<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
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 Certificate of Limited Partnership)
TEXAS 76-0447862
(State of Organization) (I.R.S. Employer Identification No.)
16825 Northchase Dr., Suite 400
Houston, Texas 77060
(281) 874-2700
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b)
of the Act:
None
Securities registered pursuant to Section 12(g)
of the Act:
2,783,562 Limited Partnership Units
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 periods that the registrant was
required), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
Registrant does not have an aggregate market value for its Limited Partnership
Interests.
Documents Incorporated by Reference
Document Incorporated as to
Registration Statement No. 33-37983 Items 1 and 13
on Form S-1
<PAGE>
TABLE OF CONTENTS
Form 10-K Annual Report
For the Period Ended December 31, 1998
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
<TABLE>
<CAPTION>
ITEM NO. PART I PAGE
----
<S> <C> <C>
1 Business I-1
2 Properties I-5
3 Legal Proceedings I-7
4 Submission of Matters to a Vote of
Security Holders I-7
PART II
5 Market Price of and Distributions on the
Registrant's SDIs and Related Interest
Holder Matters II-1
6 Selected Financial Data II-2
7 Management's Discussion and Analysis of
Financial Condition and Results of Operations II-2
8 Financial Statements and Supplementary Data II-4
9 Disagreements on Accounting and Financial
Disclosure II-4
PART III
10 Directors and Executive Officers of the
Registrant III-1
11 Executive Compensation III-2
12 Security Ownership of Certain Beneficial
Owners and Management III-2
13 Certain Relationships and Related Transactions III-2
PART IV
14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K IV-1
OTHER
Signatures
</TABLE>
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
PART I
Item 1. Business
General Description of Partnership
Swift Energy Pension Partners 1994-C, Ltd., a Texas limited
partnership (the "Partnership" or the "Registrant"), is a partnership formed
under a public serial limited partnership offering denominated Swift Depositary
Interests I (Registration Statement No. 33-37983 on Form S-1, originally
declared effective March 19, 1991, and amended effective May 1, 1992, April 1,
1993, April 19, 1994 and May 9, 1995 [the "Registration Statement"]). The
Partnership was formed effective September 30, 1994 under a Limited Partnership
Agreement dated September 30, 1994. The initial 302 investors made capital
contributions of $2,783,562. Investors in the Partnership hold Swift Depositary
Interests ("SDIs") representing beneficial ownership interests in the
Partnership.
The Partnership is principally engaged in the business of acquiring
nonoperating interests (i.e., net profits interests, royalty interests and
overriding royalty interests) in proven oil and gas properties within the
continental United States. The Partnership does not acquire working interests in
or operate oil and gas properties, and does not engage in drilling activities.
At December 31, 1998, the Partnership had expended or committed to expend 100%
of the Interest Holders' commitments in the acquisition and development of
nonoperating interests in producing properties, which properties are described
under Item 2, "Nonoperating Interests in Properties," below. The Partnership's
income is derived almost entirely from its nonoperating interests and the
disposition thereof.
The Partnership's business and affairs are conducted by its Managing
General Partner, Swift Energy Company, a Texas corporation ("Swift"). The
Partnership's Special General Partner, VJM Corporation, a California corporation
("VJM"), consults with and advises Swift as to certain financial matters.
The general manner in which the Partnership acquires nonoperating
interests and otherwise conducts its business is described in detail in the
Registration Statement under "Proposed Activities of the Partnerships," which is
incorporated herein by reference. The following is intended only as a summary of
the Partnership's manner of doing business and specific activities to date.
Manner of Acquiring Nonoperating Interests in Properties; Net Profits and
Overriding Royalty Interest Agreement
The nonoperating interests owned by the Registrant have typically been
acquired pursuant to a Net Profits and Overriding Royalty Interest Agreement
dated September 30, 1994 (the "NP/OR Agreement") between the Registrant and
Swift Energy Operating Partners 1994-C, Ltd. (the "Operating Partnership"). The
Operating Partnership is a Texas limited partnership that is also managed by
Swift and VJM. The Operating Partnership was formed to acquire and develop
producing oil and gas properties.
Under the NP/OR Agreement, the Registrant and the Operating Partnership
have, in effect, combined their funds to acquire producing properties. Using
funds committed to the NP/OR Agreement by both partnerships, the Operating
Partnership acquires producing properties, then promptly conveys nonoperating
interests therein to the Registrant. The Operating Partnership retains a working
interest in each such property, and is responsible for the production of oil and
gas therefrom. For the sake of legal and administrative convenience, producing
properties are usually acquired from the third party sellers by Swift, which
then conveys a working interest in each such property to the Operating
Partnership. The Registrant initially committed $2,783,562 and the Operating
Partnership initially committed $5,125,411 for acquisitions under the NP/OR
Agreement. The Operating Partnership is obligated under the NP/OR Agreement to
convey to the Registrant a 35% fixed net profits interest and a variable
overriding royalty interest in specified depths of all producing properties
acquired under the NP/OR Agreement.
Under the NP/OR Agreement, the Operating Partnership is required to
convey to the Registrant, and the Registrant is required to purchase,
nonoperating interests in all producing properties acquired by the Operating
Partnership, except that:
I-1
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
1. properties anticipated to require significant development
operations and nonoperating interests offered to the Operating Partnership by
third parties may be purchased by the Operating Partnership outside the NP/OR
Agreement, without participation by the Registrant;
2. during a specified one-year period, the Registrant is
entitled to reduce the amount originally committed by it to purchases under the
NP/OR Agreement and to redirect such funds to the purchase of nonoperating
interests from sources other than the Operating Partnership; and
3. the Registrant's funds will be released from the NP/OR
Agreement if they are not completely spent by the Operating Partnership within a
specified period, or if there is a prior withdrawal of funds by the Operating
Partnership to purchase properties anticipated to require significant
development.
Purchases of nonoperating interests by the Registrant using withdrawn
or released funds may be made from the Managing General Partner and its
affiliates, other partnerships affiliated with the Operating Partnership
(possibly through the Registrant's entry into a new NP/OR Agreement), or from
unaffiliated third parties.
In accordance with its obligations under the NP/OR Agreement, as of
December 31, 1998, the Operating Partnership had conveyed to the Registrant a
net profits interest burdening certain depths of all producing properties
acquired by the Operating Partnership since the date of the Np/OR Agreement.
Typically, a net profits interest in an oil and gas property entitles the owner
to a specified percentage share of the gross proceeds generated by the burdened
property, net of operating costs. The 35% net profits interest conveyed to the
Registrant under the NP/OR Agreement differs from the typical net profits
interest in that it is calculated over the entire group of producing properties
conveyed under the NP/OR Agreement; i.e., all operating costs attributable to
the burdened depths of such properties are aggregated, and the total is then
subtracted from the total of all gross proceeds attributable to such depths in
order to calculate the net profits to which the Registrant is entitled. The net
profits interest conveyed to the Registrant burdens only those depths of each
subject property which were evaluated to contain proved reserves at the date of
acquisition, to the extent such depths underlie specified surface acreage.
The Operating Partnership has also conveyed to the Registrant under the
NP/OR Agreement an overriding royalty interest in each property acquired
thereunder. An overriding royalty interest is a fractional interest in the gross
production (or the gross proceeds therefrom) of oil and gas from a property,
free of any exploration, development, operation or maintenance expenses. Under
the NP/OR Agreement, the overriding royalty interest burdens the portions of
each producing property that were evaluated at the date of acquisition not to
contain proved reserves.
Competition, Markets and Regulations
Competition
The oil and gas industry is highly competitive in all its phases. The
Partnership encounters strong competition from many other oil and gas producers,
many of which possess substantial financial resources, in acquiring economically
desirable Producing Properties.
Markets
The amounts of and price obtainable for oil and gas production from
Partnership Properties will be affected by market factors beyond the control of
the Partnership. Such factors include the extent of domestic production, the
level of imports of foreign oil and gas, the general level of market demand on a
regional, national and worldwide basis, domestic and foreign economic conditions
that determine levels of industrial production, political events in foreign
oil-producing regions, and variations in governmental regulations and tax laws
and the imposition of new governmental requirements upon the oil and gas
industry. There can be no assurance that oil and gas prices will not decrease in
the future, thereby decreasing net Revenues from Partnership Properties.
I-2
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
From time to time, there may exist a surplus of natural gas or oil
supplies, the effect of which may be to reduce the amount of hydrocarbons that
the Partnerships may produce and sell while such oversupply exists. In recent
years, initial steps have been taken to provide additional gas transportation
lines from Canada to the United States. If additional Canadian gas is brought to
the United States market, it could create downward pressure on United States gas
prices.
Regulations
Environmental Regulation
The federal government and various state and local governments have
adopted laws and regulations regarding the control of contamination of the
environment. These laws and regulations may require the acquisition of a permit
by Operators before drilling commences, prohibit drilling activities on certain
lands lying within wilderness areas or where pollution arises and impose
substantial liabilities for pollution resulting from operations, particularly
operations near or in onshore and offshore waters or on submerged lands. These
laws and regulations may also increase the costs of routine drilling and
operation of wells. Because these laws and regulations change frequently, the
costs to the Partnership of compliance with existing and future environmental
regulations cannot be predicted. However, the Managing Partner does not believe
that the Partnership is affected in a significantly different manner by these
regulations than are its competitors in the oil and gas industry.
Federal Regulation of Natural Gas
The transportation and sale of natural gas in interstate commerce is
heavily regulated by agencies of the federal government. The following
discussion is intended only as a summary of the principal statutes, regulations
and orders that may affect the production and sale of natural gas from
Partnership Properties. This summary should not be relied upon as a complete
review of applicable natural gas regulatory provisions.
FERC Orders
Several major regulatory changes have been implemented by the Federal
Energy Regulatory Commission ("FERC") from 1985 to the present that affect the
economics of natural gas production, transportation and sales. In addition, the
FERC continues to promulgate revisions to various aspects of the rules and
regulations affecting those segments of the natural gas industry that remain
subject to the FERC's jurisdiction. In April 1992, the FERC issued Order No. 636
pertaining to pipeline restructuring. This rule requires interstate pipelines to
unbundle transportation and sales services by separately stating the price of
each service and by providing customers only the particular service desired,
without regard to the source for purchase of the gas. The rule also requires
pipelines to (i) provide nondiscriminatory "no-notice" service allowing firm
commitment shippers to receive delivery of gas on demand up to certain limits
without penalties, (ii) establish a basis for release and reallocation of firm
upstream pipeline capacity and (iii) provide non-discriminatory access to
capacity by firm transportation shippers on a downstream pipeline. The rule
requires interstate pipelines to use a straight fixed variable rate design. The
rule imposes these same requirements upon storage facilities.
FERC Order No. 500 affects the transportation and marketability of
natural gas. Traditionally, natural gas has been sold by producers to pipeline
companies, which then resold the gas to end-users. FERC Order No. 500 alters
this market structure by requiring interstate pipelines that transport gas for
others to provide transportation service to producers, distributors and all
other shippers of natural gas on a nondiscriminatory, "first-come, first-served"
basis ("open access transportation"), so that producers and other shippers can
sell natural gas directly to end-users. FERC Order No. 500 contains additional
provisions intended to promote greater competition in natural gas markets.
It is not anticipated that the marketability of and price obtainable
for natural gas production from Partnership Properties will be significantly
affected by FERC Order No. 500. Gas produced from Partnership Properties
normally will be sold to intermediaries who have entered into transportation
arrangements with pipeline companies. These intermediaries will accumulate gas
purchased from a number of producers and sell the gas to end-users through open
access pipeline transportation.
I-3
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
State Regulations
Production of any oil and gas from Partnership Properties will be
affected to some degree by state regulations. Many states in which the
Partnership will operate have statutory provisions regulating the production and
sale of oil and gas, including provisions regarding deliverability. Such
statutes, and the regulations promulgated in connection therewith, are generally
intended to prevent waste of oil and gas and to protect correlative rights to
produce oil and gas between owners of a common reservoir. Certain state
regulatory authorities also regulate the amount of oil and gas produced by
assigning allowable rates of production to each well or proration unit.
Federal Leases
Some of the Partnership's properties are located on federal oil and gas
leases administered by various federal agencies, including the Bureau of Land
Management. Various regulations and orders affect the terms of leases,
exploration and development plans, methods of operation and related matters.
Employees
The Partnership has no employees. Swift, however, has a staff of
geologists, geophysicists, petroleum engineers, landmen, and accounting
personnel who administer the operations of Swift and the Partnership. As of
December 31, 1998, Swift had 203 employees. Swift's administrative and overhead
expenses attributable to the Partnership's operations are borne by the
Partnership.
I-4
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
Item 2. Nonoperating Interests in Properties
As of December 31, 1998, the Partnership has acquired nonoperating
interests in producing oil and gas properties which are generally described
below.
Principal Oil and Gas Producing Properties
The most valuable fields in the Partnership, based upon year-end
engineering estimates of discounted future net revenues using constant pricing
and costs, are described below.
1. The Chunchula Unit is located in Mobile County, Alabama, (Parker and
Parsley acquisition) and produces from the Smackover horizon. This unit
represents 47% of this Partnership's value.
2. Approximately 26% of the Partnership's value is from the AWP Field
in McMullen County, Texas (Bracken acquisition). The wells produce from the
Olmos formation.
The remaining value in the Partnership is attributable to numerous
properties none of which equals or exceeds 15 percent of the total Partnership
value.
Title to Properties
Title to substantially all significant producing properties in which
the Partnership owns nonoperating interests has been examined. In addition to
the nonoperating interests owned by the Partnership, the properties are subject
to royalty, overriding royalty and other interests customary in the industry.
The Managing General Partner does not believe any of these burdens materially
detract from the value of the properties or will materially detract from the
value of the properties or materially interfere with their use in the operation
of the business of the Partnership.
Production and Sales Price
The following table summarizes the volumes of the Partnership's net
nonoperating interests in oil and gas production expressed in MCFs. Equivalent
MCFs are obtained by converting oil to gas on the basis of their relative energy
content; one barrel equals 6,000 cubic feet of gas. Average Net Nonoperating
Interest Price per Equivalent MCF is determined by dividing the related oil and
gas revenue from nonoperating interests by the equivalent MCF's.
<TABLE>
<CAPTION>
Net Production
------------------------------------
For the Years Ended
December 31,
------------------------------------
1998 1997 1996
------ ------- -------
<S> <C> <C> <C>
Net Volumes (Equivalent MCFs) 111,971 123,179 193,089
Average Net Nonoperating
Interest Price per
Equivalent MCF $0.44 $1.28 $1.92
</TABLE>
I-5
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
Net Proved Oil and Gas Reserves
Presented below are the estimates of the Partnership's proved reserves
as of December 31, 1998, 1997 and 1996. The Partnership does not itself own a
direct interest in proved reserves. The proved reserve estimates shown below
represent an estimate of the proved reserves owned by the Operating Partnership
equal to the percentage net profits interest conveyed to the Partnership by the
Operating Partnership. All of the Partnership's nonoperating interests in proved
reserves are located in the United States.
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------------------
1998 1997 1996
---------------------- --------------------- ---------------------
Natural Natural Natural
Oil Gas Oil Gas Oil Gas
-------- ------- ------- -------- ------- --------
(BBLS) (MMCF) (BBLS) (MMCF) (BBLS) (MMCF)
<S> <C> <C> <C> <C> <C> <C>
Proved developed
reserves at end of year 69,280 1,315 114,069 1,285 123,894 1,358
------- ----- ------- ----- ------- -----
Proved reserves
Balance at beginning
of year 168,058 1,699 184,964 1,801 226,716 2,286
Extensions, discoveries
and other additions -- -- -- -- -- --
Revisions of previous
estimates (48,600) (204) (6,013) (44) (26,404) (381)
Sales of minerals in
place (133) (6) -- -- (42) (3)
Production (10,237) (51) (10,893) (58) (15,306) (101)
------- ----- ------- ----- ------- -----
Balance at end of year 109,088 1,438 168,058 1,699 184,964 1,801
------- ----- ------- ----- ------- -----
</TABLE>
Revisions of previous quantity estimates are related to upward or
downward variations based on current engineering information for production
rates, volumetrics and reservoir pressure. Additionally, changes in quantity
estimates are the result of the increase or decrease in crude oil and natural
gas prices at each year end which have the effect of adding or reducing proved
reserves on marginal properties due to economic limitations.
I-6
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
The following table summarizes by acquisition the Registrant's proved
reserves equal to the percentage net profits interests conveyed by the Operating
Partnership and its nonoperating interests in gross and net producing oil and
gas wells as of December 31, 1998:
<TABLE>
<CAPTION>
Reserves
December 31, 1998
---------------------
Natural Wells
Oil Gas -----------------------
Acquisition State(s) (BBLS) (MMCF) Gross Net
- ----------- --------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Genesis TX 1,283 8 15 0.034
Corexcal LA 199 16 28 0.008
Cox Exploration TX 3,787 145 52 0.168
L L & E AL, MS 10,345 4 19 0.079
Parker & Parsley AL, LA 45,731 1,030 41 0.204
Cabot Oil & Gas WY 34,190 -- 14 0.497
Bracken II TX 13,553 235 58 0.905
------- ----- ---- -----
109,088 1,438 227 1.895
------- ----- ---- -----
</TABLE>
There are numerous uncertainties inherent in estimating quantities of
proved reserves and in projecting the future rates of production, timing and
plan of development. Oil and gas reserve engineering must be recognized as a
subjective process of estimating underground accumulations of oil and gas that
cannot be measured in an exact way, and estimates of other engineers might
differ from those above, audited by H. J. Gruy and Associates, Inc., an
independent petroleum consulting firm. 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,
and, as a general rule, reserve estimates based upon volumetric analysis are
inherently less reliable than those based on lengthy production history.
Accordingly, reserve estimates are often different from the quantities of oil
and gas that are ultimately recovered.
In estimating the oil and natural gas reserves, the Registrant, in
accordance with criteria prescribed by the Securities and Exchange Commission,
has used prices received as of December 31, 1998 without escalation, except in
those instances where fixed and determinable gas price escalations are covered
by contracts, limited to the price the Partnership reasonably expects to
receive. The Registrant does not believe that any favorable or adverse event
causing a significant change in the estimated quantity of proved reserves has
occurred between December 31, 1998 and the date of this report.
Future prices received for the sale of the Partnership's products may
be higher or lower than the prices used in the evaluation described above; the
operating costs relating to such production may also increase or decrease from
existing levels. The estimates presented above are in accordance with rules
adopted by the Securities and Exchange Commission.
Item 3. Legal Proceedings
The Partnership is not aware of any material pending legal proceedings
to which it is a party or of which any of its property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of Interest Holders during the
fourth quarter of the fiscal year covered by this report.
I-7
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
PART II
Item 5. Market Price of and Distributions on the Registrant's SDIs and Related
Interest Holder Matters
Market Information
SDIs in the Partnership were initially sold at a price of $1 per SDI.
SDIs are not traded on any exchange and there is no established public trading
market for the SDIs. Swift is aware of negotiated transfers of SDIs between
unrelated parties; however, these transfers have been limited and sporadic. Due
to the nature of these transactions, Swift has no verifiable information
regarding prices at which SDIs have been transferred.
Holders
As of December 31, 1998, there were 302 Interest Holders holding SDIs
in the Partnership.
Distributions
The Partnership generally makes distributions to Interest Holders on a
quarterly basis, subject to the restrictions set forth in the Limited
Partnership Agreement. In the fiscal years ended December 31, 1997 and 1998, the
Partnership distributed a total of $299,200 and $151,700, respectively, to
holders of its SDIs. Cash distributions constitute net proceeds from sale of oil
and gas production after payment of lease operating expenses and other
partnership expenses. Some or all of such amounts or any proceeds from the sale
of partnership properties could be deemed to constitute a return of investors'
capital.
Oil and gas investments involve a high risk of loss, and no assurance
can be given that any particular level of distributions to holders of SDIs can
be achieved or maintained. Although it is anticipated that quarterly
distributions will continue to be made through 1999, the Partnership's ability
to make distributions could be diminished by any event adversely affecting the
oil and gas properties in which the Partnership owns interests or the amount of
revenues received by the Partnership therefrom.
The Partnership's Limited Partnership Agreement contains various
provisions which might serve to delay, defer or prevent a change in control of
the Partnership, such as the requirement of a vote of Limited Partners in order
to sell all or substantially all of the Partnership's properties or the
requirement of consent by the Managing General Partner to transfers of limited
partnership interests and provisions prohibiting the transfer of Limited
Partnership Units in any fiscal year in excess of a limit which has been
established in order to comply with certain federal income tax regulations.
II-1
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
Item 6. Selected Financial Data
The following selected financial data, prepared in accordance with
generally accepted accounting principles for the years ended December 31, 1998,
1997, 1996, 1995 and the period from inception (September 30, 1994) through
December 31, 1994, should be read in conjunction with the financial statements
included in Item 8:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 105,419 $ 242,014 $ 491,312 $ 381,567 $ 147,709
Income $ (1,214,003) $ (407,368) $ 260,439 $ 67,233 $ 34,961
Total Assets $ 850,435 $ 1,833,917 $ 2,568,150 $ 2,703,205 $ 2,823,588
Cash Distributions $ 162,046 $ 330,828 $ 329,872 $ 249,808 $ --
Long Term Obligations $ -- $ -- $ -- $ -- $ --
Interest Holders' Net
Income(Loss)Per SDI $ (.36) $ (.13) $ .07 $ -- $ (.11)
Interest Holders'
Cash Distribution
Per SDI $ .05 $ .11 $ .10 $ .08 $ --
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of 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 $445,325, $257,931
and $341,411 in 1998, 1997 and 1996, 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 the 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 partner's
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. Capital expenditures in 1998,
1997 and 1996, totaled $295,739, $26,404 and $87,528, respectively. Cash
distributions to partners totaled $162,046, $330,828 and $329,872 in 1998, 1997
and 1996, respectively.
Results of Operations
Income from nonoperating interests decreased 56 percent in 1998 over
1997. Oil and gas sales decreased 34 percent in 1998 vs. 1997. 1998 oil and gas
prices decreased 43 percent or $7.49/BBL and 23 percent or $.65/MCF,
respectively. These price declines had a significant impact on partnership
performance. Also, production volumes decreased 9 percent due to a 13 percent
gas production decrease and a 6 percent oil production decline. The decrease in
production further contributed to the partnership's decreased revenues.
Total amortization expense for 1998 increased 114 percent or $674,542
when compared to 1997. Two components, the normal provision, calculated on the
units of production method, and the additional provision, relating to the
ceiling limitation, make up total amortization expense. Normal amortization
expense decreased 19 percent or $18,825 in 1998 when compared to 1997, relating
to the 9 percent decrease in production volumes.
The Partnership recorded an additional provision in amortization in
1998 and 1997 of $1,187,475 and $494,108, 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 for oil and gas properties resulting in a full cost
ceiling impairment.
II-2
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
Income from nonoperating interests decreased 51 percent in 1997 over
1996. Oil and gas sales decreased 35 percent in 1997 vs. 1996. Production
volumes decreased 36 percent due to a 43 percent gas production decrease and a
29 percent oil production decline. The decrease in production, due to the
accelerated decline of the Creole North field in Cameron Parish, Louisiana
(Parker and Parsley acquisition) had a significant impact on partnership
performance. A decline in the 1997 oil prices of 6 percent or $1.01/BBL further
contributed to the Partnership's decreased revenues.
Total amortization expense for 1997 increased 246 percent or $421,967
when compared to 1996. Two components, the normal provision, calculated on the
units of production method, and the additional provision, relating to the
ceiling limitation, make up total amortization expense. Normal amortization
expense decreased 42 percent or $72,141 in 1997 when compared to 1996, relating
to the 36 percent decrease in production volumes.
The Partnership recorded an additional provision in amortization in
1997 of $494,108, 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 for
oil and gas properties resulting in a full cost ceiling impairment.
During 1999, Partnership revenues and costs are expected to be shared
between the Interest Holders and general partners in an 85:15 ratio. Based on
current oil and gas prices, anticipated levels of oil and gas production and
expected cash distributions during 1999, the Managing General Partner
anticipates that the Partnership sharing ratio will continue to be 85:15.
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.
II-3
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
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.
Item 8. Financial Statements and Supplementary Data
See Part IV, Item 14(a) for index to financial statements.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
II-4
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
PART III
Item 10. Directors and Executive Officers of the Registrant
As a limited partnership, the Registrant has no directors or executive
officers. The business and affairs of the Registrant are managed by Swift as
Managing General Partner. Set forth below is certain information as of March 12,
1999 regarding the directors and executive officers of Swift.
<TABLE>
<CAPTION>
Position(s) with
Name Age Swift and Other Companies
---- --- -------------------------
<S> <C> <C>
DIRECTORS
A. Earl Swift 65 Chief Executive Officer and
Chairman of the Board
Virgil N. Swift 70 Executive Vice President - Business
Development, Vice Chairman of the Board
G. Robert Evans 67 Director of Swift; Chairman of the Board,
Material Sciences Corporation;
Director, Consolidated Freightways, Inc.,
Fibreboard Corporation, Elco Industries,
and Old Second Bancorp
Raymond O. Loen 74 Director of Swift; President, R. O. Loen
Company
Henry C. Montgomery 63 Director of Swift; Chairman of the Board,
Montgomery Financial Services Corporation;
Director, Southwall Technology Corporation
Clyde W. Smith, Jr. 50 Director of Swift; President, Somerset
Properties, Inc.
Harold J. Withrow 71 Director of Swift
EXECUTIVE OFFICERS
Terry E. Swift 43 President, Chief Operating Officer
John R. Alden 53 Senior Vice President - Finance,
Chief Financial Officer and Secretary
Bruce H. Vincent 51 Senior Vice President - Funds Management
James M. Kitterman 54 Senior Vice President - Operations
Joe A. D'Amico 50 Senior Vice President- Exploration and
Development
Alton D. Heckaman, Jr. 41 Vice President - Finance and Controller
</TABLE>
III-1
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
From time to time, Swift as Managing General Partner of the Partnership
purchases Units in the Partnership from investors who offer the Units pursuant
to their right of presentment, which purchases are made pursuant to terms set
out in the Partnership's original Limited Partnership Agreement. Due to the
frequency and large number of these transactions, Swift reports these
transactions under Section 16 of the Securities Exchange Act of 1934 on an
annual rather than a monthly basis. In some cases such annual reporting may
constitute a late filing of the required Section 16 reports under the applicable
Section 16 rules.
Item 11. Executive Compensation
As noted in Item 10, "Directors and Executive Officers of the
Registrant," above, the Partnership has no executive officers. The executive
officers of Swift and VJM are not compensated by the Partnership.
Certain fees and allowances contemplated by the Limited Partnership
Agreement were paid by the Partnership to Swift and VJM. See Note (4) in Notes
To Financial Statements (Related-Party Transactions) for further discussion.
Item 12. Security Ownership of Certain Beneficial Owners and Management
No single Interest Holder is known to the Partnership to be the
beneficial owner of more than five percent of the Partnership's SDIs.
Swift and VJM are not aware of any arrangement, the operation of which
may at a subsequent date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions
As noted in Item 10, "Directors and Executive Officers of the
Registrant," above, the Partnership has no executive officers or directors, and
thus has not engaged in any transactions in which any such person had an
interest. The Partnership is permitted to engage in certain transactions with
Swift as Managing General Partner and VJM as Special General Partner, subject to
extensive guidelines and restrictions as described in the "Conflicts of
Interest" section of the Prospectus contained in the Registration Statement,
which is incorporated herein by reference.
Summarized below are the principal transactions that have occurred
between the Partnership, on one hand, and Swift, VJM and their affiliates, on
the other.
Certain Transactions with General Partners
1. As described in Item 1, "Business," above, during 1994 the
Partnership entered into an NP/OR Agreement with the Operating Partnership,
which is also managed by Swift and VJM. Pursuant to such NP/OR Agreement, the
Operating Partnership acquired the oil and gas properties described under Item 2
above and conveyed nonoperating interests therein to the Partnership.
2. Swift acts as operator for many of the wells in which the
Partnership has nonoperating interests and has received compensation for such
activities in accordance with standard industry operating agreements.
3. The Partnership paid to Swift and VJM certain fees as contemplated
by the Limited Partnership Agreement. See Note (4) in Notes To Financial
Statements (Related-Party Transactions) for further discussion.
III-2
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
PART IV
<TABLE>
<CAPTION>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
a(1) FINANCIAL STATEMENTS PAGE NO.
--------
<S> <C>
Report of Independent Public Accountants IV-3
Balance Sheets as of December 31, 1998 and 1997 IV-4
Statements of Operations for the years ended
December 31, 1998, 1997 and 1996 IV-5
Statements of Partners' Capital for the years ended
December 31, 1998, 1997 and 1996 IV-6
Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 IV-7
Notes to Financial Statements IV-8
</TABLE>
a(2) FINANCIAL STATEMENT SCHEDULES
All schedules required by the SEC are either inapplicable or the
required information is included in the Financial Statements, the
Notes thereto, or in other information included elsewhere in this
report.
a(3) EXHIBITS
3.1 Limited Partnership Agreement of Swift Energy Pension
Partners 1994-C, Ltd., dated September 30, 1994. (Form
10-K for year ended December 31, 1994, Exhibit 3.1).
3.2 Certificate of Limited Partnership of Swift Energy Pension
Partners 1994-C, Ltd., as filed September 30, 1994, with
the Texas Secretary of State. (Form 10-K for year ended
December 31, 1994, Exhibit 3.2).
10.1 Net Profits and Overriding Royalty Interest Agreement
between Swift Energy Pension Partners 1994-C, Ltd. and
Swift Energy Operating Partners 1994-C, Ltd. dated
September 30, 1994. (Form 10-K for year ended December 31,
1994, Exhibit 10.1).
99.1 A copy of the following section of the Prospectus dated
April 19, 1994, contained in Post-Effective Amendment No.
4 to Registration Statement No. 33-37983 on Form S-1 for
Swift Energy Depositary Interests I, as filed on April 19,
1994, which have been incorporated herein by reference:
"Proposed Activities" (pp 25 - 35) and "Conflicts of
Interests" (pp 92 - 96). (Form 10-K for year ended
December 31, 1994, Exhibit 99.1).
b(1) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter ended
December 31, 1998.
IV-1
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
Supplemental Information to be Furnished with Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.
No annual report to security holders covering the Partnership's 1998
fiscal year, or proxy statement, form of proxy or other proxy soliciting
material has been sent to Interest Holders of the Partnership.
IV-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Swift Energy Pension Partners 1994-C, Ltd.:
We have audited the accompanying balance sheets of Swift Energy Pension
Partners 1994-C, Ltd., (a Texas limited partnership) as of December 31, 1998 and
1997, and the related statements of operations, partners' capital and cash flows
for the years ended December 31 1998, 1997 and 1996. These financial statements
are the responsibility of the Managing General Partner's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Swift Energy Pension
Partners 1994-C, Ltd., as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years ended December 31, 1998, 1997 and
1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 10, 1999
IV-3
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,099 $ 13,559
Nonoperating interests income receivable 37,894 36,304
--------------- ---------------
Total Current Assets 38,993 49,863
--------------- ---------------
Nonoperating interests in oil and gas
properties, using full cost accounting 3,151,104 2,855,365
Less-Accumulated amortization (2,339,662) (1,071,311)
--------------- ---------------
811,442 1,784,054
--------------- ---------------
$ 850,435 $ 1,833,917
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 398,165 $ 5,598
--------------- ---------------
Interest Holders' Capital (2,783,562 Interest Holders' SDIs;
$1.00 per SDI) 427,879 1,802,068
General Partners' Capital 24,391 26,251
--------------- ---------------
Total Partners' Capital 452,270 1,828,319
--------------- ---------------
$ 850,435 $ 1,833,917
=============== ===============
</TABLE>
See accompanying notes to financial statements.
IV-4
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
REVENUES:
Income from nonoperating interests $ 105,320 $ 239,896 $ 485,282
Interest income 99 2,118 6,030
--------------- --------------- ---------------
105,419 242,014 491,312
--------------- --------------- ---------------
COSTS AND EXPENSES:
Amortization -
Normal provision 80,876 99,701 171,842
Additional provision 1,187,475 494,108 --
General and administrative 51,071 55,573 59,031
--------------- --------------- ---------------
1,319,422 649,382 230,873
--------------- --------------- ---------------
INCOME (LOSS) $ (1,214,003) $ (407,368) $ 260,439
=============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
IV-5
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
Interest General Combining
Holders Partners Adjustment Total
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Balance,
December 31, 1995 $ 2,262,578 $ 25,786 $ 347,584 $ 2,635,948
Income (Loss) 186,558 64,109 9,772 260,439
Cash Distributions (270,700) (59,172) -- (329,872)
--------------- --------------- --------------- ---------------
Balance,
December 31, 1996 2,178,436 30,723 357,356 2,566,515
--------------- --------------- --------------- ---------------
Income (Loss) (362,591) 27,156 (71,933) (407,368)
Cash Distributions (299,200) (31,628) -- (330,828)
--------------- --------------- --------------- ---------------
Balance,
December 31, 1997 1,516,645 26,251 285,423 1,828,319
--------------- --------------- --------------- ---------------
Income (Loss) (1,000,525) 8,486 (221,964) (1,214,003)
Cash Distributions (151,700) (10,346) -- (162,046)
--------------- --------------- --------------- ---------------
Balance,
December 31, 1998 $ 364,420 $ 24,391 $ 63,459 $ 452,270
=============== =============== =============== ===============
Interest Holders' net income (loss)
per SDI
1996 $ .07
===============
1997 $ (.13)
===============
1998 $ (.36)
===============
</TABLE>
See accompanying notes to financial statements.
IV-6
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ (1,214,003) $ (407,368) $ 260,439
Adjustments to reconcile income (loss) to
net cash provided by operations:
Amortization 1,268,351 593,809 171,842
Change in assets and liabilities:
(Increase) decrease in nonoperating interests income receivable (1,590) 67,527 (86,626)
Increase (decrease) in accounts payable 392,567 3,963 (4,244)
--------------- --------------- ---------------
Net cash provided by (used in) operating activities 445,325 257,931 341,411
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to nonoperating interests in oil and gas properties (295,739) (26,404) (87,528)
Proceeds from sales of nonoperating interests in oil and gas properties -- -- 3,183
--------------- --------------- ---------------
Net cash provided by (used in) investing activities (295,739) (26,404) (84,345)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (162,046) (330,828) (329,872)
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (12,460) (99,301) (72,806)
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,559 112,860 185,666
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,099 $ 13,559 $ 112,860
=============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
IV-7
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
NOTES TO FINANCIAL STATEMENTS
(1) 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 interests 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) $403,617, which
includes 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. Payout had not occurred as of December 31, 1998.
(2) 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 --
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 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.
IV-8
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
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.
Cash and Cash Equivalents --
Highly liquid debt instruments with an initial maturity of three months
or less are considered to be cash equivalents.
Reclassifications --
Certain reclassifications have been made to the prior year balances to
conform with the current year presentation.
(3) Acquisition of Nonoperating Interests in Oil and Gas Property Costs -
Effective September 30, 1994, the Partnership entered into a Net
Profits and Overriding Royalty Interests Agreement ("NP/OR Agreement") with
Swift Energy Operating Partners 1994-C, Ltd. ("Operating Partnership"), managed
by Swift, for the purpose of acquiring 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 its
proportionate share of the property acquisition costs, as defined. Property
acquisition costs are amounts actually paid by the Operating Partnership for the
properties plus costs incurred by the Operating Partnership in acquiring the
properties and costs related to screening and evaluation of properties not
acquired. In 1998, 1997 and 1996, the Partnership acquired nonoperating
interests in producing oil and gas properties for $295,739, $26,404 and $87,528,
respectively.
During 1998 and 1997, the Partnership's unamortized oil and gas
property costs exceeded the quarterly calculations of the "ceiling limitation"
resulting in an additional provision for amortization of $1,187,475 and
$494,108, respectively. In addition, during 1998 and 1997, the Interest Holders'
share of unamortized oil and gas property costs exceeded their "ceiling
limitation", resulting in a valuation allowance of $961,589 and $418,250,
respectively. This amount is included in the income (loss) attributable to the
Interest Holders shown in the statement of partners' capital together with a
"combining adjustment" for the difference between the Interest Holders'
valuation allowance and the Partnership's full cost ceiling write down. The
"combining adjustment" changes quarterly as the Partnership's total amortization
provision is more or less than the combined amortization provision attributable
to the general partners and Interest Holders.
IV-9
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) Related Party Transactions -
During 1998, 1997 and 1996, the Partnership paid Swift $41,753 per year
as a general and administrative overhead allowance.
During 1998, 1997 and 1996, the Partnership also paid Swift an
incentive amount, as defined in the Partnership Agreement, for services rendered
to the Partnership. Such amounts totaled $426 in 1998, $2,750 in 1997 and $5,650
in 1996 and are included in general and administrative expenses.
(5) Federal Income Taxes -
The Partnership is not a tax-paying entity. No provision is made in the
accounts of the Partnership for federal or state income taxes, since such taxes
are liabilities of the individual partners, and the amounts thereof depend upon
their respective tax situations.
The tax returns and the amount of distributable Partnership income are
subject to examination by the federal and state taxing authorities. If the
Partnership's royalty income for federal income tax purposes is ultimately
changed by the taxing authorities, the tax liability of the Interest Holders
could be changed accordingly. Royalty income reported on the Partnership's
federal return of income for the years ended December 31, 1998, 1997 and 1996
was $0, $172,956 and $388,117, respectively. The difference between
royalty income for federal income tax purposes reported by the Partnership and
income or loss from nonoperating interests reported herein primarily results
from the exclusion of amortization (as described below) from ordinary income
reported in the Partnership's federal return of income.
For federal income tax purposes, amortization with respect to
nonoperating interests in oil and gas is computed separately by the partners and
not by the Partnership. Since the amount of amortization on nonoperating
interests in oil and gas is not computed at the Partnership level, amortization
is not included in the Partnership's income for federal income tax purposes but
is charged directly to the partners' capital accounts to the extent of the cost
of the nonoperating interests in oil and gas properties, and thus is treated as
a separate item on the partners' Schedule K-1. Amortization for federal income
tax purposes may vary from that computed for financial reporting purposes in
cases where a ceiling adjustment is recorded, as such amount is not recognized
for tax purposes.
(6) 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.
(7) 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.
IV-10
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD
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
General Partner
Date: March 12, 1999 By: s/b A. Earl Swift
-------------- -----------------------------------
A. Earl Swift
Chief Executive Officer
Date: March 12, 1999 By: s/b John R. Alden
-------------- -----------------------------------
John R. Alden
Principal Financial Officer
Date: March 12, 1999 By: s/b Alton D. Heckaman, Jr.
-------------- -----------------------------------
Alton D. Heckaman, Jr.
Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SWIFT ENERGY PENSION
PARTNERS 1994-C, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
General Partner
Date: March 12, 1999 By: s/b A. Earl Swift
-------------- -----------------------------------
A. Earl Swift
Director and Principal
Executive Officer
Date: March 12, 1999 By: s/b Virgil N. Swift
-------------- -----------------------------------
Virgil N. Swift
Director and Executive
Vice President - Business
Development
IV-11
<PAGE>
SWIFT ENERGY PENSION PARTNERS 1994-C, LTD
Date: March 12, 1999 By: s/b G. Robert Evans
-------------- -----------------------------------
G. Robert Evans
Director
Date: March 12, 1999 By: s/b Raymond O. Loen
-------------- -----------------------------------
Raymond O. Loen
Director
Date: March 12, 1999 By: s/b Henry C. Montgomery
-------------- -----------------------------------
Henry C. Montgomery
Director
Date: March 12, 1999 By: s/b Clyde W. Smith, Jr.
-------------- -----------------------------------
Clyde W. Smith, Jr.
Director
Date: March 12, 1999 By: s/b Harold J. Withrow
-------------- -----------------------------------
Harold J. Withrow
Director
IV-12
<TABLE> <S> <C>
<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-K for the year ended December 31, 1998 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,099
<SECURITIES> 0
<RECEIVABLES> 37,894
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,993
<PP&E> 3,151,104
<DEPRECIATION> (2,339,662)
<TOTAL-ASSETS> 850,435
<CURRENT-LIABILITIES> 398,165
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 452,270
<TOTAL-LIABILITY-AND-EQUITY> 850,435
<SALES> 105,320
<TOTAL-REVENUES> 105,419
<CGS> 0
<TOTAL-COSTS> 1,268,351<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,214,003)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,214,003)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,214,003)
<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>
