-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OEdA9k2UIbnVXG3cyyKa+9/RyDsLG0C+bB+PAH0oWiM2Fec6TqSR2oSSRvSEkk4f lnl7wcHS4zW6OOYF35ECtA== 0000895362-00-000004.txt : 20000329 0000895362-00-000004.hdr.sgml : 20000329 ACCESSION NUMBER: 0000895362-00-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SWIFT ENERGY OPERATING PARTNERS 1992-C LTD CENTRAL INDEX KEY: 0000895362 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760375254 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-21612 FILM NUMBER: 580557 BUSINESS ADDRESS: STREET 1: 16825 NORTHCHASE DR STE 400 CITY: HOUSTON STATE: TX ZIP: 77060 BUSINESS PHONE: 7138742700 MAIL ADDRESS: STREET 1: 16825 NORTHCHASE DR STREET 2: SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77060 10-K 1 YEAR END RPT. O 1992-C, LTD./ 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, 1999 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 0-21612 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. (Exact name of registrant as specified in its Certificate of Limited Partnership) TEXAS 76-0375254 (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: None 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 TABLE OF CONTENTS Form 10-K Annual Report For the Period Ended December 31, 1999 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD.
ITEM NO. PART I PAGE ----- ---- 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
SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. PART I Item 1. Business General Description of Partnership Swift Energy Operating Partners 1992-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, 1992 under a Limited Partnership Agreement dated September 30, 1992. The initial 916 investors made capital contributions of $12,952,294. 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, developing and, when appropriate, disposing of working interests in proven oil and gas properties within the continental United States. The Partnership does not engage in exploratory drilling. Each working interest held by the Partnership entitles the Partnership to receive, in kind or in value, a share of the production of oil and gas from the producing property, and obligates the Partnership to participate in the operation of the property and to bear its proportionate share of all operating costs associated therewith. The Partnership typically holds less than the entire working interest in its producing properties. At December 31, 1999, the Partnership had expended or committed to expend 100% of the Interest Holders' commitments in the acquisition and development of producing properties, which properties are described under Item 2, "Properties," below. The Partnership's revenues and profits are derived almost entirely from the sale of oil and gas produced from its properties and from the sale of acquired oil and gas properties, when the sale of such properties is economically preferable to continued operation. 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. Swift is the designated operator of many of the properties in which the Partnership owns interests. The remaining properties are operated by industry operators designated by the owners of a majority of the working interest in each property. The general manner in which the Partnership acquires producing properties 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. Liquidation During the first quarter of 2000, the Managing General Partner mailed proxy material to the Interest Holders proposing to sell all the Partnership's interests in oil and gas properties and dissolve and liquidate the Partnership. In March 2000, the Interest Holders of the Partnership approved the proposal to liquidate the Partnership. The Managing General Partner anticipates liquidation will be substantially completed within the next two years. Manner of Acquiring Properties; Net Profits and Overriding Royalty Interest Agreement For the sake of legal and administrative convenience, the producing properties owned by the Registrant have typically been acquired initially by Swift, which then conveyed ownership of each such property to the Registrant. The Registrant acquires producing properties from Swift at the property acquisition cost of such properties to Swift, as adjusted for intervening operations. The Registrant entered into a Net Profits and Overriding Royalty Interest Agreement dated September 30, 1992 (the "NP/OR Agreement") with Swift Energy Pension Partners 1992-C, Ltd. (the "Pension Partnership"). The Pension Partnership is a Texas limited partnership that is also managed by Swift and VJM. The Pension Partnership was formed to acquire nonoperating interests, such as net profits, royalty and overriding royalty interests, in producing oil and gas properties. I-1 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. Under the NP/OR Agreement, the Registrant and the Pension Partnership have, in effect, combined their funds in acquiring producing properties; using funds committed to the NP/OR Agreement by both partnerships, the Registrant acquires producing properties, then promptly conveys nonoperating interests therein to the Pension Partnership. The Registrant initially committed $12,952,294 and the Pension Partnership initially committed $7,073,471 for acquisitions under the NP/OR Agreement. The Registrant is obligated under the NP/OR Agreement to convey to the Pension Partnership a 35% fixed net profits interest and a variable overriding royalty interest in specified depths of every producing property it acquires, except that (i) properties anticipated to require significant development operations, and (ii) nonoperating interests offered to the Registrant by third parties may be purchased by the registrant outside the NP/OR Agreement, without participation by the Pension Partnership. The Registrant is entitled to withdraw up to 30% of its committed funds under the NP/OR Agreement for such acquisitions. All properties acquired by the Registrant since the date of the NP/OR Agreement have been acquired subject to the NP/OR Agreement and the nonoperating interests created thereby. At December 31, 1999, the Registrant had not made any withdrawals to acquire properties anticipated to require significant development. In accordance with its obligations under the NP/OR Agreement, as of December 31, 1999, the Registrant had conveyed to the Pension Partnership a net profits interest burdening certain depths of all producing properties acquired by the Registrant 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 Pension Partnership under the NP/OR Agreement differs from the typical net profits interest in that it is calculated over the entire group of producing properties acquired 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 Pension Partnership is entitled. The net profits interest conveyed to the Pension Partnership 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 Registrant has also conveyed to the Pension Partnership under the NP/OR Agreement an overriding royalty interest in each property acquired since the date of the NP/OR Agreement. 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. 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. I-2 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. 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. Price Controls - Prior to January 1, 1993, the sale of natural gas production was subject to regulation under the Natural Gas Act and the Natural Gas Policy Act of 1978 ("NGPA"). Under the Natural Gas Wellhead Decontrol Act of 1989, however, all price regulation under the NGPA and Natural Gas Act rate, certificate and abandonment requirements were phased out effective as of January 1, 1993. 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 had been sold by producers to pipeline companies, which then resold the gas to end-users. FERC Order No. 500 altered 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 SWIFT ENERGY OPERATING PARTNERS 1992-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, 1999, Swift had 173 employees. Swift's administrative and overhead expenses attributable to the Partnership's operations are borne by the Partnership. I-4 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. Item 2. Properties As of December 31, 1999, the Partnership has acquired 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 Eakly-Weatherford Field is in Custer County, Oklahoma in the Anadarko Basin (Barney et al acquisition). The Eakly-Weatherford Field produces primarily natural gas and condensate and accounts for 51% of the value. 2. The Greenbranch Field is in McMullen County, Texas (American Cometra acquisition). This field produces gas and oil from multiple pay zones and accounts for 26% of the Partnership value. 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 of the Partnership has been examined. 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 sales volumes of the Partnership's net 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.
Net Production ----------------------------------- For the Years Ended December 31, ----------------------------------- 1999 1998 1997 --------- --------- -------- Net Volumes (Equivalent MCFs) 396,951 559,454 786,326 Average Sales Price price per Equivalent MCF $2.46 $1.95 $2.60 Average Production Cost per Equivalent MCF (includes production taxes) $1.21 $0.92 $0.90
I-5 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. Net Proved Oil and Gas Reserves Presented below are the estimates of the Partnership's proved reserves as of December 31, 1999, 1998 and 1997. All of the Partnership's proved reserves are located in the United States.
December 31, ----------------------------------------------------------------------------- 1999 1998 1997 --------------------- --------------------- --------------------- Natural Natural Natural Oil Gas Oil Gas Oil Gas ------- -------- ------- -------- ------- -------- (BBLS) (MMCF) (BBLS) (MMCF) (BBLS) (MMCF) Proved developed reserves at end of year 173,502 2,277 142,669 2,359 106,173 3,151 ------- -------- ------- -------- ------- -------- Proved reserves Balance at beginning of year 159,034 2,673 130,771 3,624 182,944 3,784 Extensions, discoveries and other additions -- -- 78 10 -- -- Revisions of previous estimates 58,427 275 56,684 71 (8,856) 593 Sales of minerals in place (55) (3) (8,060) (595) (14,236) (141) Production (17,831) (290) (20,439) (437) (29,081) (612) ------- -------- ------- -------- ------- -------- Balance at end of year 199,575 2,655 159,034 2,673 130,771 3,624 ------- -------- ------- -------- ------- --------
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 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. The following table summarizes by acquisition the Registrant's reserves and gross and net interests in producing oil and gas wells as of December 31, 1999:
Reserves December 31, 1999 --------------------- Natural Wells Oil Gas ------------------------ Acquisition State(s) (BBLS) (MMCF) Gross Net - ---------- --------- ------- ------- ------ -------- Maxus WY 22,666 -- 11 0.068 Hardy Oil & Gas TX 4,095 173 14 0.035 Barney, et al AL, AR, CO, LA, MS, OK, TX 19,003 2,122 304 4.477 American Cometra AL, CO, LA, ND, NM, NV, OK, TX, WY 153,811 360 793 14.720 ------- ------- ------ -------- 199,575 2,655 1,122 19.300 ------- ------- ------ --------
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, 1999 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, 1999 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 SWIFT ENERGY OPERATING PARTNERS 1992-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, 1999, there were 894 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, 1998 and 1999, the Partnership distributed a total of $777,100 and $314,100, respectively, to the 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 2000, 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 SWIFT ENERGY OPERATING PARTNERS 1992-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, 1999, 1998, 1997, 1996, and 1995, should be read in conjunction with the financial statements included in Item 8:
1999 1998 1997 1996 1995 ------------- ------------ -------------- ------------- ------------- Revenues $ 1,040,088 $ 1,158,893 $ 2,181,914 $ 2,806,839 $ 2,431,175 Income (Loss) $ 30,639 $ (35,524) $ 552,773 $ 831,274 $ (785,486) Total Assets $ 3,135,602 $ 3,615,471 $ 4,624,022 $ 5,578,174 $ 6,250,612 Cash Distributions $ 361,447 $ 895,586 $ 1,469,918 $ 1,280,924 $ 1,420,504 Long Term Obligations $ -- $ -- $ -- $ -- $ -- Interest Holders' Net Income (Loss) Per SDI $ -- $ -- $ .03 $ .04 $ (.06) Interest Holders' Cash Distributions Per SDI $ .02 $ .06 $ .10 $ .08 $ .10
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidation During the first quarter of 2000, the Managing General Partner mailed proxy material to the Interest Holders proposing to sell all the Partnership's interests in oil and gas properties and dissolve and liquidate the Partnership. In March 2000, the Interest Holders of the Partnership approved the proposal to liquidate the Partnership. The Managing General Partner anticipates liquidation will be substantially completed within the next two years. 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. 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 these 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. Cash distributions to partners or Interest Holders are determined quarterly, based upon net proceeds from sale of oil and gas production after payment of lease operating expense, taxes and development costs, less general and administrative expenses. In addition, future partnership cash requirements are taken into account to determine necessary cash reserves. Net cash provided by operating activities totaled $283,102, $653,967 and $1,249,730 in 1999, 1998 and 1997, respectively. The decrease in cash provided by operating activities in 1999 is related to changes in oil and gas sales receivable and declines in the Partnership's production from property sales. Cash provided by property sale proceeds totaled $142,836, $265,467 and $246,288 in 1999, 1998 and 1997, respectively. Capital expenditures totaled $26,135, $59,518 and $73,472 in 1999, 1998 and 1997, respectively. Cash distributions totaled $361,447, $895,586 and $1,469,918 in 1999, 1998 and 1997, respectively. In 1999, cash distributions were effected by production declines from the Partnership's property sales and low oil and gas prices received during the first part of this year. The Partnership has expended all of the partners' 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. 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 Partnership plans to spend in the next two years an estimated $197,000 for capital expenditures needed for the development and enhancement of proved oil and gas reserves. The Managing General Partner believes that the funds currently available to the Partnership will be adequate to meet any anticipated capital requirements. II-2 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. Results of Operations Oil and gas sales declined $106,769 or 10 percent in 1999 vs. 1998, primarily due to decreased oil and gas production. In 1999, production volumes decreased 29 percent as oil and gas production declined 13 percent and 34 percent, respectively, when compared to 1998. Production declines were related to normal depletion and the Partnership's property sales in 1998. Oil prices increased 77 percent or $7.42/BBL to an average of $17.09/BBL and gas prices increased 13 percent of $0.26/MCF to an average of $2.31/MCF for 1999. Increased oil and gas prices helped offset the effect of decreased production. Corresponding production cost per equivalent MCF increased 32 percent in 1999 compared to 1998; due to production declines. Associated depreciation expense decreased 41 percent or $177,779 in 1999 compared to 1998, related to the decline in production volumes. Oil and gas sales decreased 48 percent in 1998 vs. 1997. A decline in the 1998 gas prices received of 20 percent or $.50/MCF had a significant impact on partnership performance. The average sales price per equivalent MCF decreased 25 percent in 1998 as gas prices decreased 20 percent and oil prices declined 42 percent. Also, production volumes decreased 29 percent due to a 29 percent gas production decrease and a 30 percent oil production decline. The partnership's sale in late 1997 of properties in Oklahoma and Texas, related to the Barney, et al acquisition, contributed to the 1998 decreased production volumes. Production cost per equivalent MCF increased 2 percent in 1998 compared to 1997; primarily due to the decline in production volumes; however, total production costs decreased 27 percent in 1998. Associated depreciation expense decreased 34 percent in 1998 when compared to 1997, also related to the decline in production volumes. During 2000, Partnership revenues and costs will 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 2000, the Managing General Partner anticipates that the Partnership sharing ratio will continue to be 85:15. Year 2000 The Year 2000 issue resulted from computer programs and embedded computer chips with date fields which could not distinguish between the years 1900 and 2000. The Managing General Partner implemented steps necessary to make its operations and the related operations of the Partnership capable of addressing the Year 2000. These steps included 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. The Managing General Partner either replaced or updated mission critical systems and completed testing before 2000 began. 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 were made by upgrading this software. In addition, the Managing General Partner received certification as to Year 2000 compliance from vendors or third party consultants. The costs incurred to address the Year 2000 issue with respect to the Managing General Partners' business systems did not 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 was less than $150,000, most of which was spent during the testing phase. The Partnership's share of this cost was insignificant. The most reasonably likely worst case scenario would have been 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 have been prone to Year 2000 problems that could not be assessed or detected by the Managing General Partner. II-3 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. As of the filing of this report, the Managing General Partner is not aware of any Year 2000 problems either experienced by it or by parties which it does business, and does not expect to experience such problems in the future. 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 SWIFT ENERGY OPERATING PARTNERS 1992-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 10, 2000, regarding the directors and executive officers of Swift.
Position(s) with Name Age Swift and Other Companies ---- --- ------------------------- DIRECTORS --------- A. Earl Swift 66 Chief Executive Officer and Chairman of the Board Virgil N. Swift 71 Executive Vice President - Business Development, Vice Chairman of the Board G. Robert Evans 68 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 75 Director of Swift; President, R. O. Loen Company Henry C. Montgomery 64 Director of Swift; Chairman of the Board, Montgomery Financial Services Corporation; Director, Southwall Technology Corporation Clyde W. Smith, Jr. 51 Director of Swift; President, Somerset Properties, Inc.; Harold J. Withrow 72 Director of Swift EXECUTIVE OFFICERS ------------------ Terry E. Swift 44 President Joe A. D'Amico 51 Chief Operating Officer John R. Alden 54 Senior Vice President - Finance, Chief Financial Officer and Secretary Bruce H. Vincent 52 Senior Vice President - Funds Management James M. Kitterman 55 Senior Vice President - Operations Alton D. Heckaman, Jr. 42 Vice President - Finance and Controller
III-1 SWIFT ENERGY OPERATING PARTNERS 1992-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 and Swift, VJM and their affiliates. 1. The oil and gas properties acquired by the Partnership, as described in Item 2, "Properties" above, were typically acquired initially by Swift from the seller thereof and subsequently transferred to the Partnership. Such transfers were made by Swift at its Property Acquisition Costs (as defined in the Limited Partnership Agreement), less any amounts received from sale of production between the time of acquisition by Swift and the time of sale to the Partnership. 2. Swift acts as operator for many of the wells in which the Partnership has acquired 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 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
a(1) FINANCIAL STATEMENTS PAGE NO. Report of Independent Public Accountants IV-2 Balance Sheets as of December 31, 1999 and 1998 IV-3 Statements of Operations for the years ended December 31, 1999, 1998 and 1997 IV-4 Statements of Partners' Capital for the years ended December 31, 1999. 1998 and 1997 IV-5 Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 IV-6 Notes to Financial Statements IV-7
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 Operating Partners 1992-C, Ltd., dated September 30, 1992. (Form 10-K for year ended December 31, 1992, Exhibit 3.1). 3.2 Certificate of Limited Partnership of Swift Energy Operating Partners 1992-C, Ltd., as filed September 30, 1992, with the Texas Secretary of State. (Form 10-K for year ended December 31, 1992, Exhibit 3.2). 10.1 Net Profits and Overriding Royalty Interest Agreement between Swift Energy Operating Partners 1992-C, Ltd. and Swift Energy Pension Partners 1992-C, Ltd. dated September 30, 1992. (Form 10-K for year ended December 31, 1992, Exhibit 10.1). 99.1 A copy of the following section of the Prospectus dated March 19, 1991, contained in Pre-Effective Amendment No. 1 to Registration Statement No. 33-37983 on Form S-1 for Swift Energy Depositary Interests I, as filed on March 19, 1991, which have been incorporated herein by reference: "Proposed Activities" (pp 30 - 42) and "Conflicts of Interests" (pp 92 - 97). (Form 10-K for year ended December 31, 1992, Exhibit 28.1). b(1) REPORTS ON FORM 8-K No reports on Form 8-K have been filed during the quarter ended December 31, 1999 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 1999 fiscal year has been sent to Interest Holders of the Partnership. IV-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Swift Energy Operating Partners 1992-C, Ltd.: We have audited the accompanying balance sheets of Swift Energy Operating Partners 1992-C, Ltd., (a Texas limited partnership) as of December 31, 1999 and 1998, and the related statements of operations, partners' capital and cash flows for the years ended December 31, 1999, 1998 and 1997. 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 auditing standards generally accepted in the United States. 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 Operating Partners 1992-C, Ltd., as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years ended December 31, 1999, 1998 and 1997, in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP Houston, Texas February 9, 2000 IV-2 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. BALANCE SHEETS DECEMBER 31, 1999 AND 1998
1999 1998 ------------ -------------- ASSETS: Current Assets: Cash and cash equivalents $ 481,453 $ 443,097 Oil and gas sales receivable 315,935 407,415 Receivable due to property disposition -- 140,521 Other 22,819 19,050 ------------ -------------- Total Current Assets 820,207 1,010,083 ------------ -------------- Gas Imbalance Receivable 312,218 367,165 ------------ -------------- Oil and Gas Properties, using full cost accounting 12,786,331 12,762,511 Less-Accumulated depreciation, depletion and amortization (10,783,154) (10,524,288) ------------ -------------- 2,003,177 2,238,223 ------------ -------------- $ 3,135,602 $ 3,615,471 ============ ============== LIABILITIES AND PARTNERS' CAPITAL: Current Liabilities: Accounts Payable $ 76,113 $ 185,843 ------------ -------------- Deferred Revenues 373,461 412,792 Interest Holders' Capital (12,952,294 Interest Holders' SDIs; $1.00 per SDI) 2,682,774 3,006,137 General Partners' Capital 3,254 10,699 Total Partners' Capital 2,686,028 3,016,836 ------------ -------------- $ 3,135,602 $ 3,615,471 ============ ==============
See accompanying notes to financial statements. IV-3 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997 --------------- --------------- --------------- REVENUES: Oil and gas sales $ 1,012,515 $ 1,119,284 $ 2,144,930 Interest income 27,573 27,494 17,815 Other -- 12,115 19,169 --------------- --------------- --------------- 1,040,088 1,158,893 2,181,914 --------------- --------------- --------------- COSTS AND EXPENSES: Lease operating 418,672 447,537 578,133 Production taxes 60,329 67,591 128,627 Depreciation, depletion and amortization 258,866 436,645 661,849 General and administrative 271,582 242,644 260,532 --------------- --------------- --------------- 1,009,449 1,194,417 1,629,141 --------------- --------------- --------------- NET INCOME (LOSS) $ 30,639 $ (35,524) $ 552,773 =============== =============== ===============
See accompanying notes to financial statements. IV-4 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. STATEMENTS OF PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Interest General Combining Holders Partners Adjustment Total --------------- --------------- --------------- --------------- Balance, December 31, 1996 $ 4,467,322 $ 111,359 $ 286,410 $ 4,865,091 Income (Loss) 404,769 181,052 (33,048) 552,773 Cash Distributions (1,246,600) (223,318) -- (1,469,918) --------------- --------------- --------------- --------------- Balance, December 31, 1997 3,625,491 69,093 253,362 3,947,946 --------------- --------------- --------------- --------------- Income (Loss) (58,056) 60,092 (37,560) (35,524) Cash Distributions (777,100) (118,486) -- (895,586) --------------- --------------- --------------- --------------- Balance, December 31, 1998 2,790,335 10,699 215,802 3,016,836 --------------- --------------- --------------- --------------- Income (Loss) 21,102 39,902 (30,365) 30,639 Cash Distributions (314,100) (47,347) -- 361,447) --------------- --------------- --------------- --------------- Balance, December 31, 1999 $ 2,497,337 $ 3,254 $ 185,437 $ 2,686,028 =============== =============== =============== =============== Interest Holders' net income (loss) per SDI 1997 $ 0.03 =============== 1998 $ -- =============== 1999 $ -- ===============
See accompanying notes to financial statements. IV-5 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997 ------------- ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Income (loss) $ 30,639 $ (35,524) $ 552,773 Adjustments to reconcile income (loss) to net cash provided by operations: Depreciation, depletion and amortization 258,866 436,645 661,849 Change in gas imbalance receivable and deferred revenues 15,616 (39,064) 2,580 Change in assets and liabilities: (Increase) decrease in oil and gas sales receivable 91,480 318,140 23,681 (Increase) decrease in other current assets (3,769) (5,986) (4,178) Increase (decrease) in accounts payable (109,730) (20,244) 13,025 ------------- ------------- ------------- Net cash provided by (used in) operating activities 283,102 653,967 1,249,730 ------------- ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to oil and gas properties (26,135) (59,518) (73,472) Proceeds from sales of oil and gas properties 142,836 265,467 246,288 ------------- ------------- ------------- Net cash provided by (used in) investing activities 116,701 205,949 172,816 ------------- ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions to partners (361,447) (895,586) (1,469,918) ------------- ------------- ------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 38,356 (35,670) (47,372) ------------- ------------- ------------- CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 443,097 478,767 526,139 ------------- ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 481,453 $ 443,097 $ 478,767 ============= ============= ============= Supplemental disclosure of noncash investing activities: Oil and gas properties disposition for which cash will be received in a subsequent year $ -- $ 140,521 $ -- ============= ============= =============
See accompanying notes to financial statements. IV-6 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. NOTES TO FINANCIAL STATEMENTS (1) Organization and Terms of Partnership Agreement - Swift Energy Operating Partners 1992-C, Ltd., a Texas limited partnership ("the Partnership"), was formed on September 30, 1992, 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 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) $1,584,579, 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 916 Interest Holders made total capital contributions of $12,952,294. 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. Payout had not occurred as of December 31, 1999. During the first quarter of 2000, the Managing General Partner mailed proxy material to the Interest Holders proposing to sell all the Partnership's interests in oil and gas properties and dissolve and liquidate the Partnership. In March 2000, the Interest Holders of the Partnership approved the proposal to liquidate the Partnership. The Managing General Partner anticipates liquidation will be substantially completed within the next two years. (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. Oil and Gas Revenues -- Oil and gas revenues are reported using the entitlement method in which the Partnership recognizes its interest in oil and natural gas production as revenue. 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 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 years ended December 31, 1999, 1998 and 1997. 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. IV-7 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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. 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. 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) Oil and Gas Capitalized Costs - The following table sets forth capital expenditures related to the Partnership's oil and gas operations:
Year Ended December 31, ----------------------------------------------- 1999 1998 1997 ------- ------- --------- Acquisition of proved properties $ -- $ -- $ -- Development 26,135 59,518 73,472 ------- ------- --------- $26,135 $59,518 $ 73,572 ------- ------- ---------
All oil and gas property acquisitions are made by Swift on behalf of the Partnership. The costs of the properties include the purchase price plus any costs incurred by Swift in the evaluation and acquisition of properties. (4) Related-Party Transactions - During 1999, 1998 and 1997, the Partnership paid Swift $194,284 per year as a general and administrative overhead allowance. During 1999, 1998 and 1997, the Partnership also paid Swift an incentive amount, as defined in the Partnership Agreement, for services rendered to the Partnership. Such amounts totaled $7,042 in 1999, $13,122 in 1998 and $21,518 in 1997 and are included in general and administrative expenses. IV-8 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. NOTES TO FINANCIAL STATEMENTS (CONTINUED) Effective September 30, 1992, the Partnership entered into a Net Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement") with Swift Energy Pension Partners 1992-C, Ltd. ("Pension 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 its proportionate share of the property acquisition costs. (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 ordinary income for federal income tax purposes is ultimately changed by the taxing authorities, the tax liability of the Interest Holders could be changed accordingly. Ordinary income reported on the Partnership's federal return of income for the years ended December 31, 1999, 1998 and 1997 was $244,441, $446,076 and $1,129,804, respectively. The difference between ordinary income for federal income tax purposes reported by the Partnership and net income or loss reported herein primarily results from the exclusion of depletion (as described below) from ordinary income reported in the Partnership's federal return of income. For federal income tax purposes, depletion with respect to production of oil and gas is computed separately by the partners and not by the Partnership. Since the amount of depletion on the production of oil and gas is not computed at the Partnership level, depletion 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 leasehold interests, and thus is treated as a separate item on the partners' Schedule K-1. Depletion 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) Gas Imbalances - The Partnership recognizes its ownership interest in natural gas production as revenue. Actual production quantities sold may be different than the Partnership's ownership share in a given period. If the Partnership's sales exceed its ownership share of production, the differences are recorded as deferred revenue. Gas balancing receivables are recorded when the Partnership's ownership share of production exceeds sales. (7) 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. (8) 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-9 SWIFT ENERGY OPERATING PARTNERS 1992-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 OPERATING PARTNERS 1992-C, LTD. (Registrant) By: SWIFT ENERGY COMPANY General Partner Date: March 10, 2000 By: s/b A. Earl Swift ---------------- ----------------------------- A. Earl Swift Chief Executive Officer Date: March 10, 2000 By: s/b John R. Alden ---------------- ----------------------------- John R. Alden Principal Financial Officer Date: March 10, 2000 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 OPERATING PARTNERS 1992-C, LTD. (Registrant) By: SWIFT ENERGY COMPANY General Partner Date: March 10, 2000 By: s/b A. Earl Swift ---------------- ----------------------------- A. Earl Swift Director and Principal Executive Officer Date: March 10, 2000 By: s/b Virgil N. Swift ---------------- ----------------------------- Virgil N. Swift Director and Executive Vice President - Business Development V-1 SWIFT ENERGY OPERATING PARTNERS 1992-C, LTD. SIGNATURES Date: March 10, 2000 By: s/b G. Robert Evans ---------------- ------------------------------- G. Robert Evans Director Date: March 10, 2000 By: s/b Raymond O. Loen ---------------- ------------------------------ Raymond O. Loen Director Date: March 10, 2000 By: s/b Henry C. Montgomery ---------------- ------------------------------- Henry C. Montgomery Director Date: March 10, 2000 By: s/b Clyde W. Smith, Jr. ---------------- ------------------------------- Clyde W. Smith, Jr. Director Date: March 10, 2000 By: s/b Harold J. Withrow ---------------- ------------------------------- Harold J. Withrow Director V-2 EX-27 2 FDS --O1992-C, LTD.
5 This schedule contains summary financial information extracted from Swift Energy Operating Partners 1992-C, Ltd's balance sheet and statement of operations contained in its Form 10-K for the year ended December 31, 1999 and is qualified in it entirety by reference to such financial statements. YEAR DEC-31-1999 DEC-31-1999 481,453 0 315,935 0 0 820,207 12,786,331 (10,783,154) 3,135,602 76,113 0 0 0 0 2,686,028 3,135,602 1,012,515 1,040,088 0 737,867 0 0 0 30,639 0 30,639 0 0 0 30,639 0 0 Includes lease operating expenses, production taxes and depreciation and amortization expense. Excludes general and administrative and interest expense.
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