<PAGE>
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 September 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 33-11773-09
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Texas 76-0279533
(State or other jurisdiction of organization) (I.R.S. Employer Identification No.)
</TABLE>
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
----
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
ITEM 1. Financial Statements
Balance Sheets
- September 30, 1998 and December 31, 1997 3
Statements of Operations
- Three month and nine month periods ended September 30, 1998 and 1997 4
Statements of Cash Flows
- Nine month periods ended September 30, 1998 and 1997 5
Notes to Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 12
SIGNATURES 13
</TABLE>
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
--------------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,000 $ 390,534
Oil and gas sales receivable 209,945 402,035
--------------- ----------------
Total Current Assets 210,945 792,569
--------------- ----------------
Gas Imbalance Receivable 84,970 93,964
--------------- ----------------
Oil and Gas Properties, using full cost
accounting 8,663,667 8,517,702
Less-Accumulated depreciation, depletion
and amortization (6,309,920) (5,532,503)
--------------- ----------------
2,353,747 2,985,199
--------------- ----------------
$ 2,649,662 $ 3,871,732
=============== ================
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 131,076 $ 138,407
--------------- ----------------
Deferred Revenues 55,030 59,718
Limited Partners' Capital (83,295 Limited Partnership Units;
$100 per unit) 2,434,051 3,623,998
General Partners' Capital 29,505 49,609
--------------- ----------------
Total Partners' Capital 2,463,556 3,673,607
--------------- ----------------
$ 2,649,662 $ 3,871,732
=============== ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Oil and gas sales $ 184,871 $ 372,971 $ 704,668 $ 1,213,067
Interest income 395 5,627 4,976 17,631
Other 1,101 1,368 4,178 6,033
--------------- --------------- --------------- ---------------
186,367 379,966 713,822 1,236,731
--------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Lease operating 79,579 101,830 247,605 324,318
Production taxes 9,269 21,705 37,453 64,795
Depreciation, depletion
and amortization -
Normal 88,573 116,534 299,820 348,169
Additional 477,597 -- 477,597 --
General and administrative 26,979 28,455 97,734 124,333
--------------- --------------- --------------- ---------------
681,997 268,524 1,160,209 861,615
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (495,630) $ 111,442 $ (446,387) $ 375,116
=============== =============== =============== ===============
Limited Partners' net income (loss)
per unit $ (5.95) $ 1.34 $ (5.36) $ 4.50
=============== =============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (Loss) $ (446,387) $ 375,116
Adjustments to reconcile income (loss) to
net cash provided by operations:
Depreciation, depletion and amortization 777,417 348,169
Change in gas imbalance receivable
and deferred revenues 4,306 20,505
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable 192,090 242,117
(Increase) decrease in other current assets -- (6,288)
Increase (decrease) in accounts payable (7,331) (168,869)
--------------- ---------------
Net cash provided by (used in) operating activities 520,095 931,179
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (145,965) (74,350)
Proceeds from sales of oil and gas properties -- 4,336
(Increase) decrease in receivable due to property disposition -- 120,429
--------------- ---------------
Net cash provided by (used in) investing activities (145,965) (70,014)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners (763,664) (899,009)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (389,534) (37,844)
--------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 390,534 497,687
--------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,000 $ 459,843
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-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) Organization and Terms of Partnership Agreement -
Swift Energy Income Partners 1989-B, Ltd., a Texas limited
partnership ("the Partnership"), was formed on June 30, 1989, 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 661 limited partners made total capital contributions
of $8,329,500.
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.
Generally, 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,
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. During
1992 and 1991, the cash distribution rate (as defined in the Partnership
Agreement) exceeded 17.5 percent and thus, in 1993 and 1992, the
continuing costs and revenues were shared 85 percent by the limited
partners and 15 percent by the general partners. During 1997, 1996,
1995, 1994 and 1993, the cash distribution rate fell below 17.5 percent
and thus, in 1997, 1996, 1995 and 1994, the continuing costs and
revenues were shared 90 percent by the limited partners and 10 percent
by the general partners. Payout occurred in January 1998; therefore, for
1998 and each year remaining in the life of the partnership, the
continuing costs and revenues will be shared 85 percent by the limited
partners and 15 percent by the general partners.
(3) 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.
6
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Oil and Gas Properties --
The Partnership accounts for its ownership interest in oil and
gas properties using the proportionate consolidation method, whereby the
Partnership's share of assets, liabilities, revenues and expenses is
included in the appropriate classification in the financial statement.
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 nine months ended
September 30, 1998 and 1997.
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.
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.
(4) Related-Party Transactions -
An affiliate of the Special General Partner, as Dealer
Manager, received $202,238 for managing and overseeing the offering of
the limited partnership units. A one-time management fee of $208,238 was
paid to Swift for services performed for the Partnership.
Effective June 30, 1989, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Managed Pension Assets Partnership 1989-B, 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 will convey 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.
7
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(5) 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.
(6) 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.
(7) 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.
(8) Year 2000 -
The Year 2000 issue results from computer programs and
embedded computer chips with date fields that cannot distinguish between
the year 1900 and 2000. The Managing General Partner is currently
implementing the steps necessary to make its operations and the related
operations of the Partnership Year 2000 compliant. These steps include
upgrading, testing and certifying computer systems and field operation
services and obtaining Year 2000 compliance certification from all
important business suppliers. The Managing General Partner formed a task
force during the year to address the Year 2000 issue to ensure that all
of its business systems are Year 2000 compliant by mid-1999 with mission
critical systems projected to be compliant by the end of 1998.
The Managing General Partner's business systems are almost
entirely comprised of off-the-shelf software. Most of the necessary
changes in computer instructional code can be made by upgrading this
software. The Managing General Partner is currently in the process of
either upgrading the off-the-shelf software or receiving certification
as to Year 2000 compliance from vendors or third party consultants. A
testing phase will be conducted as the software is updated or certified
and is expected to be complete by mid-1999.
The Managing General Partner does not believe that costs
incurred to address the Year 2000 issue with respect to its business
systems will have a material effect on the Partnership's results of
operations, liquidity and financial condition. The estimated total cost
to the Managing General Partner to address Year 2000 issues is projected
to be less than $150,000, most of which will be spent during the testing
phase in the next nine months. The Partnership's share of this cost is
expected to be insignificant.
8
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The failure to correct a material Year 2000 problem could
result in an interruption, or a failure of, certain normal business
activities or operations. Based on activities to date, the Managing
General Partner believes that it will be able to resolve any Year 2000
problems concerning its financial and administrative systems. The
Managing General Partner is uncertain, however, as to the impact that
the Year 2000 issue will have on field operations or as to how the
Managing General Partner or the Partnership will be indirectly affected
by the impact that the Year 2000 issue will have on companies with which
it conducts business. For example, the pipeline operators to whom the
Managing General Partner sells the Partnership's natural gas, as well as
other customers and suppliers, could be prone to Year 2000 problems that
could not be assessed or detected by the Managing General Partner. The
Managing General Partner plans to contact its major purchasers,
customers, suppliers, financial institutions and others with whom it
conducts business to determine whether they will be Year 2000 compliant
and whether they will be able to resolve in a timely manner any Year
2000 problems. Based upon these responses and any problems that arise
during the testing phase, contingency plans or back-up systems would be
determined and addressed.
9
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Partnership was formed for the purpose of investing in producing oil
and gas properties located within the continental United States. In order to
accomplish this, the Partnership goes through two distinct yet overlapping
phases with respect to its liquidity and result of operations. When the
Partnership is formed, it commences its "acquisition" phase, with all funds
placed in short-term investments until required for such property acquisitions.
The interest earned on these pre-acquisition investments becomes the primary
cash flow source for initial partner distributions. As the Partnership acquires
producing properties, net cash from operations becomes available for
distribution, along with the investment income. After partnership funds have
been expended on producing oil and gas properties, the Partnership enters its
"operations" phase. During this phase, oil and gas sales generate substantially
all revenues, and distributions to partners reflect those revenues less all
associated partnership expenses. The Partnership may also derive proceeds from
the sale of acquired oil and gas properties, when the sale of such properties is
economically appropriate or preferable to continued operation.
LIQUIDITY AND CAPITAL RESOURCES
Oil and gas reserves are depleting assets and therefore often experience
significant production declines each year from the date of acquisition through
the end of the life of the property. The primary source of liquidity to the
Partnership comes almost entirely from the income generated from the sale of oil
and gas produced from ownership interests in oil and gas properties. Net cash
provided by operating activities totaled $520,095 and $931,179 for the nine
months ended September 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. 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 $763,664 and $899,009 for the nine months ended September 30, 1998 and
1997, respectively.
The Partnership does not allow for additional assessments from the
partners to fund capital requirements. However, funds in addition to the
remaining unexpended net capital commitments of the partners are available from
partnership revenues, borrowings or proceeds from the sale of partnership
property. The Managing General Partner 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 September 30, 1998 (current quarter) when
compared to the quarter ended September 30, 1997 (corresponding quarter), and
for the nine months ended September 30, 1998 (current period), when compared to
the nine months ended September 30, 1997 (corresponding period).
Three Months Ended September 30, 1998 and 1997
Oil and gas sales declined $188,100 or 50 percent in the third quarter of
1998 when compared to the corresponding quarter in 1997, primarily due to
decreased gas and oil production. Gas production decreased 31 percent and oil
production declined 39 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 and gas prices declined 34 percent or $5.52/BBL and 13
percent or $.30/MCF, respectively, further contributing to decreased revenues.
Corresponding operating expenses declined 22 percent in the third quarter of
1998 when compared to the third quarter of 1997.
Associated depreciation expense decreased 24 percent or $27,961 in 1998
compared to third quarter 1997, also related to the decline in production
volumes.
10
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the third quarter of 1998 for $477,597 when the
present value, discounted at ten percent, of estimated future net revenues from
oil and gas properties, using the guidelines of the Securities and Exchange
Commission, was below the fair market value originally paid for oil and gas
properties. The additional provision results from the Managing General Partner's
determination that the fair market value paid for properties may or may not
coincide with reserve valuations determined according to guidelines of the
Securities and Exchange Commission.
Nine Months Ended September 30, 1998 and 1997
Oil and gas sales declined $508,399 or 42 percent in the first nine months
of 1998 when compared to the corresponding period in 1997, primarily due to
decreased oil and gas prices. A decline in oil prices of 36 percent or $6.32/BBL
and in gas prices of 19 percent or $.48/MCF had a significant impact on
partnership performance. Also, current period oil and gas production declined 26
percent and 15 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.
Corresponding operating expenses for the first nine months of 1998 decreased 24
percent when compared to the same period in 1998.
Associated depreciation expense decreased 14 percent or $48,349 in 1998
compared to the first nine months of 1997, also related to the decline in
production volumes.
The Partnership recorded an additional provision in depreciation,
depletion and amortization in the first nine months of 1998 for $477,597 when
the present value, discounted at ten percent, of estimated future net revenues
from oil and gas properties, using the guidelines of the Securities and Exchange
Commission, was below the fair market value originally paid for oil and gas
properties. The additional provision results from the Managing General Partner's
determination that the fair market value paid for properties may or may not
coincide with reserve valuations determined according to guidelines of the
Securities and Exchange Commission.
During 1998, partnership revenues and costs will be shared between the
limited partners and general partners in a 85:15 ratio.
11
<PAGE>
SWIFT ENERGY INCOME PARTNERS 1989-B, LTD.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
-NONE-
12
<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 1989-B, LTD.
(Registrant)
By: SWIFT ENERGY COMPANY
Managing General Partner
Date: November 4, 1998 By: /s/ John R. Alden
---------------- ----------------------------------------
John R. Alden
Senior Vice President, Secretary
and Principal Financial Officer
Date: November 4, 1998 By: /s/ Alton D. Heckaman, Jr.
---------------- ----------------------------------------
Alton D. Heckaman, Jr.
Vice President, Controller
and Principal Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Swift Energy
Income Partners 1989-B Ltd.'s balance sheet and statement of operations
contained in its Form 10-Q for the quarter ended September 30, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 209,945
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 210,945
<PP&E> 8,663,667
<DEPRECIATION> (6,309,920)
<TOTAL-ASSETS> 2,649,662
<CURRENT-LIABILITIES> 131,076
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,463,556
<TOTAL-LIABILITY-AND-EQUITY> 2,649,662
<SALES> 704,668
<TOTAL-REVENUES> 713,822
<CGS> 0
<TOTAL-COSTS> 1,062,475
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (446,387)
<INCOME-TAX> 0
<INCOME-CONTINUING> (446,387)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (446,387)
<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>
</TABLE>
