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 33-11773-05
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0256602
(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 1988-B, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
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 1988-B, LTD.
BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1995 1994
---- ----
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,610 $ 1,370
Oil and gas sales receivable 108,124 112,460
----------- -----------
Total Current Assets 109,734 113,830
----------- -----------
Oil and Gas Properties, using full cost
accounting 7,132,661 7,107,852
Less-Accumulated depreciation, depletion
and amortization (5,784,879) (5,429,833)
----------- -----------
1,347,782 1,678,019
----------- -----------
$ 1,457,516 $ 1,791,849
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 315,932 $ 298,824
Current portion of note payable 40,054 80,108
----------- -----------
Total Current Liabilities 355,986 378,932
----------- -----------
Note payable to a Bank, net
of current portion -- 20,026
Deferred Revenues 24,499 23,816
Partners' Capital 1,077,031 1,369,075
----------- -----------
$ 1,457,516 $ 1,791,849
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
SWIFT ENERGY INCOME PARTNERS 1988-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 $115,344 $163,199 $ 356,488 $544,156
Interest income 40 12 113 24
Other 425 511 1,603 1,117
-------- -------- --------- --------
115,809 163,722 358,204 545,297
-------- -------- --------- --------
COSTS AND EXPENSES:
Lease operating 45,274 60,449 146,128 187,962
Production taxes 7,220 8,291 21,688 32,311
Depreciation, depletion
and amortization -
Normal provision 47,929 56,902 153,463 175,643
Additional provision 21,849 -- 201,583 --
General and administrative 20,550 18,439 44,507 63,286
Interest expense 5,196 2,674 14,396 8,371
-------- -------- --------- --------
148,018 146,755 581,765 467,573
-------- -------- --------- --------
NET INCOME (LOSS) $(32,209) $ 16,967 $(223,561) $ 77,724
======== ======== ========= ========
Limited Partners' net income (loss)
per unit $ (.44) $ .23 $ (3.03) $ 1.05
======== ======== ========= ========
SEE ACCOMPANYING NOTE TO FINANCIAL STATEMENTS.
4
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1995 1994
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $(223,561) $ 77,724
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 355,046 175,643
Deferred revenues 683 (28,499)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 4,336 7,855
Increase (decrease) in accounts payable
and accrued liabilities 17,108 70,304
--------- ---------
Net cash provided by (used in) operating activities 153,612 303,027
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (26,373) (114,204)
Proceeds from sales of oil and gas properties 1,564 37,459
--------- ---------
Net cash provided by (used in) investing activities (24,809) (76,745)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (68,483) (166,075)
Payments on note payable (60,080) (60,080)
--------- ---------
Net cash provided by (used in) financing activities (128,563) (226,155)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 240 127
--------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,370 1,194
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,610 $ 1,321
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 5,892 $ 9,017
========= =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
SWIFT ENERGY INCOME PARTNERS 1988-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 methods, 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.
6
SWIFT ENERGY INCOME PARTNERS 1988-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.
The Partnership entered into a NP/OR Agreement with its companion
pension partnership, Swift Energy Managed Pension Assets Partnership 1988-A,
Ltd., in the manner described in the notes to the financial statements in the
latest Form 10-K.
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 $47,855 or 29 percent in the current quarter
of 1995 when compared to the corresponding quarter in 1994, primarily due to
decreased oil and gas production. Current quarter oil and gas production
declined 26 percent and 8 percent, respectively, when compared to third quarter
1994 production volumes. Decreased gas prices of 22 percent or $.41/MCF further
contributed to the decreased revenues.
Associated depreciation expense decreased 16 percent or $8,973.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the third quarter of 1995 for $21,849 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 $21,348. 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 1988-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 $187,668 or 34 percent in the first nine
months of 1995 over the corresponding period in 1994. A decline in the current
period gas prices of 30 percent or $.64/MCF had a significant impact on
partnership performance. Also, current period gas and oil production declined
17 percent and 18 percent, respectively, when compared to the corresponding
period in 1994, further contributing to decreased income. Increased oil prices
of 8 percent or $.99/BBL partially offset revenue declines.
Associated depreciation expense decreased 13 percent or $22,180.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first nine months of 1995 for $201,583 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 1988-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 1988-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