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 September 30, 1995
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 33-11773-01
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
(Exact name of registrant as specified in its charter)
TEXAS 76-0226425
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
16825 NORTHCHASE DRIVE, SUITE 400
HOUSTON, TEXAS 77060
(Address of principal executive offices)
(Zip Code)
(713) 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
PAGE
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- September 30, 1995 and December 31, 1994 3
Statements of Operations
- Three month and nine month periods ended
September 30, 1995 and 1994 4
Statements of Cash Flows
- Nine month periods ended September 30, 1995 and 1994 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
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,885 $ 1,452
Oil and gas sales receivable 283,350 536,357
------------ ------------
Total Current Assets 285,235 537,809
------------ ------------
Oil and Gas Properties, using full cost
accounting 24,992,892 24,879,507
Less-Accumulated depreciation, depletion
and amortization (19,620,197) (18,352,629)
------------ ------------
5,372,695 6,526,878
------------ ------------
$ 5,657,930 $ 7,064,687
============ ============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 593,182 $ 660,538
Current portion of note payable 85,337 170,674
------------ ------------
Total Current Liabilities 678,519 831,212
------------ ------------
Note payable to a Bank, net
of current portion -- 42,669
Deferred Revenues 249,051 244,148
Partners' Capital 4,730,360 5,946,658
------------ ------------
$ 5,657,930 $ 7,064,687
============ ============
See accompanying notes to financial statements.
3
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- -----------------------
1995 1994 1995 1994
--------- -------- ---------- ----------
REVENUES:
Oil and gas sales $ 298,150 $630,177 $1,230,723 $1,808,889
Interest income 63 12 193 24
Other 6,037 7,552 23,901 18,849
--------- -------- ---------- ----------
304,250 637,741 1,254,817 1,827,762
--------- -------- ---------- ----------
COSTS AND EXPENSES:
Lease operating 132,892 141,230 497,110 490,878
Production taxes 15,216 30,876 64,240 98,071
Depreciation, depletion
and amortization -
Normal provision 112,171 210,992 493,810 614,682
Additional provision 144,883 -- 773,758 --
General and administrative 63,692 91,801 168,335 243,549
Interest expense 13,938 12,710 41,171 38,875
--------- -------- ---------- ----------
482,792 487,609 2,038,424 1,486,055
--------- -------- ---------- ----------
NET INCOME (LOSS) $(178,542) $150,132 $ (783,607) $ 341,707
========= ======== ========== ==========
Limited Partners' net income
(loss) per unit $ (.69) $ .58 $ (3.01) $ 1.31
========= ======== ========== ==========
See accompanying note to financial statements.
4
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1995 1994
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ (783,607) $ 341,707
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 1,267,568 614,682
Deferred revenues 4,903 23,443
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 253,007 (6,598)
Increase (decrease) in accounts payable
and accrued liabilities (67,356) 10,960
--------- ---------
Net cash provided by (used in) operating activities 674,515 984,194
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (136,027) (178,929)
Proceeds from sales of oil and gas properties 22,642 54,598
--------- ---------
Net cash provided by (used in) investing activities (113,385) (124,331)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (432,691) (731,749)
Payments on note payable (128,006) (128,006)
--------- ---------
Net cash provided by (used in) financing activities (560,697) (859,755)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 433 108
--------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,452 1,230
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,885 $ 1,338
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 12,554 $ 19,210
========= =========
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, 1994 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) DEFERRED REVENUES -
Deferred Revenues represent a gas imbalance liability assumed
as part of property acquisitions. The imbalance is accounted for on the
entitlements method, whereby the Partnership records its share of
revenue, based on its entitled amount. Any amounts over or under the
entitled amount are recorded as an increase or decrease to deferred
revenues.
(3) CONCENTRATION OF CREDIT RISK -
The Partnership extends credit 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.
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
The Partnership has completed acquisition of producing oil and gas
properties, expending all of the limited partners' commitments available for
property acquisitions.
The Partnership does not allow for additional assessments from the
partners to fund capital requirements. However, funds in addition to the
remaining unexpended net capital commitments of the partners are available
from partnership revenues, borrowings or proceeds from the sale of
partnership property. The Managing General Partner 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 September 30, 1995 (current quarter) when
compared to the quarter ended September 30, 1994 (corresponding quarter), and
for the nine months ended September 30, 1995 (current period), when compared
to the nine months ended September 30, 1994 (corresponding period).
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Oil and gas sales declined $332,027 or 53 percent in the current quarter
of 1995 when compared to the corresponding quarter in 1994, primarily due to
decreased gas and oil production. Current quarter gas and oil production
declined 52 percent and 32 percent, respectively, when compared to third
quarter 1994 production volumes. A decline in gas and oil prices of 16
percent or $.29/MCF and 18 percent or $3.23/BBL, respectively, further
contributed to decreased revenues.
Associated depreciation expense decreased 47 percent or $98,821.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the third quarter of 1995 for $144,883 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. The additional provision results from the Managing
General Partner's determination that the fair market value paid for
properties may or may not coincide with reserve valuations determined
according to guidelines of the Securities and Exchange Commission. Using
prices in effect at September 30, 1994, the Partnership would have recorded
an additional provision at September 30, 1994 in the amount of $298,948.
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.
7
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Oil and gas sales decreased $578,166 or 32 percent in the first nine
months of 1995 over the corresponding period in 1994, primarily due to
decreased gas and oil production. A decline of 24 percent in gas production
and 18 percent in oil production was a significant factor in the decreased
revenues for the period. Also, current period gas prices decreased 26
percent or $.52/MCF compared to the corresponding period in 1994, further
contributing to decreased income.
Associated depreciation expense decreased 20 percent or $120,872.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first nine months of 1995 for $773,758 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. The additional provision results from the Managing
General Partner's determination that the fair market value paid for
properties may or may not coincide with reserve valuations determined
according to guidelines of the Securities Exchange Commission.
During 1995, 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: November 13, 1995 By: /s/ John R. Alden
----------------------- --------------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: November 13, 1995 By: /s/ Alton D. Heckaman, Jr.
----------------------- --------------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10