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
-------- --------
Commission File Number: 0-23986
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
(Exact name of registrant as specified in its charter)
Texas 76-0400061
(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
----- ----
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
ITEM 1. Financial Statements
Statement of Net Assets in Process of Liquidation
- March 31, 2000 3
Balance Sheet
- December 31, 1999 4
Statements of Operations
- Three month periods ended March 31, 2000 and 1999 5
Statements of Cash Flows
- Three month periods ended March 31, 2000 and 1999 6
Notes to Financial Statements 7
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 OPERATING PARTNERS 1993-B, LTD.
STATEMENT OF NET ASSETS IN PROCESS OF LIQUIDATION
(Unaudited)
<TABLE>
<CAPTION>
March 31,
2000
--------------
ASSETS:
<S> <C>
Cash and cash equivalents $ 83,279
Oil and gas sales receivable 66,414
Gas Imbalance Receivable 24,664
Oil and Gas Properties 4,882,361
-------------
Total Assets 5,156,718
-------------
LIABILITIES:
Accounts Payable 34,114
Gas Imbalance Payable 20,404
-------------
Total Liabilities 54,518
-------------
Net Assets in Process of Liquidation $ 5,102,200
=============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
1999
--------------
ASSETS:
<S> <C>
Current Assets:
Cash and cash equivalents $ 107,842
Oil and gas sales receivable 111,964
--------------
Total Current Assets 219,806
--------------
Gas Imbalance Receivable 24,664
--------------
Oil and Gas Properties, using full cost
accounting 9,319,852
Less-Accumulated depreciation, depletion
and amortization (7,567,892)
--------------
1,751,960
--------------
$ 1,996,430
==============
LIABILITIES AND PARTNERS' CAPITAL:
Current Liabilities:
Accounts Payable $ 44,304
--------------
Deferred Revenues 20,404
Interest Holders' Capital (9,627,683 Interest Holders'
SDI's; $1.00 per SDI) 1,931,669
General Partners' Capital 53
--------------
Total Partners' Capital 1,931,722
--------------
$ 1,996,430
==============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
2000 1999
--------------- ---------------
REVENUES:
<S> <C> <C>
Oil and gas sales $ 228,452 $ 124,876
Interest income 1,003 40
--------------- ---------------
229,455 124,916
--------------- ---------------
COSTS AND EXPENSES:
Lease operating 65,215 58,458
Production taxes 12,066 6,785
Depreciation, depletion
and amortization 35,788 47,784
General and administrative 41,194 39,586
--------------- ---------------
154,263 152,613
--------------- ---------------
Income (Loss) Before Adoption
Of Liquidation Basis Of Accounting $ 75,192 $ (27,697)
--------------- ---------------
Effect Of Adoption Of Liquidation
Basis Of Accounting 3,138,286 --
--------------- ---------------
Income (Loss) $ 3,213,478 $ (27,697)
=============== ===============
Interest Holders' net income (loss)
per SDI
Income (Loss) Before Adoption
of Liquidation Basis of Accounting $ 0.01 $ --
=============== ===============
Effect of Adoption of Liquidation
Basis of Accounting $ 0.28 $ --
=============== ===============
Income (Loss) $ 0.29 $ --
=============== ===============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
2000 1999
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Income (loss) $ 3,213,478 $ (27,697)
Adjustments to reconcile income (loss) to
net cash provided by operations:
Effect of adoption of liquidation basis of accounting (3,138,286) --
Depreciation, depletion and amortization 35,788 47,784
Change in assets and liabilities:
(Increase) decrease in oil and gas sales receivable (54,450) 10,509
Increase (decrease) in accounts payable (10,190) (2,723)
-------------- ---------------
Net cash provided by (used in) operating activities 46,340 27,873
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (27,903) (29,321)
Proceeds from sales of oil and gas properties -- 39,393
-------------- ---------------
Net cash provided by (used in) investing activities (27,903) 10,072
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash Distributions to partners (43,000) (54,038)
-------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (24,563) (16,093)
-------------- ---------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 107,842 17,133
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 83,279 $ 1,040
============== ===============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) General Information -
The interest holders of the Partnership approved the
dissolution of the Partnership on March 16, 2000. As a result, the
Partnership has changed its basis of accounting, effective March 31,
2000, from historical cost basis to the liquidation basis. Under the
liquidation basis of accounting, the Partnership's assets at March 31,
2000 are reported at estimated net realizable value, and the
Partnership's liabilities are presented at estimated settlement amounts.
The net effect of the revaluation of the Partnership's assets and
liabilities due to the adoption of the liquidation basis of accounting
was an upward adjustment of $3,138,286.
Oil and gas properties at March 31, 2000 reflect the Managing
General Partner's estimate of value, in the absence of third party
appraisals or evaluations, based on future net revenues of the
properties, discounted at 10%, as of March 31, 2000. This estimate is
based on its assessment of the impact of selling existing assets based
on current market conditions and estimated disposal costs. The net
proceeds from the sales of oil and gas properties may vary substantially
due to changes in oil and gas prices, subsequent production and other
factors which may be applied by buyers.
For all other assets and liabilities presented on the
liquidation basis of accounting, the Managing General Partner believes
that historical cost approximates fair market value due to the
short-term nature of such assets and liabilities.
The accompanying statements of operations and cash flows were
prepared using the historical cost basis of accounting.
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.
(2) Organization and Terms of Partnership Agreement -
Swift Energy Operating Partners 1993-B, Ltd., a Texas limited
partnership ("the Partnership"), was formed on June 30, 1993, for the
purpose of purchasing and operating producing oil and gas properties
within the continental United States and Canada. 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 sole limited
partner of the Partnership is Swift Depositary Company, which has
assigned all of its beneficial (but not of record) rights and interest
as limited partner to the investors in the Partnership ("Interest
Holders"), in the form of Swift Depositary Interests ("SDIs").
The Managing General Partner has paid or will pay out of its
own corporate funds (as a capital contribution to the Partnership) all
selling commissions, offering expenses, printing, legal and accounting
fees and other formation costs incurred in connection with the offering
of SDIs and the formation of the Partnership, for which the Managing
General Partner will receive an interest in continuing costs and
revenues of the Partnership. The 606 Interest Holders made total capital
contributions of $9,627,683.
Generally, all continuing costs (including development costs,
operating costs, general and administrative reimbursements and direct
expenses) and revenues are allocated 85 percent to the interest holders
and 15 percent to the general partners. After partnership payout, as
defined in the Partnership Agreement, continuing costs and revenues will
be shared 75 percent by the interest holders, and 25 percent by the
general partners.
7
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(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.
Oil and Gas Revenues --
Oil and gas revenues are reported using the entitlement method
in which the Partnership recognizes its interest in oil and natural gas
production as revenue.
Oil and Gas Properties --
The Partnership accounts for its ownership 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 three months ended
March 31, 2000 and 1999.
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.
8
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(4) Related-Party Transactions -
Effective June 30, 1993, the Partnership entered into a Net
Profits and Overriding Royalty Interest Agreement ("NP/OR Agreement")
with Swift Energy Pension Partners 1993-B, Ltd. ("Pension Partnership"),
an affiliated partnership managed by Swift for the purpose of acquiring
interests in producing oil and gas properties. Under the 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 the Pension Partnership's proportionate share of the property
acquisition costs.
(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 ownership's 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.
9
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-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 and Canada. 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 Interest Holder 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 Interest Holders 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.
LIQUIDATION
During the first quarter of 2000, the Managing General Partner informed
the interest holders of a proposal to sell all of the Partnership's interests in
oil and gas properties and dissolve and liquidate the Partnership. The special
meeting of limited partners was held on March 16, 2000.
Of the total SDIs held by the interest holders, a majority voted for
adoption of the proposal for sales of substantially all of the assets of the
Partnership and the dissolution, winding up and termination of the Partnership.
The Partnership adopted the liquidation basis of accounting for the period
subsequent to March 31, 2000.
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 operating activities totaled $46,340 and $27,873 for
the three months ended March 31, 2000 and 1999, respectively. Cash provided by
property sales proceeds totaled $39,393 for the three months ended March 31,
1999. Cash distributions totaled $43,000 and $54,038 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.
After sale of all its interests in oil and gas properties and settlement
of its liabilities, the Partnership's assets will consist solely of cash, which
it will distribute to its partners in complete liquidation. The Partnership will
not realize gain or loss upon such distribution of cash to its partners in
liquidation.
10
<PAGE>
SWIFT ENERGY OPERATING PARTNERS 1993-B, LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
Oil and gas sales increased $103,576 or 83 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
137 percent or $15.47/BBL to an average of $26.80/BBL and gas prices increased
53 percent or $0.98/MCF to an average of $2.82/MCF for the quarter. Current
quarter production volumes decreased 12 percent as oil production increased 16
percent and gas production declined 37 percent when compared to first quarter
1999 production volumes.
Corresponding production costs per equivalent MCF increased 34 percent in
the first quarter of 2000 compared to the first quarter of 1999 and total
production costs increased 18 percent.
Associated depreciation expense decreased 25 percent or $11,996 in 2000
compared to first quarter 1999.
During 2000, partnership revenues and costs will be shared between the
Interest Holders and general partners in an 85:15 ratio.
11
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SWIFT ENERGY OPERATING PARTNERS 1993-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 OPERATING
PARTNERS 1993-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
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Swift Energy Operating Partners 1993-B, Ltd., was in the process of
liquidation as of March 31, 2000 and as such is governed by liquidation basi
accounting. This schedule contains summary financial information extracted from
Swift Energy Operating Partners 1993-B, Ltd's statement of net assets
in process of liquidation 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 statement.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 83,279
<SECURITIES> 0
<RECEIVABLES> 166,414
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 249,693
<PP&E> 4,882,361
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,156,718
<CURRENT-LIABILITIES> 34,114
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 228,452
<TOTAL-REVENUES> 229,455
<CGS> 0
<TOTAL-COSTS> 113,069<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,213,478
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,213,478
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,213,478
<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>
