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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, 1996
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: 33-37983-18
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
(Exact name of registrant as specified in its charter)
TEXAS 76-0400061
(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)
(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
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- June 30, 1996 and December 31, 1995 3
Statements of Operations
- Three month and six month periods ended June 30, 1996 and 1995 4
Statements of Cash Flows
- Six month periods ended June 30,1996 and 1995 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
PART II. OTHER INFORMATION 11
SIGNATURES 12
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1996 1995
---------------- --------------
(Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 441,231 $ 338,496
Oil and gas sales receivable 475,420 434,348
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Total Current Assets 916,651 772,844
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Gas Imbalance Receivable 26,303 35,304
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Oil and Gas Properties, using full cost
accounting 9,190,809 9,326,491
Less-Accumulated depreciation, depletion
and amortization (4,641,763) (4,315,061)
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4,549,046 5,011,430
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$ 5,492,000 $ 5,819,578
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 130,437 $ 226,718
--------------- --------------
Deferred Revenues 20,301 20,488
Partners' Capital 5,341,262 5,572,372
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$ 5,492,000 $ 5,819,578
=============== ==============
See accompanying notes to financial statements.
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
REVENUES:
Oil and gas sales $ 345,967 $ 314,798 $ 796,799 $ 825,559
Interest income 4,185 4,731 7,805 11,086
Other 15,225 10,000 21,630 18,329
-------------- -------------- -------------- --------------
365,377 329,529 826,234 854,974
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Lease operating 88,867 150,842 223,213 333,743
Production taxes 20,697 25,425 49,190 53,146
Depreciation, depletion
and amortization -
Normal provision 142,511 146,055 326,702 405,451
Additional provision -- 10,484 -- 10,484
General and administrative 47,308 50,671 92,365 98,456
-------------- -------------- -------------- --------------
299,383 383,477 691,470 901,280
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NET INCOME (LOSS) $ 65,994 $ (53,948) $ 134,764 $ (46,306)
============== ============== ============== ==============
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT $ .01 $ (.01) $ .01 $ --
============== ============== ============== ==============
See accompanying note to financial statements.
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
--------------------------------------
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 134,764 $ (46,306)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 326,702 415,935
Change in gas imbalance receivable
and deferred revenues 8,814 --
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (41,072) 34,720
Increase (decrease) in accounts payable
and accrued liabilities (96,281) (27,296)
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Net cash provided by (used in) operating activities 332,927 377,053
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (104,357) (93,838)
Proceeds from sales of oil and gas properties 240,039 25,505
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Net cash provided by (used in) investing activities 135,682 (68,333)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (365,874) (581,005)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 102,735 (272,285)
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 338,496 553,090
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 441,231 $ 280,805
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See accompanying notes to financial statements.
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SWIFT ENERGY OPERATING PARTNERS 1993-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, 1995 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) ORGANIZATION AND TERMS OF PARTNERSHIP AGREEMENT -
Swift Energy Operating Partners 1993-B, Ltd., a Texas limited
partnership (the Partnership), was formed on June 30, 1993, for the
purpose of purchasing and operating producing oil and gas properties
within the continental United States and Canada. Swift Energy Company
("Swift"), a Texas corporation, and VJM Corporation ("VJM"), a
California corporation, serve as Managing General Partner and Special
General Partner of the Partnership, respectively. The sole limited
partner of the Partnership is Swift Depositary Company, which has
assigned all of its beneficial (but not of record) rights and interest
as limited partner to the investors in the Partnership ("Interest
Holders"), in the form of Swift Depositary Interests ("SDIs").
The Managing General Partner has paid or will pay out of its
own corporate funds (as a capital contribution to the Partnership) all
selling commissions, offering expenses, printing, legal and accounting
fees and other formation costs incurred in connection with the
offering of SDIs and the formation of the Partnership, for which the
Managing General Partner will receive an interest in continuing costs
and revenues of the Partnership. The 606 interest holders made total
capital contributions of $9,627,683.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 85 percent to the interest
holders and 15 percent to the general partners. After partnership
payout, as defined in the Partnership Agreement, continuing costs and
revenues will be shared 75 percent by the interest holders, and 25
percent by the general partners.
(3) SIGNIFICANT ACCOUNTING POLICIES -
USE OF ESTIMATES--
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from estimates.
OIL AND GAS PROPERTIES --
For financial reporting purposes the Partnership follows the
"full-cost" method of accounting for oil and gas property costs.
Under this method of accounting, all productive and nonproductive
costs incurred in the acquisition and development of oil and gas
reserves are capitalized. Such costs include lease acquisitions,
geological and geophysical services, drilling, completion, equipment
and certain general and administrative costs directly associated with
acquisition and development activities. General and administrative
costs related to production and general overhead are expensed as
incurred. No general and administrative costs were capitalized during
the six months ended June 30, 1996 and 1995.
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Future development, site restoration, dismantlement and
abandonment costs, net of salvage values, are estimated on a
property-by-property basis based on current economic conditions and
are amortized to expense as the Partnership's capitalized oil and gas
property costs are amortized.
The unamortized cost of oil and gas properties is limited to
the "ceiling limitation" (calculated separately for the Partnership,
limited partners and general partners). The "ceiling limitation" is
calculated on a quarterly basis and represents the estimated future
net revenues from proved properties using current prices, discounted
at ten percent, and the lower of cost or fair value of unproved
properties. Proceeds from the sale or disposition of oil and gas
properties are treated as a reduction of oil and gas property costs
with no gains or losses being recognized except in significant
transactions.
The Partnership computes the provision for depreciation,
depletion and amortization of oil and gas properties on the
units-of-production method. Under this method, the provision is
calculated by multiplying the total unamortized cost of oil and gas
properties, including future development, site restoration,
dismantlement and abandonment costs, by an overall amortization rate
that is determined by dividing the physical units of oil and gas
produced during the period by the total estimated units of proved oil
and gas reserves at the beginning of the period.
The calculation of the "ceiling limitation" and the provision
for depreciation, depletion and amortization is based on estimates of
proved reserves. There are numerous uncertainties inherent in
estimating quantities of proved reserves and in projecting the future
rates of production, timing and plan of development. The accuracy of
any reserve estimate is a function of the quality of available data
and of engineering and geological interpretation and judgment.
Results of drilling, testing and production subsequent to the date of
the estimate may justify revision of such estimate. Accordingly,
reserve estimates are often different from the quantities of oil and
gas that are ultimately recovered.
(4) RELATED-PARTY TRANSACTIONS -
Effective June 30, 1993, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Pension Partners 1993-B, Ltd. (Pension Partnership),
an affiliated partnership managed by Swift for the purpose of
acquiring interests in producing oil and gas properties. Under the
terms of the NP/OR Agreement, the Partnership has conveyed to the
Pension Partnership a nonoperating interest in the aggregate net
profits (i.e., oil and gas sales net of related operating costs) of
the properties acquired equal to the Pension Partnership's
proportionate share of the property acquisition costs.
(5) VULNERABILITY DUE TO CERTAIN CONCENTRATIONS -
The Company'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.
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.
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(6) 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 OPERATING PARTNERS 1993-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 and Canada. 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 Interest Holder 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 Interest
Holders 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 expended all of the Interest Holder's commitments
available for property acquisitions by acquiring producing oil and gas
properties.
The Partnership does not allow for additional assessments from the
partners or Interest Holders to fund capital requirements. However, funds 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 June 30, 1996 (current quarter) when compared
to the quarter ended June 30, 1995 (corresponding quarter), and for the six
months ended June 30, 1996 (current period), when compared to the six months
ended June 30, 1995 (corresponding period).
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Oil and gas sales increased $31,169 or 10 percent in the current quarter
of 1996 when compared to the corresponding quarter in 1995, primarily due to
increased gas and oil prices. An increase in gas prices of 71 percent or
$1.00/MCF and in oil prices of 19 percent or $3.10/BBL had a significant impact
on partnership performance. Current quarter oil and gas production decreased
29 percent and 12 percent, respectively, when compared to second quarter 1995
production volumes, partially offsetting the effect of increased gas and oil
prices.
Associated depreciation expense decreased 2 percent or $3,544.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the second quarter of 1995 for $10,484 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.
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Oil and gas sales declined $28,760 or 3 percent in the first six months of
1996 when compared to the corresponding period in 1995, primarily due to
decreased gas and oil production. A decline of 35 percent in gas production
and 19 percent in oil production had a significant impact on partnership
performance. Current period gas and oil prices increased 54 percent or
$.81/MCF and 14 percent or $2.26/BBL, respectively, partially offsetting the
revenue declines.
Associated depreciation expense decreased 19 percent or $78,749.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first six months of 1995 for $10,484 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.
During 1996, partnership revenues and costs will be shared between the
Interest Holders and general partners in an 85:15 ratio.
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SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
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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 OPERATING
PARTNERS 1993-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: August 9, 1996 By: /s/ John R. Alden
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John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: August 9, 1996 By: /s/ Alton D. Heckaman, Jr.
------------------ --------------------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule