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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 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--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
- June 30, 1996 and December 31, 1995 3
Statements of Operations
- Three month and six month periods ended June 30, 1996 and 1995 4
Statement 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 OPERATING PARTNERS 1994-D, LTD.
BALANCE SHEETS
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<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
--------------- --------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 1,053,999 $ 1,140,607
Oil and gas sales receivable 222,456 273,152
Other 12,901 --
--------------- --------------
Total Current Assets 1,289,356 1,413,759
--------------- --------------
Oil and Gas Properties, using full cost
accounting 4,475,884 3,962,780
Less-Accumulated depreciation, depletion
and amortization (409,823) (256,183)
--------------- --------------
4,066,061 3,706,597
--------------- --------------
$ 5,355,417 $ 5,120,356
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 128,159 $ 249,112
Payable related to property acquisitions 500,000 106,662
--------------- --------------
Total Current Liabilities 628,159 355,774
--------------- --------------
Partners' Capital 4,727,258 4,764,582
--------------- --------------
$ 5,355,417 $ 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
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REVENUES:
Oil and gas sales $ 308,669 $ 220,338 $ 553,400 $ 389,576
Interest income 13,245 26,872 26,632 56,409
Other 7,924 1,932 10,493 2,931
-------------- -------------- -------------- --------------
329,838 249,142 590,525 448,916
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Lease operating 60,805 41,631 118,325 59,616
Production taxes 12,721 17,104 25,833 32,313
Depreciation, depletion
and amortization 70,145 67,428 153,640 118,794
General and administrative 33,073 28,782 63,892 124,587
-------------- -------------- -------------- --------------
176,744 154,945 361,690 335,310
-------------- -------------- -------------- --------------
NET INCOME (LOSS) $ 153,094 $ 94,197 $ 228,835 $ 113,606
============== ============== ============== ==============
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT $ .03 $ .02 $ .05 $ .02
============== ============== ============== ==============
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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>
SIX MONTHS ENDED
JUNE 30,
--------------------------------------
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 228,835 $ 113,606
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 153,640 118,794
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 50,696 (203,234)
(Increase) decrease in other current assets (12,901) (27,421)
Increase (decrease) in accounts payable
and accrued liabilities (120,953) 74,172
-------------- ---------------
Net cash provided by (used in) operating activities 299,317 75,917
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (119,766) (3,570,947)
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (266,159) (53,985)
-------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (86,608) (3,549,015)
-------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,140,607 4,775,604
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,053,999 $ 1,226,589
============== ===============
Supplemental disclosure of noncash investing and financing activities:
Oil and gas properties acquired which were paid for
in a subsequent period $ 500,000 $ 159,077
============== ===============
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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 six months ended June 30, 1996 and 1995.
6
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SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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.
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 interests in producing oil and gas properties.
Under the terms of the NP/OR Agreement, the Partnership has conveyed
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 76 percent of the Interest
Holder's 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
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
Oil and gas sales increased $88,331 or 40 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 47 percent or $.85/MCF had
a significant impact on partnership performance. Also, current quarter oil
production increased 24 percent when compared to second quarter 1995 production
volumes, further contributing to increased revenues. Current quarter gas
production decreased 22 percent compared to the same quarter in 1995, partially
offsetting the effect of the increased revenues.
Associated depreciation expense increased 4 percent or $2,717.
8
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SWIFT ENERGY OPERATING PARTNERS 1994-D, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Oil and gas sales increased $163,824 or 42 percent in the first six months
of 1996 over the corresponding period in 1995. An increase in gas prices of 58
percent or $1.04/MCF was a major contributing factor to the increased revenues
for the period. Also, current period oil production increased 22 percent,
further contributing to the increased revenues. Current period gas production
decreased 15 percent when compared to the corresponding period in 1995,
partially offsetting the effect of increased gas prices.
Associated depreciation expense increased 29 percent or $34,846.
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 OPERATING PARTNERS 1994-D, 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.
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SWIFT ENERGY OPERATING
PARTNERS 1994-D, 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
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11
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Index to Exhibits
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Exhibit
Number Description
- - ------- -----------
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27 Financial Data Schedule
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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 June 30, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,053,999
<SECURITIES> 0
<RECEIVABLES> 222,456
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,289,356
<PP&E> 4,475,884
<DEPRECIATION> (409,823)
<TOTAL-ASSETS> 5,355,417
<CURRENT-LIABILITIES> 628,159
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,727,258
<TOTAL-LIABILITY-AND-EQUITY> 5,355,417
<SALES> 553,400
<TOTAL-REVENUES> 590,525
<CGS> 0
<TOTAL-COSTS> 297,798<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 228,835
<INCOME-TAX> 0
<INCOME-CONTINUING> 228,835
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 228,835
<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>
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