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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 MARCH 31, 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 0-17021
SWIFT ENERGY INCOME PARTNERS 1986-B, LTD.
(Exact name of registrant as specified in its charter)
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<S> <C>
TEXAS 76-0198754
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
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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 INCOME PARTNERS 1986-B, LTD.
INDEX
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
- March 31, 1996 and December 31, 1995 3
Statements of Operations
- Three month periods ended March 31, 1996 and 1995 4
Statements of Cash Flows
- Three month periods ended March 31, 1996 and 1995 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 8
SIGNATURES 9
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SWIFT ENERGY INCOME PARTNERS 1986-B, LTD.
BALANCE SHEETS
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<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---------- ----------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 1,487 $ 1,480
Oil and gas sales receivable 71,360 35,874
--------------- ---------------
Total Current Assets 72,847 37,354
--------------- ---------------
Gas Imbalance Receivable 160 150
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 5,619,001 5,619,146
Less-Accumulated depreciation, depletion
and amortization (5,421,121) (5,413,120)
--------------- ---------------
197,880 206,026
--------------- ---------------
$ 270,887 $ 243,530
========= ===========
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 37,117 $ 43,625
--------------- ---------------
Deferred Revenues 8,292 8,714
Partners' Capital 225,478 191,191
--------------- ---------------
$ 270,887 $ 243,530
========== ===========
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See accompanying notes to financial statements.
3
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SWIFT ENERGY INCOME PARTNERS 1986-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1996 1995
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REVENUES:
Oil and gas sales $ 73,939 $ 51,165
Interest income 7 6
--------------- ---------------
73,946 51,171
--------------- ---------------
COSTS AND EXPENSES:
Lease operating 17,826 24,046
Production taxes 2,579 3,766
Depreciation, depletion
and amortization -
Normal provision 8,001 28,802
Additional provision -- 51,866
General and administrative 10,145 4,518
--------------- ---------------
38,551 112,998
--------------- ---------------
NET INCOME (LOSS) $ 35,395 $ (61,827)
============ ============
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT
MARCH 31, 1996 $ 5.79
============
MARCH 31, 1995 $ (10.12)
=============
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See accompanying note to financial statements.
4
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SWIFT ENERGY INCOME PARTNERS 1986-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------
1996 1995
------------- --------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 35,395 $ (61,827)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 8,001 80,668
Change in gas imbalance receivable
and deferred revenues (432) --
Change in assests and liabilities:
(Increase) decrease in oil and gas sales receivable (35,486) 2,188
Increase (decrease) in accounts payable
and accrued liabilities (6,508) (7,953)
--------------- ---------------
Net cash provided by (used in) operating activities 970 13,076
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of oil and gas properties 145 778
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (1,108) (13,847)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7 7
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,480 1,399
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,487 $ 1,406
=========== ===========
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See accompanying notes to financial statements.
5
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SWIFT ENERGY INCOME PARTNERS 1986-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) GAS IMBALANCES -
The gas imbalance receivable and deferred revenues are
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 the gas imbalance receivable or deferred revenues as
applicable.
(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.
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.
(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.
(5) SUBSEQUENT EVENTS -
In February 1996, the Managing General Partner informed the
limited partners of a proposal to sell all the Partnership's
properties and dissolve and liquidate the Partnership. The special
meeting of Limited Partners was held on March 20, 1996. Of the total
units held by the Limited Partners, a majority voted for adoption of
the proposal for sales of substantially all of the assets of the
Partnership and the dissolution, winding up and termination of the
Partnership. The Partnership's financial statements do not reflect any
adjustments that might result from the liquidation of the Partnership.
6
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SWIFT ENERGY INCOME PARTNERS 1986-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 results 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 the acquisition of producing oil and gas
properties, expending all of limited partners' net commitments available for
property acquisitions.
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 Partner believes that the funds currently
available to the Partnership will be adequate to meet any anticipated capital
requirements.
RESULTS OF OPERATIONS
Oil and gas sales increased $22,774 or 45 percent in the first quarter
of 1996 when compared to the same period in 1995, partially due to increased
gas and oil prices. An increase in gas prices of 68 percent or $.83/MCF and in
oil prices of 8 percent or $1.26/BBL had a significant impact on partnership
performance. Current quarter gas and oil production declined 45 percent and 30
percent, respectively, when compared to first quarter 1995 production volumes,
partially offsetting the effect of increased gas and oil prices.
Also, current quarter oil and gas sales increased due to the settlement
of pending litigation on the Kaiser Francis I acquisition, Cassel 1-17 well.
Take or pay proceeds were received in the amount of $28,369 and recorded in
the March revenues.
Associated depreciation expense decreased 72 percent or $20,801.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first quarter of 1995 for $51,866 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
limited partners and general partners in a 90:10 ratio.
7
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SWIFT ENERGY INCOME PARTNERS 1986-B, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
8
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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.
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SWIFT ENERGY INCOME
PARTNERS 1986-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: May 1, 1996 By: /s/ John R. Alden
----------------------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 1, 1996 By: /s/ Alton D. Heckaman, Jr.
----------------------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
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9
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INDEX TO EXHIBITS
27 -- Financial Data Schedule
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<ARTICLE> 5
<LEGEND>
SWIFT ENERGY INCOME PARTNERS 1986-B, LTD'S BALANCE SHEET AND STATEMENT OF
OPERATIONS CONTAINED IN ITS FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,487
<SECURITIES> 0
<RECEIVABLES> 71,360
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 72,847
<PP&E> 5,619,001
<DEPRECIATION> (5,421,121)
<TOTAL-ASSETS> 270,887
<CURRENT-LIABILITIES> 37,117
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 225,478
<TOTAL-LIABILITY-AND-EQUITY> 270,887
<SALES> 73,939
<TOTAL-REVENUES> 73,946
<CGS> 0
<TOTAL-COSTS> 28,406<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35,395
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,395
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes lease operating expenses, production taxes, and depreciation,
depletion and amortization expense. Excludes general and administrative and
interest expense.
</FN>
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