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, 1998
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 0-17025
SWIFT ENERGY INCOME PARTNERS 1987-B, LTD.
(Exact name of registrant as specified in its charter)
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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, 1998 and December 31, 1997 3
Statements of Operations
- Three month and six month periods ended June 30, 1998 and 1997 4
Statements of Cash Flows
- Six month periods ended June 30, 1998 and 1997 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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June 30, December 31,
1998 1997
--------------- ---------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 355,013 $ 1,762
Oil and gas sales receivable 354,088 796,119
Other 19,524 11,847
--------------- ---------------
Total Current Assets 728,625 809,728
--------------- ---------------
Gas Imbalance Receivable 683 --
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 24,157,610 24,511,749
Less-Accumulated depreciation, depletion
and amortization (21,084,676) (20,931,018)
--------------- ---------------
3,072,934 3,580,731
--------------- ---------------
$ 3,802,242 $ 4,390,459
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 112,043 $ 190,865
--------------- ---------------
Deferred Revenues 186,684 218,986
Limited Partners' Capital (260,255.25 Limited Partnership Units;
$100 per unit) 3,418,961 3,840,409
General Partners' Capital 84,554 140,199
--------------- ---------------
Total Partners' Capital 3,503,515 3,980,608
--------------- ---------------
$ 3,802,242 $ 4,390,459
=============== ===============
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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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Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
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REVENUES:
Oil and gas sales $ 164,281 $ 225,825 $ 280,651 $ 594,272
Interest income 6,472 1,287 9,812 2,598
Other 904 2,659 1,955 5,914
--------------- --------------- --------------- ---------------
171,657 229,771 292,418 602,784
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 63,179 146,692 157,227 272,115
Production taxes 5,764 9,649 10,327 27,312
Depreciation, depletion
and amortization -
Normal provision 87,200 99,573 153,658 199,109
Additional provision -- 156,097 -- 156,097
General and administrative 51,443 59,337 129,539 122,188
--------------- --------------- --------------- ---------------
207,586 471,348 442,751 776,821
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (359,929) $ (241,577) $ (150,333) $ (174,037)
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.14) $ (.93) $ (.58) $ (.67)
=============== =============== =============== ===============
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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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Six Months Ended
June 30,
----------------------------------------
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ (150,333) $ (174,037)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 153,658 355,206
Change in gas imbalance receivable
and deferred revenues (32,985) (2,357)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 442,031 146,053
(Increase) decrease in other current assets (7,677) (9,124)
Increase (decrease) in accounts payable (78,822) 3,675
--------------- ---------------
Net cash provided by (used in) operating activities 325,872 319,416
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (65,743) (139,509)
Proceeds from sales of oil and gas properties 419,882 --
(Increase) decrease in receivable due to property disposition -- 108,997
--------------- ---------------
Net cash provided by (used in) investing activities 354,139 (139,509)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (326,760) (30,512)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 353,251 (106,052)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,762 107,525
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 355,013 $ 1,473
=============== ===============
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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, 1997 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 Partnership recognizes its ownership interest in natural
gas production as revenue. Actual production quantities sold may be
different than the Partnership's ownership share in a given period. If
the Partnership's sales exceed its ownership share of production, the
differences are recorded as deferred revenue. Gas balancing receivables
are recorded when the Partnership's ownership share of production
exceeds sales.
(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.
In the normal course of business, the Partnership extends
credit, primarily in the form of monthly oil and gas sales receivables,
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
Oil and gas reserves are depleting assets and therefore often experience
significant production declines each year from the date of acquisition through
the end of the life of the property. The primary source of liquidity to the
Partnership comes almost entirely from the income generated from the sale of oil
and gas produced from ownership interests in oil and gas properties. Net cash
provided by operating activities totaled $325,872 and $319,416 for the six
months ended June 30, 1998 and 1997, respectively. This source of liquidity and
the related results of operations, and in turn cash distributions, will decline
in future periods as the oil and gas produced from these properties also
declines while production and general and administrative costs remain relatively
stable making it unlikely that the Partnership will hold the properties until
they are fully depleted, but will likely liquidate when a substantial majority
of the reserves have been produced. Cash provided by property sale proceeds
totaled $419,882 for the six months ended June 30, 1998. The Partnership has
expended all of the partners' net commitments available for property
acquisitions and development by acquiring producing oil and gas properties. The
partnership invests primarily in proved producing properties with nominal levels
of future costs of development for proven but undeveloped reserves. Significant
purchases of additional reserves or extensive drilling activity are not
anticipated. Cash distributions totaled $326,760 and $394,956 for the six months
ended June 30, 1998 and 1997, respectively.
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, 1998 (current quarter) when compared
to the quarter ended June 30, 1997 (corresponding quarter), and for the six
months ended June 30, 1998 (current period), when compared to the six months
ended June 30, 1997 (corresponding period).
Three Months Ended June 30, 1998 and 1997
Oil and gas sales declined $61,544 or 27 percent in the second quarter of
1998 when compared to the corresponding quarter in 1997, primarily due to
decreased gas and oil production. Gas production decreased 20 percent and oil
production declined 20 percent. The decrease in production volumes had a
significant impact on partnership performance. The partnership's sale of several
properties in the fourth quarter of 1997 and the Cotton Plant Field in Caldwell
Parish, Louisiana during the first quarter of 1998 had an impact on 1998
partnership production volumes. Also, current quarter oil prices declined 33
percent or $5.35/BBL further contributing to decreased revenues. Declines were
partially offset by an increase in gas prices of 5 percent or $.09/MCF when
compared to second quarter 1997 prices.
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)
Associated depreciation expense decreased 12 percent or $12,373 in 1998
compared to second quarter 1997, also related to the decline in production
volumes.
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.
Six Months Ended June 30, 1998 and 1997
Oil and gas sales declined $313,621 or 53 percent in the first six months
of 1998 when compared to the corresponding period in 1997, primarily due to
decreased gas and oil prices. A decline in gas prices of 29 percent or $.70/MCF
and in oil prices of 43 percent or $7.70/BBL had a significant impact on
partnership performance. Also, current period gas and oil production declined 27
percent and 40 percent, respectively, when compared to the same period in 1997,
further contributing to decreased revenues. The partnership's sale of several
properties in the fourth quarter of 1997 and the Cotton Plant Field in Caldwell
Parish, Louisiana during the first quarter of 1998 had an impact on 1998
partnership production volumes.
Associated depreciation expense decreased 23 percent or $45,451 in 1998
compared to the first six months of 1997, also related to the decline in
production volumes.
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 1998, 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, 1998 By: /s/ John R. Alden
-------------- --------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: August 4, 1998 By: /s/ Alton D. Heckaman, Jr.
-------------- --------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10
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<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, 1998 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 355,013
<SECURITIES> 0
<RECEIVABLES> 354,088
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 728,625
<PP&E> 24,157,610
<DEPRECIATION> (21,084,676)
<TOTAL-ASSETS> 3,802,242
<CURRENT-LIABILITIES> 112,043
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,503,515
<TOTAL-LIABILITY-AND-EQUITY> 3,802,242
<SALES> 280,651
<TOTAL-REVENUES> 292,418
<CGS> 0
<TOTAL-COSTS> 321,212<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (150,333)
<INCOME-TAX> 0
<INCOME-CONTINUING> (150,333)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (150,333)
<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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