================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
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: 1-8432
MESA OFFSHORE TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-6004065
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
CORPORATE TRUST DIVISION
712 MAIN STREET
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713) 216-5100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 [ ]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
As of November 10, 1997 -- 71,980,216 Units of Beneficial Interest in Mesa
Offshore Trust.
================================================================================
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MESA OFFSHORE TRUST
STATEMENTS OF DISTRIBUTABLE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- --------------------------
1997 1996 1997 1996
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Royalty income....................... $ 1,756,412 $ -- $ 4,654,552 $ 36,014
Interest income...................... 37,287 16,061 90,700 48,811
General and administrative expense... (220,704) (16,061) (870,770) (84,825)
------------- ----------- ------------- -----------
Distributable income............ $ 1,572,995 $ -- $ 3,874,482 $ --
============= =========== ============= ===========
Distributable income per unit... $ .0219 $ -- $ .0538 $ --
============= =========== ============= ===========
</TABLE>
STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
(UNAUDITED)
ASSETS
Cash and short-term investments...... $ 3,535,707 $ 1,535,247
Interest receivable.................. 37,288 5,090
Net overriding royalty interest in
oil and gas properties............. 380,905,000 380,905,000
Accumulated amortization............. (380,076,111) (379,842,595)
------------- -------------
$ 4,401,884 $ 2,602,742
============= =============
LIABILITIES AND TRUST CORPUS
Reserve for Trust expenses........... $ 2,000,000 $ 1,540,337
Distributions payable................ 1,572,995 --
Trust corpus (71,980,216 units of
beneficial interest
authorized and outstanding)........ 828,889 1,062,405
------------- -------------
$ 4,401,884 $ 2,602,742
============= =============
(The accompanying notes are an integral part of these financial statements.)
1
<PAGE>
MESA OFFSHORE TRUST
STATEMENTS OF CHANGES IN TRUST CORPUS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Trust corpus, beginning of period.... $ 917,002 $ 1,062,405 $ 1,062,405 $ 1,067,160
Distributable income................. 1,572,995 -- 3,874,482 --
Distributions to unitholders......... (1,572,995) -- (3,874,482) --
Amortization of net overriding
royalty interest................... (88,113) -- (233,516) (4,755)
-------------- -------------- -------------- --------------
Trust corpus, end of period.......... $ 828,889 $ 1,062,405 $ 828,889 $ 1,062,405
============== ============== ============== ==============
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
2
<PAGE>
MESA OFFSHORE TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- TRUST ORGANIZATION
The Mesa Offshore Trust ("Trust") was created effective December 1, 1982
when Mesa Petroleum Co., predecessor to Mesa Limited Partnership, which was
predecessor to MESA Inc., transferred a 99.99% interest in the Mesa Offshore
Royalty Partnership ("Partnership") to the Trust. The Partnership was created
to receive and hold a 90% net overriding royalty interest (the "Royalty") in
ten producing and nonproducing oil and gas properties located in federal waters
offshore Louisiana and Texas (the "Royalty Properties"). Until August 7, 1997,
MESA Inc. owned and operated its assets through Mesa Operating Co. ("Mesa"),
the operator and the managing general partner of the Royalty Properties. On
August 7, 1997, MESA Inc. merged with and into Pioneer Natural Resources Company
("Pioneer"), formerly a wholly owned subsidiary of MESA, Inc., and Parker &
Parsley Petroleum Company merged with and into Pioneer Natural Resources USA,
Inc. (successor to Mesa Operating Co.), a wholly owned subsidiary of Pioneer
("PNR") (collectively, the mergers are referred to herein as the "Merger").
Subsequent to the Merger, Pioneer owns and operates its assets through PNR and
is also the managing general partner of the Partnership.
STATUS OF THE TRUST
PNR completed the drilling on Matagorda Island block 624 in 1995 and
drilled five wells from the existing "A" platform on the South Marsh Island
155 block during 1996. As of the February 1997 reporting month, PNR recovered
substantially all remaining costs related to the South Marsh Island drilling
program. In addition, the Trust recovered approximately $.6 million in
administrative expenses paid from the Trust's reserve fund during the period in
which Royalty income was not paid to the Trust, replenishing the Trust's expense
reserve fund balance to $2 million.
The Trust Indenture provides that the Trust will terminate if the total
amount of cash per year received by the Trust falls below certain levels for
each of three successive years. The recovery of costs associated with the
Matagorda Island 624 and South Marsh Island drilling programs caused the cash
received by the Trust in 1996 to fall below the termination threshold prescribed
in the Indenture. However, based on the overall success of the South Marsh
Island drilling program, payments of Royalty income to the Trust have resumed as
of the April 30, 1997 payable date and the cash it has received in 1997 is above
the termination threshold prescribed in the Trust Indenture.
Furthermore, the December 31, 1996, reserve report prepared for the
Partnership (see the Trust's 1996 Annual Report on Form 10-K) indicates that 85%
of future net revenues will be received by the Trust during the next two years.
As such, it is possible, depending on market conditions and the success of
future drilling activities, if any, that as early as 1999 the Trust may commence
a period of three successive years in which annual net royalty income would be
below the termination threshold prescribed in the Indenture, resulting in
termination of the Trust pursuant to the terms discussed above.
NOTE 2 -- BASIS OF PRESENTATION
The accompanying unaudited financial information has been prepared by Texas
Commerce Bank National Association ("Trustee") in accordance with the
instructions to Form 10-Q, and the Trustee believes such information includes
all the disclosures necessary to make the information presented not misleading.
The information furnished reflects all adjustments which are, in the opinion of
the Trustee, necessary for a fair presentation of the results for the interim
periods presented. The financial
3
<PAGE>
MESA OFFSHORE TRUST
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
information should be read in conjunction with the financial statements and
notes thereto included in the Trust's 1996 Annual Report on Form 10-K.
The financial statements of the Trust are prepared on the following basis:
(a) Royalty income recorded for a month is the Trust's interest in
the amount computed and paid by PNR to the Partnership for such month
rather than either the value of a portion of the oil and gas produced by
PNR for such month or the amount subsequently determined to be 90% of the
net proceeds for such month;
(b) Interest income, interest receivable and distributions payable to
unitholders include interest to be earned on short-term investments from
the financial statement date through the next distribution date;
(c) Trust general and administration expenses are recorded in the
month they accrue;
(d) Amortization of the net overriding royalty interest, which is
calculated on the basis of current royalty income in relation to estimated
future royalty income, is charged directly to trust corpus since such
amount does not affect distributable income; and
(e) Distributions payable are determined on a monthly basis and are
payable to unitholders of record as of the last business day of each month.
However, cash distributions are made quarterly in January, April, July and
October, and include interest earned from the monthly record dates to the
date of distribution.
This basis for reporting royalty income is considered to be the most
meaningful because distributions to the unitholders for a month are based on net
cash receipts for such month. However, it will differ from the basis used for
financial statements prepared in accordance with generally accepted accounting
principles in several respects. Under such principles, royalty income for a
month would be based on net proceeds from production for such month without
regard to when calculated or received and interest income would be calculated
only for the periods covered by the financial statements and would exclude
interest from the period end to the date of distribution.
The instruments conveying the Royalty provide that PNR will calculate and
pay the Partnership each month an amount equal to 90% of the net proceeds for
the preceding month. Generally, net proceeds means the excess of the amounts
received by PNR from sales of oil and gas from the Royalty Properties plus other
cash receipts over operating and capital costs incurred.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this Form 10-Q, including without
limitation the statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 1 to the financial
statements of the Trust regarding the future net revenues of the Trust, are
forward-looking statements. Although Pioneer has advised the Trust that it
believes that the expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from expectations ("Cautionary Statements") are disclosed in this
Form 10-Q, including, without limitation in conjunction with the forward-looking
statements included in this Form 10-Q. All subsequent written and oral
forward-looking statements attributable to the Trust or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
FINANCIAL REVIEW
During the third quarter of 1997, the Trust had distributable income of
$1,572,995, representing $.0219 per unit, as compared to no distributable income
in the third quarter of 1996. The resumption of distributions is due to the
recovery as of the February 1997 reporting month of substantially all remaining
costs related to the drilling on South Marsh Island and Matagorda Island
discussed below. The per unit amounts of distributable income for the third
quarter of 1997 and 1996 were earned by month as follows:
1997 1996
--------- ---------
July................................. $ .0074 $ --
August............................... .0080 --
September............................ .0065 --
--------- ---------
$ .0219 $ --
========= =========
Royalty income increased to $1,756,412 in the third quarter of 1997 as
compared to Royalty income for the third quarter of 1996. The increase in
Royalty income is primarily due to the recovery of drilling costs by PNR on the
South Marsh Island blocks 155 and 156.
Production volumes for natural gas decreased to 798,555 Mcf in the third
quarter of 1997 from 1,597,370 Mcf in the third quarter of 1996 generally due to
natural production declines in wells producing from South Marsh Island blocks
155 and 156, Brazos block A-7 and West Delta blocks 61 and 62. The average price
received for natural gas was $2.12 per Mcf in the third quarter of 1997 compared
to $2.37 per Mcf in the third quarter of 1996.
Crude oil, condensate and natural gas liquids production decreased to
40,870 barrels in the third quarter of 1997 from 67,201 barrels in the third
quarter of 1996. The average price received for crude oil, condensate and
natural gas liquids was $14.05 per barrel in the third quarter of 1997 compared
to $15.22 per barrel in the third quarter of 1996.
The decrease in natural gas and crude oil, condensate and natural gas
liquids production in the third quarter of 1997 when compared to the third
quarter of 1996 is primarily attributable to natural
5
<PAGE>
production declines in wells as described above as a result of pressure
depletion and water encroachment.
For the nine months ended September 30, 1997, natural gas production
volumes increased to 3,491,449 Mcf from 3,087,645 Mcf for the nine months ended
September 30, 1996. Crude oil, condensate and natural gas liquids production
volumes increased to 147,274 barrels in the first nine months of 1997 as
compared to 110,107 barrels in the first nine months of 1996. The increase in
natural gas production and crude oil, condensate and natural gas liquids
production was primarily due to new production on South Marsh Island.
OPERATIONAL REVIEW
PNR has advised the Trust that during the third quarter of 1997 its
offshore gas production was marketed under short-term contracts at spot market
prices to multiple purchasers, including Penn Union Energy, Pacific Gas &
Electric Co. and Conoco, and that it expects to continue to market its
production under short-term contracts for the foreseeable future. Spot market
prices for natural gas in the third quarter of 1997 were generally lower than
spot market prices in the third quarter of 1996.
The amount of cash distributed by the Trust is dependent on, among other
things, the sales prices and quantities of gas, crude oil, condensate and
natural gas liquids produced from the Royalty Properties and the quantities
sold. Substantial uncertainties exist with regard to future gas and oil prices,
which are subject to fluctuations due to the regional supply and demand for
natural gas and oil, production levels and other activities of OPEC and other
oil and gas producers, weather, storage levels, industrial growth, conservation
measures, competition and other variables.
The Brazos A-39 block has experienced an increase in natural gas production
in the third quarter of 1997 as compared to the third quarter of 1996 primarily
due to the resumption of production from block A-39, well A-3. Well A-3 resumed
operation in September 1996 and is producing approximately 2.5 MMcf of gas per
day as of October 1997. PNR is considering purchasing 3-D seismic to evaluate
future drilling potential on Brazos A-39 block. The Brazos A-7 well has
experienced a decline in production due to natural production decline. PNR has
farmed out a portion of the Brazos A-7 well to another operator and has
participated at a 10% working interest in the completion of an exploratory gas
well that was drilled in the second quarter of 1997. The No. 5 well encountered
gas pay and is temporarily abandoned. A completion proposal was received in the
third quarter of 1997. The completion cost estimate of the No. 5 well is
approximately $6 million ($540,000 net to the Trust, of which $700,000, ($63,000
net to the Trust) has been expended to date). Production from this well is
expected to begin mid-year 1998.
The South Marsh Island 155 and 156 blocks experienced a decrease in
condensate and natural gas production in the third quarter of 1997 as compared
to 1996, primarily due to reductions in production from the A-20, A-22 and A-14
sidetrack wells and loss of production from the A-21 and A-6 sidetrack wells
which were drilled in the first three quarters of 1996. The initial gross
producing rate of these five wells was approximately 40 MMcf of gas and 1,000
barrels of condensate per day which rate has subsequently declined to
approximately 5.3 MMcf of gas and 22.0 barrels of condensate per day as of
October 1997. The decrease in production is primarily due to natural production
decline. A recompleton of the A-6 sidetrack well in the second quarter of 1997
was performed at a cost of approximately $30,000 ($19,000 net to the Trust). The
initial production after recompletion was 10 MMcf of gas per day but as of
October 1997, the well has loaded up with water and has ceased to produce. PNR
has purchased 3-D seismic for approximately $300,000 gross ($189,000 net to the
Trust) and is evaluating future drilling potential on the South March Island 156
block.
6
<PAGE>
The West Delta 61 and 62 blocks experienced a decrease in natural gas
production in the third quarter of 1997 as compared to the third quarter of 1996
primarily due to natural production decline. In portions of West Delta Block 62,
the Trust is receiving royalty income from this property pursuant to a farmout
agreement with another operator. The interest in the farmout wells which is
attributable to the Trust consists of a 7.5% net profits interest. PNR is
currently evaluating additional drilling opportunities for this property in
areas not subject to the farmout agreement.
Matagorda Island 624 oil and natural gas production increased in the third
quarter of 1997 as compared to the third quarter of 1996, primarily due to
improved performance in the A-1 well. The A-8 development well, which was
drilled in the fourth quarter of 1995, is currently shut in due to mechanical
problems. A tubing replacement is planned for the fourth quarter of 1997 at an
estimated cost of $376,000 ($110,000 net to the Trust). Gross producing rate of
the block was approximately 4 MMcf of gas and 90 barrels of condensate per day
as of October 1997.
TERMINATION OF THE TRUST
The terms of the Mesa Offshore Trust Indenture provide that the Trust will
terminate upon the first to occur of the following events: (1) the total amount
of cash received per year by the Trust for each of three successive years
commencing after December 31, 1987 is less than 10 times one-third of the total
amount payable to the Trustee as compensation for such three year period or (2)
a vote by the unitholders in favor of termination. Because the Trust will
terminate in the event the total amount of cash received per year by the Trust
falls below certain levels, it would be possible for the Trust to terminate even
though some of the Royalty Properties continued to have remaining productive
lives. For information regarding the estimated remaining life of each of the
Royalty Properties and the estimated future net revenues of the Trust based on
information provided by PNR, see the Trust's 1996 Annual Report on Form 10-K.
Upon termination of the Trust, the Trustee will sell for cash all the assets
held in the Trust estate and make a final distribution to unitholders of any
funds remaining after all Trust liabilities have been satisfied. The discussion
set forth above is qualified in its entirety by reference to the Trust Indenture
itself, which is available upon request from the Trustee.
Amounts paid to the Trustee as compensation were $123,000, $149,000 and
$177,500 for the years 1996, 1995 and 1994, respectively. Royalty income of
$4,654,552 as of September 30, 1997 was above the termination threshold
prescribed in the Indenture.
The terms of the First Amended and Restated Articles of General Partnership
of the Partnership provide that the Partnership shall dissolve upon the
occurrence of any of the following: (a) December 31, 2030; (b) the election of
the Trustee to dissolve the Partnership; (c) the termination of the Trust; (d)
the bankruptcy of the Managing General Partner; or (e) the dissolution of the
Managing General Partner or its election to dissolve the Partnership; provided
that the Managing General Partner shall not elect to dissolve the Partnership so
long as the Trustee remains the only other partner of the Partnership. In the
event of a dissolution of the Partnership and a subsequent winding up and
termination thereof, the assets of the Partnership (i.e., the Royalty interest)
could either (i) be distributed in kind ratably to the Managing General Partner
and the Trustee or (ii) be sold and the proceeds thereof distributed ratably to
the Managing General Partner and the Trustee. In the event of a sale of the
Royalty and a distribution of the cash proceeds to the Trustee, the Trustee
would make a final distribution to unitholders of such cash proceeds plus any
other cash held by the Trust after the payment of or provision for all
liabilities of the Trust, and the Trust would be terminated. The discussion set
forth above is qualified in its entirety by reference to the Partnership
Agreement itself, which is available upon request from the Trustee.
7
<PAGE>
On August 7, 1997, MESA Inc. and Parker & Parsley Petroleum Company merged
to create Pioneer Natural Resources Company, one of the largest independent oil
and gas exploration and production company in the United States. Pioneer has
advised the Trust that this merger should have no significant effects on the
Trust, although the precise nature of any effects cannot be predicted or
quantified at this time.
The following tables provide summaries of the calculations of the net
proceeds attributable to the Partnership's royalty interests (unaudited):
<TABLE>
<CAPTION>
SOUTH
BRAZOS MARSH WEST MATAGORDA
A-7 AND ISLAND 155 DELTA 61 ISLAND
A-39 AND 156 AND 62 624 TOTAL
--------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED
SEPTEMBER 30, 1997:
Ninety percent of gross
proceeds....................... $ 340,092 $1,231,930 $ 467,587 $229,683 $2,269,292
Less ninety percent of --
Operating expenditures......... (104,913) (271,174) (204,273) (52,818) (633,178)
Capital costs recovered........ -- 174,948 (26,909) -- 148,039
Accrual for future abandonment
costs........................ (20,608) 3,610 (10,426) (141) (27,565)
--------- ---------- --------- -------- ---------
Net proceeds (excess costs)...... $ 214,571 $1,139,314 $ 225,979 $176,724 $1,756,588
========= ========== ========= ======== =========
Trust share of net proceeds
(99.99%)....................... $1,756,412
==========
Production Volumes and Average
Prices:
Crude oil, condensate and natural
gas liquids (Bbls)............. 313 29,433 9,038 2,086 40,870
========= ========== ========= ========= =========
Average sales price per Bbl...... $ 16.88 $ 12.48 $ 18.11 $ 18.17 $ 14.05
========= ========== ========= ========= =========
Natural gas (Mcf)................ 159,498 405,857 137,420 95,780 798,555
========= ========== ========= ========= =========
Average sales price per Mcf...... $ 2.10 $ 2.13 $ 2.21 $ 2.00 $ 2.12
========= ========== ========= ========= =========
Producing wells.................. 3 4 3 2 12
SOUTH
BRAZOS MARSH WEST MATAGORDA
A-7 AND ISLAND 155 DELTA 61 ISLAND
A-39 AND 156 AND 62 624 TOTAL
--------- ---------- --------- --------- ----------
THREE MONTHS ENDED
SEPTEMBER 30, 1996:
Ninety percent of gross
proceeds....................... $ 191,253 $3,574,332 $ 805,836 $237,722 $4,809,143
Less ninety percent of --
Operating expenditures......... (149,524) (223,962) (217,468) (99,855) (690,809)
Capital costs recovered........ -- (3,934,901) -- (4,523) (3,939,424)
Accrual for future abandonment
costs........................ (19,571) (76,369) (76,535) (6,435) (178,910)
--------- ---------- --------- --------- ----------
Net proceeds (excess costs)...... $ 22,158 $ (660,900) $ 511,833 $126,909 $ --
========= ========== ========= ========= ==========
Trust share of net proceeds
(99.99%)....................... $ --
==========
Production Volumes and Average
Prices:
Crude oil, condensate and natural
gas liquids (Bbls)............. 235 63,776 1,353 1,837 67,201
========= ========== ========= ========= ==========
Average sales price per Bbl...... $ 18.44 $ 15.02 $ 17.85 $ 19.71 $ 15.22
========= ========== ========= ========= ==========
Natural gas (Mcf)................ 79,405 1,112,049 320,443 85,473 1,597,370
========= ========== ========= ========= ==========
Average sales price per Mcf...... $ 2.35 $ 2.35 $ 2.44 $ 2.36 $ 2.37
========= ========== ========= ========= ==========
Producing wells.................. 3 4 2 3 12
</TABLE>
- ------------
o The amounts shown are for Mesa Offshore Royalty Partnership.
o The amounts for the three months ended September 30, 1997 and 1996 represent
actual production for the periods May 1997 through July 1997 and May 1996
through July 1996, respectively.
o Capital costs recovered represent capital costs incurred during the current
or prior periods to the extent that such costs have been recovered by PNR
from current period Gross Proceeds.
o Producing wells indicates the number of wells capable of production as of
the end of the period.
o The cost carryforward of $2,457,504 at September 30, 1996 was primarily
related to the drilling on South Marsh Island 155/156.
8
<PAGE>
<TABLE>
<CAPTION>
SOUTH
BRAZOS MARSH WEST MATAGORDA
A-7 AND ISLAND 155 DELTA 61 ISLAND
A-39 AND 156 AND 62 624 TOTAL
--------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED
SEPTEMBER 30, 1997:
Ninety percent of gross
proceeds....................... $1,382,672 $7,953,873 $1,450,559 $1,011,701 $11,798,805
Less ninety percent of --
Operating expenditures......... (313,451) (1,002,961) (615,845) (190,447) (2,122,704)
Capital costs recovered........ -- (4,773,208) (60,806) (4,564) (4,838,578)
Accrual for future abandonment
costs........................ (105,724) (15,128) (52,939) (8,714) (182,505)
--------- ---------- --------- --------- ----------
Net proceeds (excess costs)...... $ 963,497 $2,162,576 $ 720,969 $807,976 $4,655,018
========= ========== ========= ========= ==========
Trust share of net proceeds
(99.99%)....................... $4,654,552
==========
Production Volumes and Average
Prices:
Crude oil, condensate and natural
gas liquids (Bbls)............. 864 127,523 11,542 7,345 147,274
========= ========== ========= ========= ==========
Average sales price per Bbl...... $ 18.80 $ 16.66 $ 18.30 $ 20.08 $ 16.97
========= ========== ========= ========= ==========
Natural gas (Mcf)................ 542,701 2,141,543 475,597 331,608 3,491,449
========= ========== ========= ========= ==========
Average sales price per Mcf...... $ 2.52 $ 2.72 $ 2.61 $ 2.61 $ 2.66
========= ========== ========= ========= ==========
Producing wells.................. 3 4 3 2 12
SOUTH
BRAZOS MARSH WEST MATAGORDA
A-7 AND ISLAND 155 DELTA 61 ISLAND
A-39 AND 156 AND 62 624 TOTAL
--------- ---------- --------- --------- ----------
NINE MONTHS ENDED
SEPTEMBER 30, 1996:
Ninety percent of gross
proceeds....................... $ 712,082 $5,169,109 $2,539,673 $673,422 $9,094,286
Less ninety percent of --
Operating expenditures......... (447,773) (609,294) (549,720) (288,164) (1,894,951)
Capital costs recovered........ -- (6,514,882) -- (319,284) (6,834,166)
Accrual for future abandonment
costs........................ (57,858) (68,982) (193,546) (8,765) (329,151)
--------- ---------- --------- -------- ----------
Net proceeds (excess costs)...... $ 206,451 $(2,024,049) $1,796,407 $ 57,209 $ 36,018
========= ========== ========= ======== ==========
Trust share of net proceeds
(99.99%)....................... $ 36,014
==========
Production Volumes and Average
Prices:
Crude oil, condensate and natural
gas liquids (Bbls)............. 253 100,254 4,689 4,911 110,107
========= ========== ========= ========= ==========
Average sales price per Bbl...... $ -- $ 15.06 $ 16.49 $ 19.48 $ 15.01
========= ========== ========= ========= ==========
Natural gas (Mcf)................ 356,357 1,490,621 967,269 273,398 3,087,645
========= ========== ========= ========= ==========
Average sales price per Mcf...... $ 2.08 $ 2.45 $ 2.55 $ 2.11 $ 2.41
========= ========== ========= ========= ==========
Producing wells.................. 3 4 2 3 12
</TABLE>
- ------------
o The amounts shown are for Mesa Offshore Royalty Partnership.
o The amounts for the nine months ended September 30, 1997 and 1996 represent
actual production for the periods November 1996 through July 1997 and
November 1995 through July 1996, respectively.
o Capital costs recovered represent capital costs incurred during the current
or prior periods to the extent that such costs have been recovered by PNR
from current period Gross Proceeds.
o Producing wells indicates the number of wells capable of production as of
the end of the period.
o Crude oil, condensate and natural gas liquids production and prices for the
nine months ended September 30, 1996 are distorted due to prior period
accounting adjustments on Brazos A-7 and A-39.
o The cost carryforward of $2,457,504 at September 30, 1996 was primarily
related to the drilling on South Marsh Island 155/156.
9
<PAGE>
PART II
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(A) EXHIBITS
(Asterisk indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference.)
<TABLE>
<CAPTION>
SEC FILE
OR
REGISTRATION EXHIBIT
NUMBER NUMBER
------------ -------
<C> <S> <C> <C>
4(a) *Mesa Offshore Trust Indenture between Mesa Petroleum Co. and Texas
Commerce Bank National Association, as Trustee, dated December 15,
1982.................................................................... 2-79673 10(gg)
4(b) *Overriding Royalty Conveyance between Mesa Petroleum Co. and Mesa
Offshore Royalty Partnership, dated December 15, 1982................... 2-79673 10(hh)
4(c) *Partnership Agreement between Mesa Offshore Management Co. and Texas
Commerce Bank National Association, as Trustee, dated December 15,
1982.................................................................... 2-79673 10(ii)
4(d) *Amendment to Partnership Agreement between Mesa Offshore Management Co.,
Texas Commerce Bank National Association, as Trustee, and Mesa Operating
Limited Partnership, dated December 27, 1985 (Exhibit 4(d) to Form 10-K
for year ended December 31, 1992 of Mesa Offshore Trust)................ 1-8432 4(d)
4(e) *Amendment to Partnership Agreement between Texas Commerce Bank National
Association, as Trustee and Mesa Operating Limited Partnership dated as
of January 5, 1994 (Exhibit 4(e) to Form 10-K for year ended December
31, 1993 of Mesa Offshore Trust)........................................ 1-8432 4(e)
27 Financial Data Schedule
</TABLE>
(B) REPORTS ON FORM 8-K
None.
10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS 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.
MESA OFFSHORE TRUST
TEXAS COMMERCE BANK
By: NATIONAL ASSOCIATION
TRUSTEE
By: /s/ PETE FOSTER
PETE FOSTER
SENIOR VICE PRESIDENT & TRUST
OFFICER
Date: November 13, 1997
The Registrant, Mesa Offshore Trust, has no principal executive officer,
principal financial officer, board of directors or persons performing similar
functions. Accordingly, no additional signatures are available and none have
been provided.
11
<PAGE>
(Asterisk indicates exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference.)
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEC FILE
OR
REGISTRATION EXHIBIT
EXHIBIT NO. DESCRIPTION NUMBER NUMBER
----------- ----------- ------------ -------
<C> <S> <C> <C>
4(a) *Mesa Offshore Trust Indenture between Mesa Petroleum Co. and Texas
Commerce Bank National Association, as Trustee, dated December 15,
1982.................................................................... 2-79673 10(gg)
4(b) *Overriding Royalty Conveyance between Mesa Petroleum Co. and Mesa
Offshore Royalty Partnership, dated December 15, 1982................... 2-79673 10(hh)
4(c) *Partnership Agreement between Mesa Offshore Management Co. and Texas
Commerce Bank National Association, as Trustee, dated December 15,
1982.................................................................... 2-79673 10(ii)
4(d) *Amendment to Partnership Agreement between Mesa Offshore Management Co.,
Texas Commerce Bank National Association, as Trustee, and Mesa Operating
Limited Partnership, dated December 27, 1985 (Exhibit 4(d) to Form 10-K
for year ended December 31, 1992 of Mesa Offshore Trust)................ 1-8432 4(d)
4(e) *Amendment to Partnership Agreement between Texas Commerce Bank National
Association, as Trustee and Mesa Operating Limited Partnership dated as
of January 5, 1994 (Exhibit 4(e) to Form 10-K for year ended December
31, 1993 of Mesa Offshore Trust)........................................ 1-8432 4(e)
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MESA
OFFSHORE TRUST 1997 THIRD QUARTER REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH 1997 THIRD QUARTER REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 3,535,707
<SECURITIES> 0
<RECEIVABLES> 37,287
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,572,995
<PP&E> 380,905,000
<DEPRECIATION> 380,076,111
<TOTAL-ASSETS> 4,401,884
<CURRENT-LIABILITIES> 1,572,995
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,828,889
<TOTAL-LIABILITY-AND-EQUITY> 4,401,884
<SALES> 4,654,552
<TOTAL-REVENUES> 4,745,252
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 870,770
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,874,482
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,874,482
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,874,482
<EPS-PRIMARY> .054
<EPS-DILUTED> .054
</TABLE>
