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1993 ANNUAL REPORT |
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Notes to Consolidated Financial Statements
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1993 ANNUAL REPORT |
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Notes to Consolidated Financial Statements
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7. Related-Party Transactions
In 1991, Swift purchased all of the capital stock of a marketing company from a former significant stockholder and director of Swift and a separate minority interest owner ("sellers"). This acquired company has marketing responsibilities for the current and future Swift limited partnership offerings. The sellers entered into a management agreement to manage and supervise the sales activities of the Swift marketing entity under which they provided services and for which they were reimbursed certain fixed expenses and compensated on a sliding scale basis, dependent upon the number of partnership units sold. Management fees paid under this management agreement totaled approximately $240,000, $335,000, and $108,000 in 1993, 1992, and 1991, respectively. This arrangement was terminated effective in January 1994, whereby Swift will now assume all such management responsibilities.
The Company is the operator of a substantial number of properties owned by the limited partnerships and joint ventures and accordingly charges these entities and third party joint interest owners operating fees. The Company is also reimbursed for direct, administrative, and overhead costs incurred in conducting the business of the limited partnerships which totaled $4,200,000, $3,900,000, and $3,700,000, in 1993, 1992, and 1991, respectively. The Company was also reimbursed by the limited partnerships and joint ventures for costs incurred in the screening, evaluation, and acquisition of producing oil and gas properties on their behalf. Such costs totaled $2,500,000, $900,000, and $1,400,000, in 1993, 1992, and 1991, respectively.
During 1992, the Company sold certain oil and gas properties, previously held in producing oil and gas properties held for transfer and the Company’s oil and gas property account, to partnerships formed under the current limited partnership offering. The properties were sold to the affiliated partnerships for proceeds equal to the properties’ fair market value, $30,500,000, as determined by an independent petroleum engineer. Approximately $14,000,000 of the total proceeds from the sale were attributed to properties held in the Company’s oil and gas property account with the remainder attributable to producing oil and gas properties held for transfer. The $14,000,000 of proceeds attributable to properties held in the Company’s oil and gas property account were treated as a reduction of the Company’s proved oil and gas properties with no gain or loss recognized in accordance with the full-cost method of accounting.
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