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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 March 31, 1997
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)
(281)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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<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
ITEM 1. Financial Statements
Balance Sheets
- March 31, 1997 and December 31, 1996 3
Statements of Operations
- Three month periods ended March 31, 1997 and 1996 4
Statements of Cash Flows
- Three month periods ended March 31, 1997 and 1996 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>
March 31, December 31,
1997 1996
-------------- --------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 476,722 $ 485,796
Oil and gas sales receivable 263,836 247,342
Other 5,466 --
-------------- --------------
Total Current Assets 746,024 733,138
-------------- --------------
Oil and Gas Properties, using full cost
accounting 4,527,096 4,509,703
Less-Accumulated depreciation, depletion
and amortization (1,328,520) (549,631)
-------------- --------------
3,198,576 3,960,072
-------------- --------------
$ 3,944,600 $ 4,693,210
============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 81,876 $ 23,912
-------------- --------------
Deferred Revenues 10,666 10,666
Partners' Capital 3,852,058 4,658,632
-------------- --------------
$ 3,944,600 $ 4,693,210
============== ==============
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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
March 31,
---------------------------------
1997 1996
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<S> <C> <C>
REVENUES:
Oil and gas sales $ 277,344 $ 244,731
Interest income 5,466 13,387
Other 1,893 2,569
--------------- ---------------
284,703 260,687
--------------- ---------------
COSTS AND EXPENSES:
Lease operating 74,545 57,520
Production taxes 13,508 13,111
Depreciation, depletion
and amortization -
Normal provision 66,741 83,495
Additional provision 712,148 --
General and administrative 29,518 30,821
--------------- ---------------
896,460 184,947
--------------- ---------------
NET INCOME (LOSS) $ (611,757) $ 75,740
=============== ===============
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Limited Partners' net income (loss)
per unit
March 31, 1997 $ (.13)
===============
March 31, 1996 $ .02
===============
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>
Three Months Ended
March 31,
---------------------------------------
1997 1996
---------------- ---------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ (611,757) $ 75,740
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 778,889 83,495
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (16,494) 38,876
Increase (decrease) in other current assets (5,466) (13,136)
Increase (decrease) in accounts payable
and accrued liabilities 57,964 (159,691)
---------------- ---------------
Net cash provided by (used in) operating activities 203,136 25,284
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (17,393) (10,254)
---------------- ---------------
CASH FLOWS FROM FINANCINGACTIVITIES:
Cash distributions to partners (194,817) (116,613)
---------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (9,074) (101,583)
---------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 485,796 1,140,607
---------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 476,722 $ 1,039,024
================ ===============
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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, 1996 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 three months ended
March 31, 1997 and 1996.
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 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.
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
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
Oil and gas sales increased $32,613 or 13 percent in the first quarter of
1997 when compared to the same period in 1996, primarily due to increased gas
and oil prices. An increase in gas prices of 15 percent or $.45/MCF and in oil
prices of 51 percent or $7.23/BBL had a significant impact on partnership
performance. Also, first quarter gas production increased 12 percent further
contributing to the increased revenues. Current quarter oil production declined
34 percent when compared to first quarter 1996 production volumes, partially
offsetting the effect of increased gas and oil prices.
Associated depreciation expense decreased 20 percent or $16,754.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first quarter of 1997 for $712,148 when the
present value, discounted at ten percent, of estimated future net revenues from
oil and gas properties, using the guidelines of the Securities and Exchange
Commission, was below the fair market value originally paid for oil and gas
properties. The additional provision results from the Managing General Partner's
determination that the fair market value paid for properties may or may not
coincide with reserve valuations determined according to guidelines of the
Securities and Exchange Commission. Using prices in effect at March 31, 1997,
the Partnership would have recorded an additional provision at March 31, 1997 in
the amount of $1,163,746.
During 1997, 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: May 5, 1997 By: /s/ John R. Alden
----------- ----------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 5, 1997 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 con-
tained in its Form 10-Q for the quarter ended March 31, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 476,722
<SECURITIES> 0
<RECEIVABLES> 263,836
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 746,024
<PP&E> 4,572,096
<DEPRECIATION> (1,328,520)
<TOTAL-ASSETS> 3,944,600
<CURRENT-LIABILITIES> 81,876
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,852,058
<TOTAL-LIABILITY-AND-EQUITY> 3,944,600
<SALES> 277,344
<TOTAL-REVENUES> 284,703
<CGS> 0
<TOTAL-COSTS> 866,942<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (611,757)
<INCOME-TAX> 0
<INCOME-CONTINUING> (611,757)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (611,757)
<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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