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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, 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 33-11773-05
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
(Exact name of registrant as specified in its charter)
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<S> <C>
Texas 76-0256602
(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 1988-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 1988-B, LTD.
BALANCE SHEETS
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<CAPTION>
June 30, December 31,
1998 1997
--------------- ---------------
(Unaudited)
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ASSETS:
Current Assets:
Cash and cash equivalents $ 146,125 $ 214,578
Oil and gas sales receivable 76,359 86,000
--------------- ---------------
Total Current Assets 222,484 300,578
--------------- ---------------
Gas Imbalance Receivable 7,420 8,238
--------------- ---------------
Oil and Gas Properties, using full cost
accounting 6,806,843 6,804,801
Less-Accumulated depreciation, depletion
and amortization (6,112,627) (6,077,713)
--------------- ---------------
694,216 727,088
--------------- ---------------
$ 924,120 $ 1,035,904
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 25,921 $ 32,709
--------------- ---------------
Deferred Revenues 42,734 44,164
Limited Partners' Capital (73,829.56 Limited Partnership Units;
$100 per unit) 839,131 931,982
General Partners' Capital 16,334 27,049
--------------- ---------------
Total Partners' Capital 855,465 959,031
--------------- ---------------
$ 924,120 $ 1,035,904
=============== ===============
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See accompanying notes to financial statements.
3
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SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 43,982 $ 66,216 $ 79,704 $ 209,616
Interest income 2,137 1,235 4,763 1,244
Other 124 157 231 399
--------------- --------------- --------------- ---------------
46,243 67,608 84,698 211,259
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 15,124 18,243 27,476 47,076
Production taxes 2,735 3,955 4,980 13,260
Depreciation, depletion
and amortization 17,423 26,146 34,914 65,050
General and administrative 11,660 14,182 31,369 28,648
--------------- --------------- --------------- ---------------
46,942 62,526 98,739 154,034
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (699) $ 5,082 $ (14,041) $ 57,225
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (.01) $ .07 $ (.19) $ .78
=============== =============== =============== ===============
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See accompanying notes to financial statements.
4
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SWIFT ENERGY INCOME PARTNERS 1988-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) $ (14,041) $ 57,225
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 34,914 65,050
Change in gas imbalance receivable
and deferred revenues (612) 2,037
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 9,641 3,122
Increase (decrease) in accounts payable (6,788) (32,571)
--------------- ---------------
Net cash provided by (used in) operating activities 23,114 94,863
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (2,042) --
Proceeds from sales of oil and gas properties -- 163,969
--------------- ---------------
Net cash provided by (used in) investing activities (2,042) 163,969
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (89,525) (59,411)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (68,453) 199,421
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 214,578 1,901
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 146,125 $ 201,322
=============== ===============
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See accompanying notes to financial statements.
5
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SWIFT ENERGY INCOME PARTNERS 1988-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 1988-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.
The Partnership entered into a NP/OR Agreement with its companion pension
partnership, Swift Energy Managed Pension Assets Partnership 1988-A, Ltd., in
the manner described in the notes to the financial statements in the latest Form
10-K.
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 $23,114 and $94,863 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
$163,969 for the six months ended June 30, 1997. 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 $89,525 and $59,411 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 $22,234 or 34 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 30 percent and oil
production declined 43 percent. The decrease in production volumes had a
significant impact on partnership performance. The partnership's sale of several
properties in 1997 had an impact on 1998 partnership production volumes. Also,
current quarter oil prices declined 45 percent or $7.20/BBL further contributing
to decreased revenues. Declines were partially offset by an increase in gas
prices of 7 percent or $.13/MCF when compared to second quarter 1997 prices.
7
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SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Associated depreciation expense decreased 33 percent or $8,723 in 1998
compared to second quarter 1997, also related to the decline in production
volumes.
Six Months Ended June 30, 1998 and 1997
Oil and gas sales declined $129,912 or 62 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 34 percent or $.85/MCF
and in oil prices of 43 percent or $7.73/BBL had a significant impact on
partnership performance. Also, current period gas and oil production declined 43
percent and 51 percent, respectively, when compared to the same period in 1997,
further contributing to decreased revenues. The partnership's sale of several
properties in 1997 had an impact on 1998 partnership production volumes.
Associated depreciation expense decreased 46 percent or $30,136 in 1998
compared to the first six months of 1997, also related to the decline in
production volumes.
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 1988-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 1988-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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<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 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> 146,125
<SECURITIES> 0
<RECEIVABLES> 76,359
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 222,484
<PP&E> 6,806,843
<DEPRECIATION> (6,112,627)
<TOTAL-ASSETS> 924,120
<CURRENT-LIABILITIES> 25,921
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 855,465
<TOTAL-LIABILITY-AND-EQUITY> 924,120
<SALES> 79,704
<TOTAL-REVENUES> 84,698
<CGS> 0
<TOTAL-COSTS> 67,370<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (14,041)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,041)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,041)
<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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