FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 0-17720
SWIFT ENERGY INCOME PARTNERS 1987-D, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0238818
(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
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SWIFT ENERGY INCOME PARTNERS 1987-D, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
Balance Sheets
- June 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 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-D, LTD.
BALANCE SHEETS
June 30, December 31,
1998 1997
--------------- ---------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 586,262 $ 321,450
Oil and gas sales receivable 104,962 371,369
Other 7,439 --
--------------- ---------------
Total Current Assets 698,663 692,819
--------------- ---------------
Gas Imbalance Receivable 3,226 3,582
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 10,193,656 10,387,781
Less-Accumulated depreciation, depletion
and amortization (9,074,488) (8,996,785)
--------------- ---------------
1,119,168 1,390,996
--------------- ---------------
$ 1,821,057 $ 2,087,397
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 50,906 $ 111,115
--------------- ---------------
Deferred Revenues 18,580 19,202
Limited Partners' Capital (114,492.48 Limited Partnership Units;
$100 per unit) 1,740,098 1,912,875
General Partners' Capital 11,473 44,205
--------------- ---------------
Total Partners' Capital 1,751,571 1,957,080
--------------- ---------------
$ 1,821,057 $ 2,087,397
=============== ===============
See accompanying notes to financial statements.
3
SWIFT ENERGY INCOME PARTNERS 1987-D, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
REVENUES:
Oil and gas sales $ 83,497 $ 142,281 $ 176,744 $ 425,285
Interest income 7,580 1,944 12,870 1,952
Other 901 1,372 1,790 3,206
--------------- --------------- --------------- ---------------
91,978 145,597 191,404 430,443
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 28,109 59,874 61,916 137,199
Production taxes 3,617 5,252 6,883 18,014
Depreciation, depletion
and amortization 37,694 65,743 77,703 146,050
General and administrative 24,879 28,132 55,392 58,835
Interest expense -- -- -- 658
--------------- --------------- --------------- ---------------
94,299 159,001 201,894 360,756
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (2,321) $ (13,404) $ (10,490) $ 69,687
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.02) $ (.12) $ (.09) $ .61
=============== =============== =============== ===============
See accompanying notes to financial statements.
4
SWIFT ENERGY INCOME PARTNERS 1987-D, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (10,490) $ 69,687
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 77,703 146,050
Change in gas imbalance receivable
and deferred revenues (266) 886
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 266,407 73,406
(Increase) decrease in other current assets (7,439) --
Increase (decrease) in accounts payable (60,209) (202,208)
--------------- ---------------
Net cash provided by (used in) operating activities 265,706 87,821
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (65,062) (23,525)
Proceeds from sales of oil and gas properties 259,187 447,769
--------------- ---------------
Net cash provided by (used in) investing activities 194,125 424,244
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (195,019) (168,983)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 264,812 343,082
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 321,450 1,895
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 586,262 $ 344,977
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ 658
=============== ===============
See accompanying notes to financial statements.
5
SWIFT ENERGY INCOME PARTNERS 1987-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, 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-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. 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 operating activities totaled $265,706 and $87,821 for the six months
ended June 30, 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 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 provided by property sale proceeds totaled
$259,187 and $447,769 for the six months ended June 30, 1998 and 1997
respectively. 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. Cash distributions totaled $195,019 and
$168,983 for the six months ended June 30, 1998 and 1997, respectively.
The Partnership does not allow for additional assessments from the
partners to fund capital requirements. However, funds are available from
partnership revenues, borrowings or proceeds from the sale of partnership
property. The Managing General Partners believes that the funds currently
available to the partnership will be adequate to meet any anticipated capital
requirements.
RESULTS OF OPERATIONS
The following analysis explains changes in the revenue and expense
categories for the quarter ended June 30, 1998 (current quarter) when compared
to the quarter ended June 30, 1997 (corresponding quarter), and for the six
months ended June 30, 1998 (current period), when compared to the six months
ended June 30, 1997 (corresponding period).
Three Months Ended June 30, 1998 and 1997
Oil and gas sales declined $58,784 or 41 percent in the second quarter of
1998 when compared to the corresponding quarter in 1997, primarily due to
decreased gas and oil production. Gas production decreased 44 percent and oil
production declined 4 percent. The decrease in production volumes had a
significant impact on partnership performance. The partnership's sale of several
properties in the fourth quarter of 1997 and the Cotton Plant Field in Caldwell
Parish, Louisiana during the first quarter of 1998 had an impact on 1998
partnership production volumes. Also, current quarter oil prices declined 40
percent or $6.35/BBL further contributing to decreased revenues. Declines were
partially offset by an increase in gas prices of 12 percent or $.23/MCF when
compared to second quarter 1997 prices.
7
SWIFT ENERGY INCOME PARTNERS 1987-D, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Associated depreciation expense decreased 43 percent or $28,049 in 1998
compared to second quarter 1997, also related to the decline in production
volumes.
Six Months Ended June 30, 1998 and 1997
Oil and gas sales declined $248,541 or 58 percent in the first six months
of 1998 when compared to the corresponding period in 1997, primarily due to
decreased gas and oil prices. A decline in gas prices of 28 percent or $.78/MCF
and in oil prices of 45 percent or $7.81/BBL had a significant impact on
partnership performance. Also, current period gas and oil production declined 44
percent and 20 percent, respectively, when compared to the same period in 1997,
further contributing to decreased revenues. The partnership's sale of several
properties in the fourth quarter of 1997 and the Cotton Plant Field in Caldwell
Parish, Louisiana during the first quarter of 1998 had an impact on 1998
partnership production volumes.
Associated depreciation expense decreased 47 percent or $68,347 in 1998
compared to the first six months of 1997, also related to the decline in
production volumes.
During 1998, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
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SWIFT ENERGY INCOME PARTNERS 1987-D, 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-D, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: August 4, 1998 By: /s/ John R. Alden
-------------- ---------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: August 4, 1998 By: /s/ Alton D. Heckaman, Jr.
-------------- ---------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10