<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: 33-37983-27
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 76-0447862
(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 PENSION PARTNERS 1994-C, LTD.
INDEX
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PART I. FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- June 30, 1996 and December 31, 1995 3
Statements of Operations
- Three month and six month 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 8
PART II. OTHER INFORMATION 10
SIGNATURES 11
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SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
BALANCE SHEETS
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<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
--------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 153,722 $ 185,666
Nonoperating interests income receivable 76,153 17,206
--------------- --------------
Total Current Assets 229,875 202,872
--------------- --------------
Nonoperating interests in oil and gas
properties, using full cost accounting 2,814,813 2,805,994
Less-Accumulated amortization (410,409) (305,661)
--------------- --------------
2,404,404 2,500,333
--------------- --------------
$ 2,634,279 $ 2,703,205
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Payable related to property acquisitions $ -- $ 61,378
Payable related to property capital costs 5,602 5,879
--------------- --------------
Total Current Liabilities 5,602 67,257
--------------- --------------
Partners' Capital 2,628,677 2,635,948
--------------- --------------
$ 2,634,279 $ 2,703,205
=============== ==============
</TABLE>
See accompanying notes to financial statements.
3
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SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Income from nonoperating interests $ 160,707 $ 97,569 $ 280,086 $ 147,720
Interest income 1,638 6,813 3,148 15,153
-------------- -------------- -------------- --------------
162,345 104,382 283,234 162,873
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Amortization 46,437 48,235 104,748 151,030
General and administrative 18,591 17,463 35,899 29,147
-------------- -------------- -------------- --------------
65,028 65,698 140,647 180,177
-------------- -------------- -------------- --------------
NET INCOME (LOSS) $ 97,317 $ 38,684 $ 142,587 $ (17,304)
============== ============== ============== ==============
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT $ .03 $ .01 $ .05 $ (.01)
============== ============== ============== ==============
</TABLE>
See accompanying note to financial statements.
4
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SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------------------
1996 1995
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 142,587 $ (17,304)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 104,748 151,030
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income receivable (58,947) 32,949
(Increase) decrease in acquisitions receivable -- 74,613
Increase (decrease) in other current assets -- (6,785)
Increase (decrease) in accounts payable
and accrued liabilities -- 756
-------------- ---------------
Net cash provided by (used in) operating activities 188,388 235,259
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperating interests in oil and gas properties (73,427) (473,733)
Proceeds from sales of nonoperating interests
in oil and gas properties 3,230 --
Payable related to property capital costs (277) --
-------------- ---------------
Net cash provided by (used in) investing activities (70,474) (473,733)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (149,858) (112,146)
-------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,944) (350,620)
-------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 185,666 574,108
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 153,722 $ 223,488
============== ===============
Supplemental disclosure of noncash investing and financing activities:
Oil and gas properties acquired which were paid for
in a subsequent period $ -- $ 91,541
============== ===============
</TABLE>
See accompanying notes to financial statements.
5
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SWIFT ENERGY PENSION PARTNERS 1994-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, 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-C, Ltd., a Texas limited
partnership (the Partnership), was formed on September 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 302 Interest Holders made total
capital contributions of $2,783,562.
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
partner, 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
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SWIFT ENERGY PENSION PARTNERS 1994-C, 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 units of 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-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.
(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
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SWIFT ENERGY PENSION PARTNERS 1994-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 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 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 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 93 percent of the Interest Holder's
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 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 65 percent in the current
quarter of 1996 when compared to the second quarter in 1995. Oil and gas sales
increased $60,765 or 42 percent in the current quarter of 1996 when compared to
the corresponding quarter in 1995, primarily due to increased gas prices. An
increase in gas prices of 48 percent or $.84/MCF had a significant impact on
partnership performance. Also, current quarter oil production increased 18
percent when compared to second quarter 1995 production volumes, further
contributing to increased revenues. Current quarter gas production decreased
24 percent compared to the same quarter in 1995, partially offsetting the
effect of the increased gas prices.
Associated amortization expense decreased 4 percent or $1,798.
8
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SWIFT ENERGY PENSION PARTNERS 1994-C, 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 increased 90 percent in the current
period of 1996 when compared to the corresponding period in 1995. Oil and gas
sales increased $131,804 or 55 percent in the first six months of 1996 over the
corresponding period in 1995. An increase in gas prices of 67 percent or
$1.09/MCF was a major contributing factor to the increased revenues for the
period. Also, current period oil production increased 19 percent when compared
to the corresponding period in 1995, further contributing to the increased
revenues.
Associated amortization expense increased 31 percent or $24,744.
The Partnership recorded an additional provision in amortization in the
first six months of 1995 for $71,026 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
Interest Holders and general partners in an 85:15 ratio.
9
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SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
10
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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 1994-C, 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
11
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Index to Exhibits
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<CAPTION>
Exhibit
Number Description
- - -------- -----------
<S> <C>
27 Financial Data Schedule
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift
Energy Pension Partners 1994-C 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> 153,722
<SECURITIES> 0
<RECEIVABLES> 76,153
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 229,875
<PP&E> 2,814,813
<DEPRECIATION> (410,409)
<TOTAL-ASSETS> 2,634,279
<CURRENT-LIABILITIES> 5,602
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,628,677
<TOTAL-LIABILITY-AND-EQUITY> 2,634,279
<SALES> 280,086
<TOTAL-REVENUES> 283,234
<CGS> 0
<TOTAL-COSTS> 104,748<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 142,587
<INCOME-TAX> 0
<INCOME-CONTINUING> 142,587
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 142,587
<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>
