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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, 1997
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)
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<S> <C>
Texas 76-0226425
(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)
(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 1987-B, LTD.
INDEX
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PART I. FINANCIAL INFORMATION PAGE
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ITEM 1. Financial Statements
Balance Sheets
- June 30, 1997 and December 31, 1996 3
Statements of Operations
- Three month and six month periods ended June 30, 1997 and 1996 4
Statements of Cash Flows
- Six month periods ended June 30, 1997 and 1996 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
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SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
BALANCE SHEETS
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<CAPTION>
June 30, December 31,
1997 1996
--------------- ---------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 1,473 $ 107,525
Oil and gas sales receivable 296,437 442,490
Receivable due to property disposition -- 108,997
Other 9,124 --
--------------- ---------------
Total Current Assets 307,034 659,012
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 24,808,581 24,669,072
Less-Accumulated depreciation, depletion
and amortization (20,719,019) (20,363,813)
--------------- ---------------
4,089,562 4,305,259
--------------- ---------------
$ 4,396,596 $ 4,964,271
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 203,771 $ 200,096
--------------- ---------------
Deferred Revenues 218,037 220,394
Partners' Capital 3,974,788 4,543,781
--------------- ---------------
$ 4,396,596 $ 4,964,271
=============== ==============
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See accompanying notes to financial statements.
3
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SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 225,825 $ 392,887 $ 594,272 $ 1,013,337
Interest income 1,287 917 2,598 1,758
Other 2,659 12,562 5,914 17,203
--------------- --------------- --------------- ---------------
229,771 406,366 602,784 1,032,298
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 146,692 98,893 272,115 254,659
Production taxes 9,649 18,502 27,312 44,676
Depreciation, depletion
and amortization -
Normal provision 99,573 129,529 199,109 311,774
Additional provision 156,097 -- 156,097 --
General and administrative 59,337 65,549 122,188 131,707
Interest expense -- 1,610 -- 9,566
--------------- --------------- --------------- ---------------
471,348 314,083 776,821 752,382
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (241,577) $ 92,283 $ (174,037) $ 279,916
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.93) $ .35 $ (.67) $ 1.08
=============== =============== =============== ===============
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See accompanying notes to financial statements.
4
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SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
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<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (174,037) $ 279,916
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 355,206 311,774
Change in gas imbalance receivable
and deferred revenues (2,357) (18,623)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 146,053 85,922
(Increase) decrease in receivable due to property disposition 108,997 --
(Increase) decrease in other current assets (9,124) (6,946)
Increase (decrease) in accounts payable
and accrued liabilities 3,675 (751,242)
--------------- ---------------
Net cash provided by (used in) operating activities 428,413 (99,199)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (139,509) (45,755)
Proceeds from sales of oil and gas properties -- 398,199
--------------- ---------------
Net cash provided by (used in) investing activities (139,509) 352,444
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (394,956) (210,458)
Payments on note payable -- (42,669)
--------------- ---------------
Net cash provided by (used in) financing activities (394,956) (253,127)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (106,052) 118
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 107,525 1,039
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,473 $ 1,157
=============== ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ -- $ 10,637
=============== ===============
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See accompanying notes to financial statements.
5
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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, 1996 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 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.
(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.
6
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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 limited partners' 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 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, 1997 (current quarter) when compared
to the quarter ended June 30, 1996 (corresponding quarter), and for the six
months ended June 30, 1997 (current period), when compared to the six months
ended June 30, 1996 (corresponding period).
Three Months Ended June 30, 1997 and 1996
Oil and gas sales declined $167,062 or 43 percent in the second quarter of
1997 when compared to the corresponding quarter in 1996, primarily due to
decreased gas and oil production. A decline of 32 percent in gas production and
40 percent in oil production had a significant impact on partnership
performance. Also, current quarter gas prices declined 15 percent or $.32/MCF
when compared to second quarter 1996 gas prices, further contributing to
decreased revenues.
Associated depreciation expense decreased 23 percent or $29,956.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the second quarter of 1997 for $156,097 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.
7
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SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Six Months Ended June 30, 1997 and 1996
Oil and gas sales decreased $419,065 or 41 percent in the first six months
of 1997 over the corresponding period in 1996. A decline of 34 percent in gas
production and 54 percent in oil production were major contributing factors to
the decreased revenues for the period. Increased gas prices of 14 percent or
$.29/MCF partially offset the production declines.
Associated depreciation expense declined 36 percent or $112,665.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first six months of 1997 for $156,097 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 1997, partnership revenues and costs will be shared between the
limited partners and general partners in a 90:10 ratio.
8
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SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
9
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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 INCOME
PARTNERS 1987-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: August 4, 1997 By: /s/ John R. Alden
-------------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: August 4, 1997 By: /s/ Alton D. Heckaman, Jr.
-------------- ---------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Income Partners 1987-B, Ltd.'s balance sheet and statement of operations con-
tained in its Form 10-Q for the quarter ended June 30, 1997 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,473
<SECURITIES> 0
<RECEIVABLES> 296,437
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 307,034
<PP&E> 24,808,581
<DEPRECIATION> (20,719,019)
<TOTAL-ASSETS> 4,396,596
<CURRENT-LIABILITIES> 203,771
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,974,788
<TOTAL-LIABILITY-AND-EQUITY> 4,396,596
<SALES> 225,825
<TOTAL-REVENUES> 229,771
<CGS> 0
<TOTAL-COSTS> 412,011<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (241,577)
<INCOME-TAX> 0
<INCOME-CONTINUING> (241,577)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (241,577)
<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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