding period in 1995. An increase in gas prices of 61 percent or
$.90/MCF and in oil prices of 24 percent or $3.62/BBL were major contributing
factors to the increased revenues for the period. Also, current period oil
production decreased 31 percent when compared to the corresponding period in
1995, partially offsetting the effect of increased gas and oil prices.
Associated amortization expense decreased 7 percent or $14,917.
The Partnership recorded an additional provision in amortization in the
first nine months of 1995 for $65,725 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-B, 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-B, 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 1994B 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> 1,669
<SECURITIES> 0
<RECEIVABLES> 75,136
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 76,805
<PP&E> 3,662,493
<DEPRECIATION> (1,349,177)
<TOTAL-ASSETS> 2,390,121
<CURRENT-LIABILITIES> 5,173
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,384,948
<TOTAL-LIABILITY-AND-EQUITY> 2,390,121
<SALES> 414,577
<TOTAL-REVENUES> 414,626
<CGS> 0
<TOTAL-COSTS> 202,143<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 158,796
<INCOME-TAX> 0
<INCOME-CONTINUING> 158,796
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,796
<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>
