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 33-11773-04
SWIFT ENERGY INCOME PARTNERS 1988-A, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0247812
(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 1988-A, 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 1988-A, LTD.
BALANCE SHEETS
June 30, December 31,
1998 1997
--------------- ----------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 391,523 $ 259,688
Oil and gas sales receivable 92,782 133,502
--------------- ----------------
Total Current Assets 484,305 393,190
--------------- ----------------
Gas Imbalance Receivable 6,452 7,164
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 9,581,903 9,791,171
Less-Accumulated depreciation, depletion
and amortization (8,617,836) (8,559,288)
--------------- ----------------
964,067 1,231,883
--------------- ----------------
$ 1,454,824 $ 1,632,237
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 41,720 $ 54,029
--------------- ----------------
Deferred Revenues 37,160 38,404
Limited Partners' Capital (107,396.06 Limited Partnership Units;
$100 per unit) 1,363,917 1,506,632
General Partners' Capital 12,027 33,172
--------------- ----------------
Total Partners' Capital 1,375,944 1,539,804
--------------- ----------------
$ 1,454,824 $ 1,632,237
=============== ================
See accompanying notes to financial statements.
3
SWIFT ENERGY INCOME PARTNERS 1988-A, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
REVENUES:
Oil and gas sales $ 63,116 $ 110,186 $ 141,586 $ 335,281
Interest income 4,825 1,543 7,840 1,552
Other 644 726 1,170 1,749
--------------- --------------- --------------- ---------------
68,585 112,455 150,596 338,582
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 22,624 48,765 51,317 116,841
Production taxes 2,682 3,557 4,555 13,279
Depreciation, depletion
and amortization 27,173 47,483 58,548 107,100
General and administrative 20,899 24,153 49,458 47,764
Interest expense -- -- -- 1,236
--------------- --------------- --------------- ---------------
73,378 123,958 163,878 286,220
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (4,793) $ (11,503) $ (13,282) $ 52,362
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.04) $ (.11) $ (.12) $ .49
=============== =============== =============== ===============
See accompanying notes to financial statements.
4
SWIFT ENERGY INCOME PARTNERS 1988-A, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
----------------------------------------
1998 1997
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (13,282) $ 52,362
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 58,548 107,100
Change in gas imbalance receivable
and deferred revenues (532) 1,772
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 40,720 37,142
Increase (decrease) in accounts payable (12,309) (185,179)
--------------- ---------------
Net cash provided by (used in) operating activities 73,145 13,197
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (53,048) (12,532)
Proceeds from sales of oil and gas properties 262,316 383,904
--------------- ---------------
Net cash provided by (used in) investing activities 209,268 371,372
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (150,578) (112,735)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 131,835 271,834
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 259,688 1,993
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 391,523 $ 273,827
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ 1,236
=============== ===============
See accompanying notes to financial statements.
5
SWIFT ENERGY INCOME PARTNERS 1988-A, 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 1988-A, 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 $73,145 and $13,197 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
$262,316 and $383,904 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 $150,578 and
$112,735 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 $47,070 or 43 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 9 percent. The decrease in production volumes had a
significant impact on partnership performance. The partnership's sale of several
properties in 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 42 percent or $6.68/BBL
further contributing to decreased revenues. Declines were partially offset by an
increase in gas prices of 9 percent or $.18/MCF when compared to second quarter
1997 prices.
7
SWIFT ENERGY INCOME PARTNERS 1988-A, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Associated depreciation expense decreased 43 percent or $20,310 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 $193,695 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 30 percent or $.84/MCF
and in oil prices of 44 percent or $7.51/BBL had a significant impact on
partnership performance. Also, current period gas and oil production declined 42
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 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 45 percent or $48,552 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 1988-A, 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 1988-A, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: August 4, 1998
-------------- ---------------------------------
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