<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 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
Certificate of Limited Partnership)
TEXAS 76-0256602
(State of Organization) (I.R.S. Employer
Identification No.)
16825 NORTHCHASE DR., SUITE 400
HOUSTON, TEXAS 77060
(713) 874-2700
(Address and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
73,829.56 Limited Partnership Units
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 periods that the
registrant was required), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Registrant does not have an aggregate market value for its Limited
Partnership Interests.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT INCORPORATED AS TO
Registration Statement No. 33-11773 Items 1 and 13
on Form S-1
<PAGE>
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT
FOR THE PERIOD ENDED DECEMBER 31, 1995
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
ITEM NO. PART I PAGE
- -------- ------ ----
1 Business I-1
2 Properties I-5
3 Legal Proceedings I-8
4 Submission of Matters to a Vote of
Security Holders I-8
PART II
-------
5 Market Price of and Di stributions on the
Registrant's Units and Related Limited
Partner Matters II-1
6 Selected Financial Data II-2
7 Management's Discussion and Analysis of
Financial Condition and Results of Operations II-2
8 Financial Statements and Supplementary Data II-3
9 Disagreements on Accounting and Financial
Disclosure II-3
PART III
--------
10 Directors and Executive Officers of the
Registrant III-1
11 Executive Compensation III-2
12 Security Ownership of Certain Beneficial
Owners and Management III-2
13 Certain Relationships and Related Transactions III-2
PART IV
-------
14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K IV-1
OTHER
-----
Signatures
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
PART I
ITEM 1. BUSINESS
GENERAL DESCRIPTION OF PARTNERSHIP
Swift Energy Income Partners 1988-B, Ltd., a Texas limited partnership
(the "Partnership" or the "Registrant"), is a partnership formed under a
public serial limited partnership offering denominated Swift Energy Income
Partners III (Registration Statement No. 33-11773 on Form S-1, originally
declared effective March 19, 1987, and amended effective March 28, 1988, May
4, 1989 and May 1, 1990 [the "Registration Statement"]). The Partnership was
formed effective July 1, 1988 under a Limited Partnership Agreement dated
June 30, 1988. The initial 752 limited partners made capital contributions
of $7,382,956.
The Partnership is principally engaged in the business of acquiring,
developing and, when appropriate, disposing of working interests in proven
oil and gas properties within the continental United States. The Partnership
does not engage in exploratory drilling. Each working interest held by the
Partnership entitles the Partnership to receive, in kind or in value, a share
of the production of oil and gas from the producing property, and obligates
the Partnership to participate in the operation of the property and to bear
its proportionate share of all operating costs associated therewith. The
Partnership typically holds less than the entire working interest in its
producing properties.
At December 31, 1995, the Partnership had expended or committed to
expend 100% of the limited partners' net commitments (I.E., limited partners'
commitments available to the Partnership for property acquisitions after
payment of organization fees and expenses) in the acquisition and development
of producing properties, which properties are described under Item 2,
"Properties," below. The Partnership's revenues and profits are derived
almost entirely from the sale of oil and gas produced from its properties and
from the sale of acquired oil and gas properties, when the sale of such
properties is economically preferable to continued operation.
The Partnership's business and affairs are conducted by its Managing
General Partner, Swift Energy Company, a Texas corporation ("Swift"). The
Partnership's Special General Partner, VJM Corporation, a California
corporation ("VJM"), consults with and advises Swift as to certain financial
matters. Swift is the designated operator of many of the properties in which
the Partnership owns interests. The remaining properties are operated by
industry operators designated by the owners of a majority of the working
interest in each property.
The general manner in which the Partnership acquires producing
properties and otherwise conducts its business is described in detail in the
Registration Statement under "Proposed Activities," which is incorporated
herein by reference. The following is intended only as a summary of the
Partnership's manner of doing business and specific activities to date.
MANNER OF ACQUIRING PROPERTIES; NET PROFITS AND OVERRIDING ROYALTY INTEREST
AGREEMENT
For the sake of legal and administrative convenience, the producing
properties owned by the Registrant have typically been acquired initially by
Swift, which then conveyed ownership of each such property to the Registrant.
The Registrant acquires producing properties from Swift at the property
acquisition cost of such properties to Swift, as adjusted for intervening
operations.
The Registrant entered into a Net Profits and Overriding Royalty Interest
Agreement dated July 1, 1988 (the "NP/OR Agreement") with Swift Energy Managed
Pension Assets Partnership 1988-A, Ltd. (the "Pension Partnership"). The
Pension Partnership is a Texas limited partnership that is also managed by Swift
and VJM. The Pension Partnership was formed to acquire nonoperating interests,
such as net profits, royalty and overriding royalty interests, in producing oil
and gas properties.
I-1
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
Under the NP/OR Agreement, the Registrant and the Pension Partnership have,
in effect, combined their funds in acquiring producing properties; using funds
committed to the NP/OR Agreement by both partnerships, the Registrant acquires
producing properties, then promptly conveys nonoperating interests therein to
the Pension Partnership. The Registrant initially committed $6,733,121 and the
Pension Partnership initially committed $4,116,890 for acquisitions under the
NP/OR Agreement. The Registrant is obligated under the NP/OR Agreement to
convey to the Pension Partnership a 38% fixed net profits interest and a
variable overriding royalty interest in specified depths of every producing
property it acquires, except that (i) properties anticipated to require
significant development operations, and (ii) nonoperating interests offered to
the Registrant by third parties may be purchased by the registrant outside the
NP/OR Agreement, without participation by the Pension Partnership. The
Registrant is entitled to withdraw up to 30% of its committed funds under the
NP/OR Agreement for such acquisitions.
All properties acquired by the Registrant since the date of the NP/OR
Agreement have been acquired subject to the NP/OR Agreement and the nonoperating
interests created thereby, except for certain nonoperating interests acquired
outside the NP/OR Agreement by the Registrant from Northwind Exploration
Company. At December 31, 1995, the Registrant had not made any withdrawals to
acquire properties anticipated to require significant development.
In accordance with its obligations under the NP/OR Agreement, as of
December 31, 1995 the Registrant had conveyed to the Pension Partnership a net
profits interest burdening certain depths of all producing properties (other
than the Northwind properties) acquired by the Registrant since the date of the
NP/OR Agreement. Typically, a net profits interest in an oil and gas property
entitles the owner to a specified percentage share of the gross proceeds
generated by the burdened property, net of operating costs. The 38% net profits
interest conveyed to the Pension Partnership under the NP/OR Agreement differs
from the typical net profits interest in that it is calculated over the entire
group of producing properties acquired under the NP/OR Agreement; I.E., all
operating costs attributable to the burdened depths of such properties are
aggregated, and the total is then subtracted from the total of all gross
proceeds attributable to such depths in order to calculate the net profits to
which the Pension Partnership is entitled. The net profits interest conveyed to
the Pension Partnership burdens only those depths of each subject property which
were evaluated to contain proved reserves at the date of acquisition, to the
extent such depths underlie specified surface acreage.
The Registrant has also conveyed to the Pension Partnership under the NP/OR
agreement an overriding royalty interest in each property (other that the
Northwind properties) acquired since the date of the NP/OR Agreement. An
overriding royalty interest is a fractional interest in the gross production (or
the gross proceeds therefrom) of oil and gas from a property, free of any
exploration, development, operation or maintenance expenses. Under the NP/OR
Agreement, the overriding royalty interest burdens the portions of each
producing property that were evaluated at the date of acquisition not to contain
proved reserves.
COMPETITION, MARKETS AND REGULATIONS
COMPETITION
The oil and gas industry is highly competitive in all its phases. The
Partnership encounters strong competition from many other oil and gas producers,
many of which possess substantial financial resources, in acquiring economically
desirable Producing Properties.
MARKETS
The amounts of and price obtainable for oil and gas production from
Partnership Properties will be affected by market factors beyond the control of
the Partnership. Such factors include the extent of domestic production, the
level of imports of foreign oil and gas, the general level of market demand on a
regional, national and worldwide basis, domestic and foreign economic conditions
that determine levels of industrial production, political events in foreign oil-
producing regions, and variations in governmental regulations and tax laws and
the imposition of new governmental requirements upon the oil and gas industry.
There can be no assurance that oil and gas prices will not decrease in the
future, thereby decreasing net Revenues from Partnership Properties.
I-2
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
From time to time, there may exist a surplus of natural gas or oil
supplies, the effect of which may be to reduce the amount of hydrocarbons that
the Partnerships may produce and sell while such oversupply exists. In recent
years, initial steps have been taken to provide additional gas transportation
lines from Canada to the United States. If additional Canadian gas is brought
to the United States market, it could create downward pressure on United States
gas prices.
REGULATIONS
ENVIRONMENTAL REGULATION
The federal government and various state and local governments have adopted
laws and regulations regarding the control of contamination of the environment.
These laws and regulations may require the acquisition of a permit by Operators
before drilling commences, prohibit drilling activities on certain lands lying
within wilderness areas or where pollution arises and impose substantial
liabilities for pollution resulting from operations, particularly operations
near or in onshore and offshore waters or on submerged lands. These laws and
regulations may also increase the costs of routine drilling and operation of
wells. Because these laws and regulations change frequently, the costs to the
Partnership of compliance with existing and future environmental regulations
cannot be predicted. However, the Managing Partner does not believe that the
Partnership is affected in a significantly different manner by these regulations
than are its competitors in the oil and gas industry.
FEDERAL REGULATION OF NATURAL GAS
The transportation and sale of natural gas in interstate commerce is
heavily regulated by agencies of the federal government. The following
discussion is intended only as a summary of the principal statutes, regulations
and orders that may affect the production and sale of natural gas from
Partnership Properties. This summary should not be relied upon as a complete
review of applicable natural gas regulatory provisions.
PRICE CONTROLS - Prior to January 1, 1993, the sale of natural gas
production was subject to regulation under the Natural Gas Act and the
Natural Gas Policy Act of 1978 ("NGPA"). Under the Natural Gas Wellhead
Decontrol Act of 1989, however, all price regulation under the NGPA and
Natural Gas Act rate, certificate and abandonment requirements were phased
out effective as of January 1, 1993.
FERC ORDERS
Several major regulatory changes have been implemented by the Federal
Energy Regulatory Commission ("FERC") from 1985 to the present that affect the
economics of natural gas production, transportation and sales. In addition, the
FERC continues to promulgate revisions to various aspects of the rules and
regulations affecting those segments of the natural gas industry that remain
subject to the FERC's jurisdiction. In April 1992, the FERC issued Order No.
636 pertaining to pipeline restructuring. This rule requires interstate
pipelines to unbundle transportation and sales services by separately stating
the price of each service and by providing customers only the particular service
desired, without regard to the source for purchase of the gas. The rule also
requires pipelines to (i) provide nondiscriminatory "no-notice" service allowing
firm commitment shippers to receive delivery of gas on demand up to certain
limits without penalties, (ii) establish a basis for release and reallocation of
firm upstream pipeline capacity, and (iii) provide non-discriminatory access to
capacity by firm transportation shippers on a downstream pipeline. The rule
requires interstate pipelines to use a straight fixed variable rate design. The
rule imposes these same requirements upon storage facilities.
FERC Order No. 500 affects the transportation and marketability of natural
gas. Traditionally, natural gas had been sold by producers to pipeline
companies, which then resold the gas to end-users. FERC Order No. 500 altered
this market structure by requiring interstate pipelines that transport gas for
others to provide transportation service to producers, distributors and all
other shippers of natural gas on a nondiscriminatory, "first-come, first-served"
basis (open access transportation"), so that producers and other shippers can
sell natural gas directly to end-users. FERC Order No. 500 contains additional
provisions intended to promote greater competition in natural gas markets.
It is not anticipated that the marketability of and price obtainable for
natural gas production from Partnership Properties will be significantly
affected by FERC Order No. 500. Gas produced from Partnership Properties
normally will be sold to intermediaries who have entered into transportation
arrangements with pipeline companies. These intermediaries will accumulate gas
purchased from a number of producers and sell the gas to end-users through open
access pipeline transportation.
I-3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATE REGULATIONS
Production of any oil and gas from Partnership Properties will be affected
to some degree by state regulations. Many states in which the Partnership will
operate have statutory provisions regulating the production and sale of oil and
gas, including provisions regarding deliverability. Such statutes, and the
regulations promulgated in connection therewith, are generally intended to
prevent waste of oil and gas and to protect correlative rights to produce oil
and gas between owners of a common reservoir. Certain state regulatory
authorities also regulate the amount of oil and gas produced by assigning
allowable rates of production to each well or proration unit.
FEDERAL LEASES
Some of the Partnership's properties are located on federal oil and gas
leases administered by various federal agencies, including the Bureau of Land
Management. Various regulations and orders affect the terms of leases,
exploration and development plans, methods of operation and related matters.
EMPLOYEES
The Partnership has no employees. Swift, however, has a staff of
geologists, geophysicists, petroleum engineers, landmen, and accounting
personnel who administer the operations of Swift and the Partnership. As of
December 31, 1995, Swift had 176 employees. Swift's administrative and
overhead expenses attributable to the Partnership's operations are borne by
the Partnership.
I-4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
ITEM 2. PROPERTIES
As of December 31, 1995, the Partnership has acquired interests in
producing oil and gas properties which are generally described below.
PRINCIPAL OIL AND GAS PRODUCING PROPERTIES
The Partnership's fields are highly diversified in 8 states none of
which equals or exceeds 15 percent of the total Partnership value.
TITLE TO PROPERTIES
Title to substantially all significant producing properties of the
Partnership has been examined. The properties are subject to royalty,
overriding royalty and other interests customary in the industry. The
Managing General Partner does not believe any of these burdens materially
detract from the value of the properties or will materially detract from the
value of the properties or materially interfere with their use in the
operation of the business of the Partnership.
PRODUCTION AND SALES PRICE
The following table summarizes the sales volumes of the Partnership's
net oil and gas production expressed in MCFs. Equivalent MCFs are obtained
by converting oil to gas on the basis of their relative energy content; one
barrel equals 6,000 cubic feet of gas.
<TABLE>
<CAPTION>
NET PRODUCTION
-------------------------------
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Net Volumes (Equivalent MCFs) 269,146 326,635 393,720
Average Sales Price
per Equivalent MCF $1.64 $2.00 $2.01
Average Production Cost
per Equivalent MCF
(includes production taxes) $0.85 $0.90 $0.94
</TABLE>
I-5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
NET PROVED OIL AND GAS RESERVES
Presented below are the estimates of the Partnership's proved reserves
as of December 31, 1995, 1994 and 1993. All of the Partnership's proved
reserves are located in the United States.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------
1995 1994 1993
-------------------------------------------------------
NATURAL NATURAL NATURAL
OIL GAS OIL GAS OIL GAS
------- ----- ------- ----- ------- -----
(BBLS) (MMCF) (BBLS) (MMCF) (BBLS) (MMCF)
<S> <C> <C> <C> <C> <C> <C>
PROVED DEVELOPED
RESERVES AT END OF YEAR 92,257 1,374 112,691 1,722 107,391 2,522
------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- -----
PROVED RESERVES
Balance at beginning
of year 121,793 1,744 133,734 2,599 134,448 2,793
Extensions, discoveries
and other additions -- -- -- -- 2,669 104
Revisions of previous
estimates (15,496) (92) 4,297 (512) 10,672 18
Sales of minerals in
place -- -- (4,189) (89) (283) (5)
Production (9,626) (212) (12,049) (254) (13,772) (311)
------- ----- ------- ----- ------- -----
Balance at end of year 96,671 1,440 121,793 1,744 133,734 2,599
------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- -----
</TABLE>
Revisions of previous quantity estimates are related to upward or downward
variations based on current engineering information for production rates,
volumetrics and reservoir pressure. Additionally, changes in quantity estimates
are the result of the increase or decrease in crude oil and natural gas prices
at each year end which have the effect of adding or reducing proved reserves on
marginal properties due to economic limitations.
I-6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
The following table summarizes by acquisition the Registrant's reserves
and gross and net interests in producing oil and gas wells as of December 31,
1995:
<TABLE>
<CAPTION>
RESERVES
DECEMBER 31, 1995
-----------------
NATURAL WELLS
OIL GAS -------------
ACQUISITION STATE(S) (BBLS) (MMCF) GROSS NET
- ----------- ------- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Union Drilling WV -- 281 122 8.737
Potter AR, LA, MS,
NM, OK, TX 77,801 824 187 10.053
Mega, Northwind TX 5,752 114 7 0.075
Anderson, Samedan
Oil, Strebor Oil
& Lake Ronel Oil TX 133 116 6 0.193
Norcen - Ag Farms WY 351 -- 3 0.034
Norcen Explorer WY 10,287 8 29 0.135
Union Pacific II TX -- 28 2 0.120
Mission Oil
Company TX 1,991 59 47 0.245
Hardy Oil Company TX 356 10 4 0.009
------ ----- ----- ------
96,671 1,440 407 19.601
------ ----- ----- ------
------ ----- ----- ------
</TABLE>
There are numerous uncertainties inherent in estimating quantities of
proved reserves and in projecting the future rates of production, timing and
plan of development. Oil and gas reserve engineering must be recognized as a
subjective process of estimating underground accumulations of oil and gas
that cannot be measured in an exact way, and estimates of other engineers
might differ from those above, audited by H. J. Gruy and Associates, Inc., an
independent petroleum consulting firm. 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, and, as a general rule, reserve estimates based upon
volumetric analysis are inherently less reliable than those based on lengthy
production history. Accordingly, reserve estimates are often different from
the quantities of oil and gas that are ultimately recovered.
In estimating the oil and natural gas reserves, the Registrant, in
accordance with criteria prescribed by the Securities and Exchange
Commission, has used prices received as of December 31, 1995 without
escalation, except in those instances where fixed and determinable gas price
escalations are covered by contracts, limited to the price the Partnership
reasonably expects to receive. The Registrant does not believe that any
favorable or adverse event causing a significant change in the estimated
quantity of proved reserves has occurred between December 31, 1995 and the
date of this report.
Future prices received for the sale of the Partnership's products may be
higher or lower than the prices used in the evaluation described above; the
operating costs relating to such production may also increase or decrease
from existing levels. The estimates presented above are in accordance with
rules adopted by the Securities and Exchange Commission.
I-7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not aware of any material pending legal proceedings
to which it is a party or of which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote during the fourth quarter of the
fiscal year covered by this report.
I-8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
PART II
ITEM 5. MARKET PRICE OF AND DISTRIBUTIONS ON THE REGISTRANT'S UNITS AND RELATED
LIMITED PARTNER MATTERS
MARKET INFORMATION
Units in the Partnership were initially sold at a price of $100 per
Unit. Units are not traded on any exchange and there is no established public
trading market for the Units. Swift is aware of negotiated transfers of
Units between unrelated parties; however, these transfers have been limited
and sporadic. Due to the nature of these transactions, Swift has no
verifiable information regarding prices at which Units have been transferred.
HOLDERS
As of December 31, 1995, there were 752 Limited Partners holding Units in
the Partnership.
DISTRIBUTIONS
The Partnership generally makes distributions to Limited Partners on a
quarterly basis, subject to the restrictions set forth in the Limited
Partnership Agreement. In the fiscal years ending December 31, 1994 and
1995, the Partnership distributed a total of $192,000 and $75,700,
respectively, to holders of its Units. Cash distributions constitute net
proceeds from sale of oil and gas production after payment of lease operating
expenses and other partnership expenses. Some or all of such amounts or any
proceeds from the sale of partnership properties could be deemed to
constitute a return of investors' capital.
Oil and gas investments involve a high risk of loss, and no assurance
can be given that any particular level of distributions to holders of Units
can be achieved or maintained. Although it is anticipated that quarterly
distributions will continue to be made through 1996, the Partnership's
ability to make distributions could be diminished by any event adversely
affecting the oil and gas properties in which the Partnership owns interests
or the amount of revenues received by the Partnership therefrom.
The Partnership's Limited Partnership Agreement contains various
provisions which might serve to delay, defer or prevent a change in control
of the Partnership, such as the requirement of a vote of Limited Partners in
order to sell all or substantially all of the Partnership's properties or the
requirement of consent by the Managing General Partner to transfers of
limited partnership interests.
II-1
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data, prepared in accordance with
generally accepted accounting principles as of December 31, 1995, 1994, 1993,
1992, and 1991, should be read in conjunction with the financial statements
included in Item 8.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 459,276 $ 665,124 $ 798,081 $ 970,833 $ 1,272,166
Income (Loss) $ (243,649) $ (175,340) $ 53,579 $ (742,807) $ (1,149,077)
Total Assets $1,430,750 $1,791,849 $2,186,454 $2,486,740 $ 3,658,833
Cash Distributions $ 87,387 $ 213,470 $ 326,446 $ 393,344 $ 869,869
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
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. 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. This source of
liquidity and the related results of operations will decline in future
periods as the oil and gas produced from these properties also declines.
Subject to 1996 market conditions remaining comparable with 1995, the
Managing General Partner ("MGP") anticipates an increase in liquidity
provided that certain development work scheduled in 1996 is completed
successfully. The Partnership plans to spend in the next two years an
estimated $132,000 for capital expenditures needed for this development work
and the enhancement of proved oil and gas reserves. The MGP anticipates that
the Partnership will have adequate liquidity from income from continuing
operations to satisfy any future capital expenditure requirements. Funds
generated from bank borrowings and proceeds from the sale of oil and gas
properties will be used to supplement this effort if deemed necessary.
RESULTS OF OPERATIONS
Oil and gas sales decreased 31 percent in 1995 vs. 1994. Production
volumes decreased 18 percent due to a 17 percent gas production decrease and
a 20 percent oil production decline. Since the Partnership's reserves are 71
percent gas, the decrease in gas production, due to accelerated production
declines on mature wells, had a major impact on partnership performance. A
decline in the 1995 gas prices of 26 percent or $.51/MCF further contributed
to the Partnership's decreased revenues. The average sales price per
equivalent MCF decreased 18 percent in 1995.
Production cost per equivalent MCF decreased 6 percent in 1995 compared
to 1994. In addition, total production costs decreased 22 percent in 1995.
Associated depreciation expense decreased 17 percent in 1995 when
compared to 1994.
Oil and gas sales decreased 17 percent in 1994 vs. 1993. Production
volumes decreased 17 percent due to an 18 percent gas production decrease and
a 13 percent oil production decline. Since the partnership's reserves are 70
percent gas, the decrease in gas production, due to accelerated production
declines on mature wells and production curtailments due to declining prices,
had a major impact on partnership performance. The Partnership experienced a
decline in oil prices of 9 percent or $1.29/BBL, which further contributed to
the decreased revenues. The average sales price per equivalent MCF remained
stable in 1994.
II-2
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
Production cost per equivalent MCF decreased 4 percent in 1994 compared
to 1993 and total production costs decreased 21 percent in 1994.
Associated depreciation expense decreased 14 percent in 1994 when compared
to 1993.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in 1995 and 1994 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 paid for oil and gas properties resulting in
a full cost ceiling impairment.
During 1996, Partnership revenues and costs will be shared between the
limited and general partners in a 90:10 ratio, based on the annualized rate
of cash distributions by the Partnership during a certain period prior to
December 31, 1995. Based on current oil and gas prices, current levels of
oil and gas production and expected cash distributions during 1996, the MGP
anticipates that the Partnership sharing ratio will continue to be 90:10.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 14(a) for index to financial statements.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
II-3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As a limited partnership, the Registrant has no directors or executive
officers. The business and affairs of the Registrant are managed by Swift as
Managing General Partner. Set forth below is certain information as of March
15, 1996 regarding the directors and executive officers of Swift.
<TABLE>
<CAPTION>
POSITION(S) WITH
NAME AGE SWIFT AND OTHER COMPANIES
---- --- -------------------------
<S> <C> <C>
DIRECTORS
---------
A. Earl Swift 62 President, Chief Executive Officer and
Chairman of the Board
Virgil N. Swift 67 Executive Vice President - Business
Development, Vice Chairman of the Board
G. Robert Evans 64 Director of Swift; Chairman of the Board,
Material Sciences Corporation;
Director, Consolidated Freightways, Inc.,
Fibreboard Corporation, Elco Industries, and
Old Second Bancorp
Raymond O. Loen 71 Director of Swift; President, R. O. Loen
Company
Henry C. Montgomery 60 Director of Swift; Chairman of the Board,
Montgomery Financial Services Corporation;
Director, Southwall Technology Corporation
Clyde W. Smith, Jr. 47 Director of Swift; President, Somerset
Properties, Inc.
Harold J. Withrow 68 Director of Swift
EXECUTIVE OFFICERS
------------------
Terry E. Swift 40 Executive Vice President, Chief
Operating Officer
John R. Alden 50 Senior Vice President - Finance,
Chief Financial Officer and Secretary
Bruce H. Vincent 48 Senior Vice President - Funds Management
James M. Kitterman 51 Senior Vice President - Operations
Alton D. Heckaman, Jr. 38 Vice President - Finance and
Controller
</TABLE>
III-1
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
From time to time, Swift as Managing General Partner of the Partnership
purchases Units in the Partnership from investors who offer the Units
pursuant to their right of presentment, which purchases are made pursuant to
terms set out in the Partnership's original Limited Partnership Agreement.
Due to the frequency and large number of these transactions, Swift reports
these transactions under Section 16 of the Securities Exchange Act of 1934 on
an annual rather than a monthly basis. In some cases such annual reporting
may constitute a late filing of the required Section 16 reports under the
applicable Section 16 rules.
ITEM 11. EXECUTIVE COMPENSATION
As noted in Item 10, "Directors and Executive Officers of the
Registrant," above, the Partnership has no executive officers. The executive
officers of Swift and VJM are not compensated by the Partnership.
Certain fees and allowances contemplated by the Limited Partnership
Agreement have been paid by the Partnership to Swift and VJM. See Note (4)
in Notes To Financial Statements (Related-Party Transactions) for further
discussion.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No single limited partner is known to the Partnership to be the
beneficial owner of more than five percent of the Partnership's Units.
Swift and VJM are not aware of any arrangement, the operation of which
may at a subsequent date result in a change in control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As noted in Item 10, "Directors and Executive Officers of the Registrant,"
above, the Partnership has no executive officers or directors, and thus has not
engaged in any transactions in which any such person had an interest. The
Partnership is permitted to engage in certain transactions with Swift as
Managing General Partner and VJM as Special General Partner, subject to
extensive guidelines and restrictions described in the "Conflicts of Interest"
section of the Amended Prospectus contained in the Registration Statement, which
is incorporated herein by reference.
Summarized below are the principal transactions that have occurred between
the Partnership and Swift, VJM and their affiliates.
1. The oil and gas properties acquired by the Partnership, as described
in Item 2, "Properties" above, were typically acquired initially by Swift from
the seller thereof and subsequently transferred to the Partnership. Such
transfers were made by Swift at its Property Acquisition Costs (as defined in
the Limited Partnership Agreement), less any amounts received from sale of
production between the time of acquisition by Swift and the time of sale to the
Partnership.
2. Swift acts as operator for many of the wells in which the Partnership
has acquired interests and has received compensation for such activities in
accordance with standard industry operating agreements.
3. The Partnership paid to Swift and VJM certain fees as contemplated by
the Limited Partnership Agreement. See Note (4) in Notes To Financial
Statements (Related-Party Transactions) for further discussion.
III-2
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a(1) FINANCIAL STATEMENTS PAGE NO.
--------
Report of Independent Public Accountants IV-2
Balance Sheets as of December 31, 1995 and 1994 IV-3
Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 IV-4
Statements of Partners' Capital for the years ended
December 31, 1995, 1994 and 1993 IV-5
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 IV-6
Notes to Financial Statements IV-7
a(2) FINANCIAL STATEMENT SCHEDULES
All schedules required by the SEC are either inapplicable or the
required information is included in the Financial Statements, the Notes
thereto, or in other information included elsewhere in this report.
a(3) EXHIBITS
3.1 Limited Partnership Agreement of Swift Energy Income Partners
1988-B, Ltd., dated June 30, 1988. (Form 10-K for year ended
December 31, 1988, Exhibit 3.1).
3.2 Certificate of Limited Partnership of Swift Energy Income Partners
1988-B, Ltd., as filed July 1, 1988, with the Texas Secretary of
State. (Form 10-K for year ended December 31, 1988, Exhibit 3.2).
10.1 Net Profits and Overriding Royalty Interest Agreement between Swift
Energy Income Partners 1988-B, Ltd. and Swift Energy Managed Pension
Assets Partnership 1989-A, Ltd. dated July 1, 1988. (Form 10-K for
the year ended December 31, 1988, Exhibit 10.1).
99.1 A copy of the following section of the Amended Prospectus dated
March 28, 1988, contained in Post-Effective Amendment No. 1 to
Registration Statement No. 33-11773 on Form S-1 for Swift Energy
Income Partners III, as filed on March 25, 1988, which have
been incorporated herein by reference: "Proposed Activities"
(pp 36 - 50) and "Conflicts of Interest" (pp. 70 - 78).
(Form 10-K for year ended December 31, 1989, Exhibit 28.1).
b(1) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter ended
December 31, 1995.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
No annual report to security holders covering the Partnership's 1995 fiscal
year, or proxy statement, form of proxy or other proxy soliciting material has
been sent to Limited Partners of the Partnership.
IV-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Swift Energy Income Partners 1988-B, Ltd.:
We have audited the accompanying balance sheets of Swift Energy
Income Partners 1988-B, Ltd., (a Texas limited partnership) as of December
31, 1995 and 1994, and the related statements of operations, partners'
capital and cash flows for the years ended December 31, 1995, 1994 and 1993.
These financial statements are the responsibility of the general partner's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Swift Energy
Income Partners 1988-B, Ltd., as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the years ended December 31,
1995, 1994 and 1993, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 19, 1996
IV-2
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,720 $ 1,370
Oil and gas sales receivable 94,807 112,460
------------ -------------
Total Current Assets 96,527 113,830
------------ -------------
Gas Imbalance Receivable 19,429 --
Oil and Gas Properties, using full cost
accounting 7,141,607 7,107,852
Less-Accumulated depreciation, depletion
and amortization (5,826,813) (5,429,833)
1,314,794 1,678,019
------------ -------------
$ 1,430,750 $ 1,791,849
------------ -------------
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts payable and accrued liabilities $ 328,189 $ 298,824
Current portion of note payable 20,026 80,108
------------ -------------
Total Current Liabilities 348,215 378,932
------------ -------------
Note payable to a Bank, net
of current portion -- 20,026
Deferred Revenues 44,496 23,816
Partners' Capital 1,038,039 1,369,075
------------ -------------
$ 1,430,750 $ 1,791,849
------------ -------------
------------ -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
REVENUES:
Oil and gas sales $ 456,909 $ 663,438 $ 797,262
Interest income 161 49 36
Other 2,206 1,637 783
----------- ----------- ----------
459,276 665,124 798,081
----------- ----------- ----------
COSTS AND EXPENSES:
Lease operating 200,486 253,494 324,790
Production taxes 27,302 39,132 46,084
Depreciation, depletion
and amortization -
Normal provision 195,397 235,023 271,829
Additional provision 201,583 226,987 --
General and administrative 58,112 75,090 83,754
Interest expense 20,045 10,738 18,045
----------- ----------- ----------
702,925 840,464 744,502
----------- ----------- ----------
INCOME (LOSS) $ (243,649) $ (175,340) $ 53,579
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
LIMITED GENERAL COMBINING
PARTNERS PARTNERS ADJUSTMENT TOTAL
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1992 $ 1,782,013 $ 48,926 $ 199,813 $ 2,030,752
INCOME (LOSS) 44,896 28,817 (20,134) 53,579
CASH DISTRIBUTIONS (287,900) (38,546) -- (326,446)
----------- ---------- ---------- -----------
BALANCE,
DECEMBER 31, 1993 1,539,009 39,197 179,679 1,757,885
----------- ---------- ---------- -----------
INCOME (LOSS) (142,171) 23,769 (56,938) (175,340)
CASH DISTRIBUTIONS (192,000) (21,470) -- (213,470)
----------- ---------- ---------- -----------
BALANCE,
DECEMBER 31, 1994 1,204,838 41,496 122,741 1,369,075
----------- ---------- ---------- -----------
INCOME (LOSS) (221,753) 10,600 (32,496) (243,649)
CASH DISTRIBUTIONS (75,700) (11,687) -- (87,387)
----------- ---------- ---------- -----------
BALANCE,
DECEMBER 31, 1995 $ 907,385 $ 40,409 $ 90,245 $ 1,038,039
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
LIMITED PARTNERS' NET INCOME (LOSS)
PER UNIT
1993 $ .61
-----------
-----------
1994 $ (1.93)
-----------
-----------
1995 $ (3.00)
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------ --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ (243,649) $ (175,340) $ 53,579
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 396,980 462,010 271,829
Change in gas imbalance receivable
and deferred revenues 1,251 (28,377) (37,733)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 17,653 50,303 69,825
Increase (decrease) in accounts payable
and accrued liabilities 29,365 102,689 70,395
------------ --------- ---------
Net cash provided by (used in) operating activities 201,600 411,285 427,895
------------ --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (35,273) (152,183) (58,909)
Proceeds from sales of oil and gas properties 1,518 34,651 17,716
Net cash provided by (used in) investing activities (33,755) (117,532) (41,193)
------------ --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (87,387) (213,470) (326,446)
Payments on note payable (80,108) (80,107) (60,081)
------------ --------- ---------
Net cash provided by (used in) financing activities (167,495) (293,577) (386,527)
------------ --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 350 176 175
------------ --------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,370 1,194 1,019
------------ --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,720 $ 1,370 $ 1,194
------------ --------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 21,907 $ 11,665 $ 14,555
------------ --------- ---------
------------ --------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
IV-6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND TERMS OF PARTNERSHIP AGREEMENT -
Swift Energy Income Partners 1988-B, Ltd., a Texas limited partnership
(the Partnership), was formed on July 1, 1988, for the purpose of purchasing
and operating producing oil and gas properties within the continental United
States. 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
general partners are required to contribute up to 1/99th of limited partner
net contributions. The 752 limited partners made total capital contributions
of $7,382,956.
Property acquisition costs and the management fee are borne 99 percent
by the limited partners and one percent by the general partners.
Organization and syndication costs were borne solely by the limited partners.
Initially, all continuing costs (including development costs, operating
costs, general and administrative reimbursements and direct expenses) and
revenues are allocated 90 percent to the limited partners and ten percent to
the general partners. If prior to partnership payout, as defined, however,
the cash distribution rate for a certain period equals or exceeds 17.5
percent, then for the following calendar year, these continuing costs and
revenues will be allocated 85 percent to the limited partners and 15 percent
to the general partners. After partnership payout, continuing costs and
revenues will be shared 85 percent by the limited partners, and 15 percent by
the general partners, even if the cash distribution rate is less than 17.5
percent. Payout had not occurred as of December 31, 1995.
(2) 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
years ended December 31, 1995, 1994 and 1993.
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.
IV-7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
STATEMENTS OF CASH FLOWS -
Highly liquid debt instruments with an initial maturity of three months or
less are considered to be cash equivalents.
(3) OIL AND GAS CAPITALIZED COSTS -
The following table sets forth capital expenditures related to the
Partnership's oil and gas operations:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
Acquisition of
proved properties $ -- $ -- $ --
Development 35,273 152,183 58,909
-------- --------- --------
$ 35,273 $ 152,183 $ 58,909
-------- --------- --------
-------- --------- --------
</TABLE>
All oil and gas property acquisitions are made by Swift on behalf of the
Partnership. The costs of the properties include the purchase price plus any
costs incurred by Swift in the evaluation and acquisition of properties.
Interest expense, presented in the accompanying statements of operations,
includes amortization of the discount recorded on gas imbalance liabilities
assumed in property acquisitions ($2,820 in 1993).
During 1995 and 1994, the Partnership's unamortized oil and gas property
costs exceeded the quarterly calculations of the "ceiling limitation" resulting
in an additional provision for depreciation, depletion and amortization of
$201,583 and $226,987, respectively. In computing the Partnership's third
quarter 1994 "ceiling limitation", the Partnership utilized the product prices
in effect at the date of the filing of the Partnership's report on Form 10-Q.
Utilizing these subsequent prices, no write down was required by the
Partnership. The write down would have been $21,348 using product prices in
effect at September 30, 1994.
In addition, the limited partners' share of unamortized oil and gas
property costs exceeded their "ceiling limitation" in 1995 and 1994 resulting in
a valuation allowance of $179,983 and $187,205, respectively. These amounts are
included in the income (loss) attributable to the limited partners shown in the
statements of partners' capital together with a "combining adjustment" for the
differences between the limited partners' valuation allowances and the
Partnership's valuation allowances. The "combining adjustment" changes
quarterly as the Partnership's total depreciation, depletion and amortization
provision is more or less than the combined depreciation, depletion and
amortization provision attributable to general and limited partners.
IV-8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) RELATED-PARTY TRANSACTIONS -
An affiliate of the Special General Partner, as Dealer Manager, received
$183,061 for managing and overseeing the offering of limited partnership units.
A one-time management fee of $184,574 was paid to Swift in 1988 for
services performed for the Partnership. During 1995, 1994 and 1993, the
Partnership paid Swift $27,672, $40,707 and $51,749, respectively, as general
and administrative overhead allowances.
Effective July 1, 1988, the Partnership entered into a Net Profits and
Overriding Royalty Interests Agreement ("NP/OR Agreement") with Swift Energy
Managed Pension Assets Partnership 1988-A, Ltd. (Pension Partnership), managed
by Swift, for the purpose of acquiring working interests in producing oil and
gas properties. Under 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 its proportionate share of the property acquisition
costs.
(5) NOTE PAYABLE TO A BANK -
Note payable to a bank at December 31, 1995 and 1994 follows:
<TABLE>
<CAPTION>
1995 1994
-------- ---------
<S> <C> <C>
Date of current note: December 29, 1992
Note payable at 1.25% above the bank's base
(9.75% at December 31, 1995 and
December 31, 1994), principal payable in
quarterly installments of $20,027,with the
balance due at maturity (January 1, 1996),
collateralized by partnership assets $ 20,026 $ 100,134
Less: Current portion (20,026) (80,108)
-------- ---------
Long-term portion $ -- $ 20,026
-------- ---------
-------- ---------
</TABLE>
As provided by the Partnership Agreement, the note payable was obtained to
fund development wells.
(6) FEDERAL INCOME TAXES -
The Partnership is not a tax-paying entity. No provision is made in the
accounts of the Partnership for federal or state income taxes, since such taxes
are liabilities of the individual partners, and the amounts thereof depend upon
their respective tax situations.
The tax returns and the amount of distributable Partnership income are
subject to examination by the federal and state taxing authorities. If the
Partnership's ordinary income for federal income tax purposes is ultimately
changed by the taxing authorities, the tax liability of the limited partners
could be changed accordingly. Ordinary income reported on the Partnership's
federal return of income for the years ended December 31, 1995, 1994 and 1993
was $115,858, $295,711 and $255,177, respectively. The difference between
ordinary income for federal income tax purposes reported by the Partnership and
net income or loss reported herein primarily results from the exclusion of
depletion (as described below) from ordinary income reported in the
Partnership's federal return of income.
IV-9
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For federal income tax purposes, depletion with respect to production of
oil and gas is computed separately by the partners and not by the Partnership.
Since the amount of depletion on the production of oil and gas is not computed
at the Partnership level, depletion is not included in the Partnership's income
for federal income tax purposes but is charged directly to the partners' capital
accounts to the extent of the cost of the leasehold interests, and thus is
treated as a separate item on the partners' Schedule K-1. Depletion for federal
income tax purposes may vary from that computed for financial reporting purposes
in cases where a ceiling adjustment is recorded, as such amount is not
recognized for tax purposes.
(7) GAS IMBALANCES -
The gas imbalance receivable and deferred revenues represent imbalances
assumed as part of property acquisitions. The imbalances 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.
(8) 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.
(9) 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.
IV-10
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
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
General Partner
Date: March 15, 1996 By: s/b A. Earl Swift
--------------- ----------------------------------
A. Earl Swift
President
Date: March 15, 1996 By: s/b John R. Alden
--------------- ----------------------------------
John R. Alden
Principal Financial Officer
Date: March 15, 1996 By: s/b Alton D. Heckaman, Jr.
--------------- ----------------------------------
Alton D. Heckaman, Jr.
Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SWIFT ENERGY INCOME
PARTNERS 1988-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
General Partner
Date: March 15, 1996 By: s/b A. Earl Swift
--------------- ----------------------------------
A. Earl Swift
Director and Principal
Executive Officer
Date: March 15, 1996 By: s/b Virgil N. Swift
--------------- ----------------------------------
Virgil N. Swift
Director and Executive
Vice President - Business
Development
IV-11
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
Date: March 15, 1996 By: s/b G. Robert Evans
--------------- ----------------------------------
G. Robert Evans
Director
Date: March 15, 1996 By: s/b Raymond O. Loen
--------------- ----------------------------------
Raymond O. Loen
Director
Date: March 15, 1996 By: s/b Henry C. Montgomery
--------------- ----------------------------------
Henry C. Montgomery
Director
Date: March 15, 1996 By: s/b Clyde W. Smith, Jr.
--------------- ----------------------------------
Clyde W. Smith, Jr.
Director
Date: March 15, 1996 By: s/b Harold J. Withrow
--------------- ----------------------------------
Harold J. Withrow
Director
IV-12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift
Energy Income Partners 1988-B, LTD.'s balance sheet and statement of
operations contained in its Form 10-K for the year ended December 31, 1995
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,720
<SECURITIES> 0
<RECEIVABLES> 94,807
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 96,527
<PP&E> 7,141,607
<DEPRECIATION> (5,826,813)
<TOTAL-ASSETS> 1,430,750
<CURRENT-LIABILITIES> 348,215
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,038,039
<TOTAL-LIABILITY-AND-EQUITY> 1,430,750
<SALES> 456,909
<TOTAL-REVENUES> 459,276
<CGS> 0
<TOTAL-COSTS> 624,768<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,045
<INCOME-PRETAX> (243,649)
<INCOME-TAX> 0
<INCOME-CONTINUING> (243,649)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (243,649)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes lease operating expense, production taxes, and depletion,
depreciation and amortization expense. Excludes general and administrative
and interest expense.
</FN>
</TABLE>
