FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-17722
SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0256602
(State or other jurisdiction (I.R.S. Employer Identification No)
of organization)
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
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
ITEM 1. Financial Statements
<S> <C>
Balance Sheets
- March 31, 2000 and December 31, 1999 3
Statements of Operations
- Three month periods ended March 31, 2000 and 1999 4
Statements of Cash Flows
- Three month periods ended March 31, 2000 and 1999 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
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 184,290 $ 173,304
Oil and gas sales receivable 25,611 26,649
----------- ------------
Total Current Assets 209,901 199,953
----------- ------------
Gas Imbalance Receivable 9,979 9,979
----------- ------------
Oil and Gas Properties, using full cost
accounting 6,750,029 6,749,580
Less-Accumulated depreciation, depletion
and amortization (6,359,696) (6,347,106)
----------- ------------
390,333 402,474
----------- ------------
$ 610,213 $ 612,406
=========== ============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 7,039 $ 4,792
----------- ------------
Deferred Revenues 40,606 40,606
Limited Partners' Capital (73,830 Limited Partnership
Units; $100 per unit) 551,286 556,421
General Partners' Capital 11,282 10,587
------------ ------------
Total Partners' Capital 562,568 567,008
----------- ------------
$ 610,213 $ 612,406
=========== ============
</TABLE>
See accompanying notes to financial statements.
3
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SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
----------- ------------
REVENUES:
<S> <C> <C>
Oil and gas sales $ 51,691 $ 25,997
Interest income 2,314 1,591
----------- ------------
54,005 27,588
----------- ------------
COSTS AND EXPENSES:
Lease operating 8,321 7,746
Production taxes 3,393 1,712
Depreciation, depletion
and amortization 12,590 11,471
General and administrative 13,824 15,963
----------- ------------
38,128 36,892
----------- ------------
NET INCOME (LOSS) $ 15,877 $ (9,304)
=========== ============
Limited Partners' net income (loss)
per unit $ 0.18 $ (0.13)
=========== ============
</TABLE>
See accompanying notes to financial statements.
4
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SWIFT ENERGY INCOME PARTNERS 1988-B, LTD.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) $ 15,877 $ (9,304)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 12,590 11,471
Change in gas imbalance receivable
and deferred revenues -- (486)
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 1,038 (29,048)
Increase (decrease) in accounts payable 2,247 3,609
--------- ---------
Net cash provided by (used in) operating activities 31,752 (23,758)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (449) 1,028
Proceeds from sales of oil and gas properties -- 43,414
--------- ---------
Net cash provided by (used in) investing activities (449) 44,442
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Distributions to partners (20,317) (19,771)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 10,986 913
--------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 173,304 134,838
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 184,290 $ 135,751
========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
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, 1999 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.
During the first quarter of 2000, the Managing General Partner
mailed proxy material to the limited partners proposing to sell all the
Partnership's interests in oil and gas properties and dissolve and
liquidate the Partnership. In May 2000, the limited partners of the
Partnership approved the proposal to liquidate the Partnership. The
Managing General Partner anticipates liquidation will be substantially
completed within the next two years.
(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.
Liquidation
During the first quarter of 2000, the Managing General Partner mailed
proxy material to the limited partners proposing to sell all the Partnership's
interests in oil and gas properties and dissolve and liquidate the Partnership.
In May 2000, the limited partners of the Partnership approved the proposal to
liquidate the Partnership. The Managing General Partner anticipates liquidation
will be substantially completed within the next two years.
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. 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 distributions to
partners are determined quarterly, based upon net proceeds from sales of oil and
gas production after payment of lease operating expense, taxes and development
costs, less general and administrative expenses. In addition, future partnership
cash requirements are taken into account to determine necessary cash reserves.
Net cash provided by (used in) operating activities totaled $31,752 and
$(23,578) for the three months ended March 31, 2000 and 1999, respectively. Cash
provided by property sales proceeds totaled $43,414 for the three months ended
March 31, 1999. Cash distributions totaled $20,317 and $19,771 for the three
months ended March 31, 2000 and 1999, respectively.
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. The Partnership does not allow for
additional assessments from the partners to fund capital requirements. The
Managing General Partner 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 increased $25,694 or 99 percent in the first quarter of
2000 when compared to the corresponding quarter in 1999. Increased oil and gas
prices had a significant impact on Partnership performance. Oil prices increased
132 percent or $13.12/BBL to an average of $23.05/BBL and gas prices increased
69 percent or $1.06/MCF to an average of $2.60/MCF for the quarter. Current
quarter production volumes increased 10 percent as oil production increased 109
percent and gas production declined 2 percent when compared to first quarter
1999 production volumes.
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)
Corresponding production costs per equivalent MCF increased 14 percent in
the first quarter of 2000 compared to the first quarter of 1999 and total
production costs increased 24 percent.
Associated depreciation expense increased 10 percent or $1,119 in 2000
compared to first quarter 1999.
The Partnership records an additional provision in depreciation, depletion
and amortization 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, is below the fair market value originally
paid for oil and gas properties. Using prices in effect at March 31, 1999, the
Partnership would have recorded an additional provision at March 31, 1999 in the
amount of $19,835. However, these temporarily low quarter-end prices rebounded
and by using prices in effect at the filing date, the Partnership's unamortized
cost of oil and gas properties were not limited by this calculation.
During 2000, 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
<PAGE>
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: May 8, 2000 By: /s/ John R. Alden
------------ ------------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: May 8, 2000 By: /s/ Alton D. Heckaman, Jr.
------------- ------------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
10
<TABLE> <S> <C>
<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-Q for the quarter ended March 31, 2000 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 184,290
<SECURITIES> 0
<RECEIVABLES> 25,611
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 209,901
<PP&E> 6,750,029
<DEPRECIATION> (6,359,696)
<TOTAL-ASSETS> 610,213
<CURRENT-LIABILITIES> 7,039
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 562,568
<TOTAL-LIABILITY-AND-EQUITY> 610,213
<SALES> 51,691
<TOTAL-REVENUES> 54,005
<CGS> 0
<TOTAL-COSTS> 24,304<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,877
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,877
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,877
<EPS-BASIC> 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>
</TABLE>
