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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: 33-37983-29
SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
(Exact name of registrant as specified in its charter)
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<S> <C>
Texas 76-0451887
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
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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 OPERATING PARTNERS 1994-D, LTD.
INDEX
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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 9
SIGNATURES 10
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SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
BALANCE SHEETS
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<CAPTION>
September 30, December 31,
1996 1995
--------------- --------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 999,452 $ 1,140,607
Oil and gas sales receivable 294,773 273,152
Other 12,460 --
-------------- --------------
Total Current Assets 1,306,685 1,413,759
-------------- --------------
Oil and Gas Properties, using full cost
accounting 4,478,899 3,962,780
Less-Accumulated depreciation, depletion
and amortization (480,038) (256,183)
-------------- --------------
3,998,861 3,706,597
-------------- --------------
$ 5,305,546 $ 5,120,356
============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 93,507 $ 249,112
Payable related to property acquisitions 500,000 106,662
-------------- --------------
Total Current Liabilities 593,507 355,774
-------------- --------------
Partners' Capital 4,712,039 4,764,582
-------------- --------------
$ 5,305,546 $ 5,120,356
============== ==============
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See accompanying notes to financial statements.
3
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SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ------------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 309,986 $ 187,226 $ 863,387 $ 576,802
Interest income 12,460 17,356 39,092 73,765
Other income 3,471 2,827 13,964 5,758
--------------- --------------- --------------- ---------------
325,917 207,409 916,443 656,325
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease Operating 58,430 105,079 176,755 164,695
Production taxes 17,869 5,744 43,701 38,057
Depreciation, depletion
and amortization 70,215 50,039 223,855 168,833
General and administrative 30,828 29,040 94,722 153,627
--------------- --------------- --------------- ---------------
177,342 189,902 539,033 525,212
--------------- ---------------- --------------- ---------------
NET INCOME (LOSS) $ 148,575 $ 17,507 $ 377,410 $ 131,113
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ .03 $ -- $ .08 $ .03
=============== =============== =============== ===============
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See accompanying note to financial statements.
4
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SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
Nine Months Ended
September 30,
---------------------------------------
1996 1995
-------------- ---------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ 377,410 $ 131,113
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 223,855 168,833
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (21,621) (181,482)
(Increase) decrease in other current assets (12,460) (17,430)
Increase (decrease) in accounts payable
and accrued liabilities (155,605) 214,748
-------------- ---------------
Net cash provided by (used in) operating activities 411,579 315,782
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (122,781) (3,700,440)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (429,953) (175,190)
-------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (141,155) (3,559,848)
-------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,140,607 4,775,604
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 999,452 $ 1,215,756
============== ===============
Supplemental disclosure of noncash investing and financing activities:
Oil and gas properties acquired which were paid for
in a subsequent period $ 500,000 $ 68,534
============== ===============
</TABLE>
See accompanying notes to financial statements.
5
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SWIFT ENERGY OPERATING PARTNERS 1994-D, 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 Operating Partners 1994-D, Ltd., a Texas limited
partnership (the Partnership), was formed on December 30, 1994, for the
purpose of purchasing and operating 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 321 Interest Holders made total capital
contributions of $4,775,604.
Generally, all continuing costs (including development costs,
operating costs, 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.
Oil and Gas Properties --
For financial reporting purposes the Partnership follows the
"full-cost" method of accounting for oil and gas property costs. Under
this method of accounting, all productive and nonproductive costs
incurred in the acquisition and development of oil and gas reserves are
capitalized. Such costs include lease acquisitions, geological and
geophysical services, drilling, completion, equipment and certain
general and administrative costs directly associated with acquisition
and development activities. General and administrative costs related to
production and general overhead are expensed as incurred. No general and
administrative costs were capitalized during the nine months ended
September 30, 1996 and 1995.
Future development, site restoration, dismantlement and
abandonment costs, net of salvage values, are estimated on a
property-by-property basis based on current economic conditions and are
amortized to expense as the Partnership's capitalized oil and gas
property costs are amortized.
6
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SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The unamortized cost of 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 proved properties using current prices, discounted at ten
percent, and the lower of cost or fair value of unproved properties.
Proceeds from the sale or disposition of oil and gas properties are
treated as a reduction of oil and gas property costs with no gains or
losses being recognized except in significant transactions.
The Partnership computes the provision for depreciation,
depletion and amortization of oil and gas properties on the
units-of-production method. Under this method, the provision is
calculated by multiplying the total unamortized cost of oil and gas
properties, including future development, site restoration,
dismantlement and abandonment costs, by an overall amortization rate
that is determined by dividing the physical units of oil and gas
produced during the period by the total estimated units of proved oil
and gas reserves at the beginning of the period.
The calculation of the "ceiling limitation" and the provision
for depreciation, depletion and amortization is based on estimates of
proved reserves. There are numerous uncertainties inherent in estimating
quantities of proved reserves and in projecting the future rates of
production, timing and plan of development. The accuracy of any reserve
estimate is a function of the quality of available data and of
engineering and geological interpretation and judgment. Results of
drilling, testing and production subsequent to the date of the estimate
may justify revision of such estimate. Accordingly, reserve estimates
are often different from the quantities of oil and gas that are
ultimately recovered.
(4) Related-Party Transactions -
Effective December 30, 1994, the Partnership entered into a
Net Profits and Overriding Royalty Interest Agreement ("NP/OR
Agreement") with Swift Energy Pension Partners 1994-D, Ltd. (Pension
Partnership), an affiliated partnership managed by Swift for the purpose
of acquiring nonoperating interests in producing oil and gas properties.
Under the terms of the NP/OR Agreement, the Partnership will convey to
the Pension Partnership 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 Pension 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 OPERATING PARTNERS 1994-D, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Partnership was formed for the purpose of investing in producing oil
and gas properties located within the continental United States and Canada. In
order to accomplish this, the Partnership goes through two distinct yet
overlapping phases with respect to its liquidity and result of operations. When
the Partnership is formed, it commences its "acquisition" phase, with all funds
placed in short-term investments until required for such property acquisitions.
The interest earned on these pre-acquisition investments becomes the primary
cash flow source for initial Interest Holder distributions. As the Partnership
acquires producing properties, net cash from operations becomes available for
distribution, along with the investment income. After partnership funds have
been expended on producing oil and gas properties, the Partnership enters its
"operations" phase. During this phase, oil and gas sales generate 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 acquired oil and gas properties, when the sale of such
properties is economically appropriate or preferable to continued operation.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has expended approximately 84 percent of the Interest
Holders' commitments available for property acquisitions by acquiring producing
oil and gas properties.
The Partnership does not allow for additional assessments from the
partners or interest holders to fund capital requirements. However, funds are
available from partnership revenues, borrowings 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
Three Months Ended September 30, 1996 and 1995
Oil and gas sales increased $122,760 or 66 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 44 percent or
$.77/MCF and in oil prices of 54 percent or $6.93/BBL had a significant impact
on partnership performance. Also, current quarter gas production increased 54
percent when compared to third quarter 1995 production volumes, further
contributing to increased revenues.
Associated depreciation expense increased 40 percent or $20,176.
Nine Months Ended September 30, 1996 and 1995
Oil and gas sales increased $286,585 or 50 percent in the first nine
months of 1996 over the corresponding period in 1995. An increase in gas prices
of 52 percent or $.93/MCF and in oil prices of 8 percent or $1.23/BBL were major
contributing factors to the increased revenues for the period. Also, current
period oil and gas production increased 12 percent and 4 percent, respectively,
when compared to the corresponding period in 1995, further contributing to the
increased revenues.
Associated depreciation expense increased 33 percent or $55,022.
During 1996, partnership revenues and costs will be shared between the
Interest Holders and general partners in an 85:15 ratio.
8
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SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
9
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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 OPERATING
PARTNERS 1994-D, 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
10
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Operating Partners 1994-D, Ltd's balance sheet and statement of operations
contained in its Form 10-Q for the quarter ended September 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 999,452
<SECURITIES> 0
<RECEIVABLES> 294,773
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,306,685
<PP&E> 4,478,899
<DEPRECIATION> (480,038)
<TOTAL-ASSETS> 5,305,546
<CURRENT-LIABILITIES> 93,507
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,712,039
<TOTAL-LIABILITY-AND-EQUITY> 5,305,546
<SALES> 863,387
<TOTAL-REVENUES> 916,443
<CGS> 0
<TOTAL-COSTS> 444,311<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 377,410
<INCOME-TAX> 0
<INCOME-CONTINUING> 377,410
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 377,410
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes lease operating expenses, production taxes and depreciation deple-
tion and amortization expense. Excludes general and administrative and interest
expense.
</FN>
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