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, 1998
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 0-17025
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0226425
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
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
---- ----
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
Balance Sheets
- March 31, 1998 and December 31, 1997 3
Statements of Operations
- Three month periods ended March 31, 1998 and 1997 4
Statements of Cash Flows
- Three month periods ended March 31, 1998 and 1997 5
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 9
SIGNATURES 10
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
BALANCE SHEETS
March 31, December 31,
1998 1997
--------------- ---------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 142,549 $ 1,762
Oil and gas sales receivable 847,272 796,119
Other 15,179 11,847
--------------- ---------------
Total Current Assets 1,005,000 809,728
--------------- ---------------
Gas Imbalance Receivable 683 --
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 24,087,125 24,511,749
Less-Accumulated depreciation, depletion
and amortization (20,997,476) (20,931,018)
--------------- ---------------
3,089,649 3,580,731
--------------- ---------------
$ 4,095,332 $ 4,390,459
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 198,241 $ 190,865
--------------- ---------------
Deferred Revenues 218,986 218,986
Limited Partners' Capital (260,255.25 Limited Partnership Units;
$100 per unit) 3,588,665 3,840,409
General Partners' Capital 89,440 140,199
--------------- ---------------
Total Partners' Capital 3,678,105 3,980,608
--------------- ---------------
$ 4,095,332 $ 4,390,459
=============== ===============
See accompanying notes to financial statements.
3
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
---------------------------------
1998 1997
--------------- ---------------
REVENUES:
Oil and gas sales $ 116,370 $ 368,447
Interest income 3,340 1.311
Other 1,050 3,254
--------------- ---------------
120,760 373,012
--------------- ---------------
COSTS AND EXPENSES:
Lease operating 94,048 125,423
Production taxes 4,563 17,663
Depreciation, depletion
and amortization 66,458 99,536
General and administrative 70,095 62,850
--------------- ---------------
235,164 305,472
--------------- ---------------
NET INCOME (LOSS) $ (114,404) $ 67,540
=============== ===============
Limited Partners' net income (loss)
per unit
March 31, 1998 $ (.44)
===============
March 31, 1997 $ .26
===============
See accompanying note to financial statements.
4
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------------------------
1998 1997
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (114,404) $ 67,540
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 66,458 99,536
Change in gas imbalance receivable
and deferred revenues (683) (325)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (51,153) (65,535)
(Increase) decrease in other current assets (3,332) (8,310)
Increase (decrease) in accounts payable 7,376 (13,849)
--------------- ---------------
Net cash provided by (used in) operating activities (95,738) 79,057
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (4,276) (41,433)
Proceeds from sales of oil and gas properties 428,900 --
(Increase) decrease in receivable due to property disposition -- 108,997
--------------- ---------------
Net cash provided by (used in) investing activities 424,624 67,564
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (188,099) (183,166)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 140,787 (36,545)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,762 107,525
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 142,549 $ 70,980
=============== ===============
See accompanying notes to financial statements.
5
SWIFT ENERGY INCOME PARTNERS 1987-B, 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, 1997 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) 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.
(3) 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.
(4) 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.
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SWIFT ENERGY INCOME PARTNERS 1987-B, 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. 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 partner 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 partners 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
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. Net cash provided by (used in) operating activities totaled
$(95,738) and $79,057 for the three months ended March 31, 1998 and 1997,
respectively. 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 the 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.
The Partnership has expended all of the partner's 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. Cash distributions totaled $188,099 and $183,166
for the three months ended March 31, 1998 and 1997, respectively.
The Partnership does not allow for additional assessments from the
partners to fund capital requirements. The Managing General Partner anticipates
that the Partnership will have adequate liquidity from income from continuing
operations to satisfy any future capital expenditure requirements. Funds
generated from bank borrowings and proceeds from the sale of oil and gas
properties will be used to supplement this effort if deemed necessary.
Results of Operations
Oil and gas sales declined $252,077 or 68 percent in the first quarter
of 1998 when compared to the corresponding quarter in 1997, primarily due to
decreased gas and oil prices. A decline in gas prices of 51 percent or $1.54/MCF
and in oil prices of 51 percent or $10.07/BBL had a significant impact on
partnership performance. Also, current quarter gas and oil production declined
34 percent and 57 percent, respectively, when compared to first quarter 1997
production volumes, further contributing to decreased revenues. The
partnership's sale of several properties in the fourth quarter of 1997 had an
impact on 1998 partnership production volumes.
Associated depreciation expense decreased 33 percent or $33,078 in 1998
compared to first quarter 1997, also related to the decline in production
volumes.
7
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Partnership records an additional provision in depreciation,
depletion and amortization 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. Using prices in effect at March 31,
1997, the Partnership would have recorded an additional provision at March 31,
1997 in the amount of $809,035. However, these temporarily low quarter-end
prices rebounded and by using prices in effect at the filing date, the
Partnership's unamortized cost of oil and gas properties were not limited by
this calculation
During 1998, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
8
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
9
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 INCOME
PARTNERS 1987-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 5, 1998 By: /s/ John R. Alden
----------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 5, 1998 By: /s/ Alton D. Heckaman, Jr.
----------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10