UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
Commission File No. 2-75530A
PARKER & PARSLEY 82-I, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-1825545
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
303 West Wall, Suite 101, Midland, Texas 79701
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (915) 683-4768
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited partnership interests ($2,000 per unit)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / x /
No market currently exists for the limited partnership interests of the
Registrant. Based on original purchase price the aggregate market value of
limited partnership interests owned by non-affiliates of the Registrant is
$8,593,500.
As of March 8, 1999, the number of outstanding limited partnership interests was
4,891. The following documents are incorporated by reference into the indicated
parts of this Annual Report on Form 10-K: None
<PAGE>
Parts I and II of this Report contain forward looking statements that involve
risks and uncertainties. Accordingly, no assurances can be given that the
actual events and results will not be materially different than the
anticipated results described in the forward looking statements. See "Item 1.
Business" for a description of various factors that could materially affect
the ability of the Partnership to achieve the anticipated results described in
the forward looking statements.
PART I
ITEM 1. Business
Parker & Parsley 82-I, Ltd. (the "Partnership") is a limited partnership
organized in 1982 under the laws of the State of Texas. On August 8, 1997,
Pioneer Natural Resources USA, Inc. ("Pioneer USA") became the managing
general partner of the Partnership, joining the existing general partner, P&P
Employees 82-I, Ltd. ("EMPL"), a Texas limited partnership whose general
partner is Pioneer USA, and 4,891 limited partnership interests as of March 8,
1999. Prior to August 8, 1997, the Partnership's managing general partner and
the general partner of EMPL was Parker & Parsley Development L.P. ("PPDLP"), a
wholly-owned subsidiary of Parker & Parsley Petroleum Company ("Parker &
Parsley"). On August 7, 1997, Parker & Parsley and Mesa Inc. ("Mesa") received
shareholder approval to merge and create Pioneer Natural Resources Company
("Pioneer"). On August 8, 1997, PPDLP was merged with and into Pioneer USA, a
wholly-owned subsidiary of Pioneer, resulting in Pioneer USA becoming the
managing general partner of the Partnership and the general partner of EMPL as
PPDLP's successor by merger. For a more complete description of the Parker &
Parsley and Mesa merger, see Pioneer's Registration Statement on Form S-4 as
filed with the Securities and Exchange Commission.
A Registration Statement, as amended, filed pursuant to the Securities Act of
1933, registering limited partnership interests aggregating $33,000,000 in a
series of Texas limited partnerships formed under the Parker & Parsley 82
Drilling Program, was declared effective by the Securities and Exchange
Commission on February 4, 1982. On June 1, 1982, the offering of limited
partnership interests in the Partnership, the first partnership formed under
such registration statement, was closed, with interests aggregating $9,782,000
being sold to 624 subscribers.
The Partnership engages primarily in oil and gas exploration, development and
production and is not involved in any industry segment other than oil and gas.
See "Item 6. Selected Financial Data" and "Item 8. Financial Statements and
Supplementary Data" of this report for a summary of the Partnership's revenue,
income and identifiable assets.
The principal markets during 1998 for the oil produced by the Partnership were
refineries and oil transmission companies that have facilities near the
Partnership's oil producing properties. The principal markets for the
Partnership's gas were companies that have pipelines located near the
Partnership's gas producing properties. Of the Partnership's total oil and gas
revenues for 1998, approximately 65%, 13% and 10%were attributable to sales
made to Genesis Crude Oil, L.P., GPM Gas Corporation and Western Gas
Resources, Inc., respectively.
2
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The Partnership's revenues, profitability, cash flow and future rate of growth
are highly dependent on the prevailing prices of oil and gas, which are
affected by numerous factors beyond the Partnership's control. Oil and gas
prices historically have been very volatile. A substantial or extended decline
in the prices of oil or gas could have a material adverse effect on the
Partnership's revenues, profitability and cash flow and could, under certain
circumstances, result in a reduction in the carrying value of the
Partnership's oil and gas properties.
Because of the demand for oil and gas, the Partnership does not believe that
the termination of the sales of its products to any one customer would have a
material adverse impact on its operations. The loss of a particular customer
for gas may have an effect if that particular customer has the only gas
pipeline located in the areas of the Partnership's gas producing properties.
The Partnership believes, however, that the effect would be temporary, until
alternative arrangements could be made.
Federal and state regulation of oil and gas operations generally includes the
fixing of maximum prices for regulated categories of natural gas, the
imposition of maximum allowable production rates, the taxation of income and
other items, and the protection of the environment. Although the Partnership
believes that its business operations do not impair environmental quality and
that its costs of complying with any applicable environmental regulations are
not currently significant, the Partnership cannot predict what, if any, effect
these environmental regulations may have on its current or future operations.
The Partnership does not have any employees of its own. Pioneer USA employs
818 persons, many of whom dedicated a part of their time to the conduct of the
Partnership's business during the period for which this report is filed.
Pioneer USA supplies all management functions.
Numerous uncertainties exist in estimating quantities of proved reserves and
future net revenues therefrom. The estimates of proved reserves and related
future net revenues set forth in this report are based on various assumptions,
which may ultimately prove to be inaccurate. Therefore, such estimates should
not be construed as estimates of the current market value of the Partnership's
proved reserves.
No material part of the Partnership's business is seasonal and the Partnership
conducts no foreign operations.
ITEM 2. Properties
The Partnership's properties consist primarily of leasehold interests in
properties on which oil and gas wells are located. Such property interests are
often subject to landowner royalties, overriding royalties and other oil and
gas leasehold interests.
Fractional working interests in developmental and exploratory oil and gas
prospects located in Texas and New Mexico were acquired by the Partnership,
3
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resulting in the Partnership's participation in the drilling of 34 oil and gas
wells. There were six dry holes from previous periods, two wells plugged and
abandoned and nine wells sold. At December 31, 1998, 17 wells were producing.
For information relating to the Partnership's estimated proved oil and gas
reserves at December 31, 1998, 1997 and 1996 and changes in such quantities
for the years then ended, see Note 7 of Notes to Financial Statements included
in "Item 8. Financial Statements and Supplementary Data" below. Such reserves
have been estimated by the engineering staff of Pioneer USA with a review by
Williamson Petroleum Consultants, Inc., an independent petroleum consultant.
ITEM 3. Legal Proceedings
The Partnership from time to time is a party to various legal proceedings
incidental to its business involving claims in oil and gas leases or
interests, other claims for damages in amounts not in excess of 10% of its
current assets and other matters, none of which Pioneer believes to be
material to the Partnership.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of 1998.
4
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PART II
ITEM 5. Market for Partnership's Common Equity and Related Stockholder
Matters
At March 8, 1999, the Partnership had 4,891 outstanding limited partnership
interests held of record by 612 subscribers. There is no established public
trading market for the limited partnership interests. Under the limited
partnership agreement, Pioneer USA has made certain commitments to purchase
partnership interests at a computed value.
Revenues which, in the sole judgement of the managing general partner, are not
required to meet the Partnership's obligations are distributed to the partners
at least quarterly in accordance with the limited partnership agreement.
During the years ended December 31, 1998 and 1997, distributions of $95,712
and $231,378, respectively, were made to the limited partners.
ITEM 6. Selected Financial Data
The following table sets forth selected financial data for the years ended
December 31:
<TABLE>
1998 1997 1996 1995 1994
--------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating results:
Oil and gas sales $ 392,883 $ 608,207 $ 710,173 $ 613,929 $ 636,470
======== ========= ========= ========= =========
Litigation settlement, net $ - $ - $ 43,618 $ - $ -
======== ========= ========= ========= =========
Impairment of oil and
gas properties $ 294,610 $ 165,201 $ 2,277 $ 20,719 $ -
======== ========= ========= ========= =========
Net income (loss) $(563,993) $ (60,847) $ 312,582 $ 34,081 $ 102,033
======== ========= ========= ========= =========
Allocation of net
income (loss):
General partners $ (49,472) $ 31,736 $ 92,811 $ 35,122 $ 45,462
======== ========= ========= ========= =========
Limited partners $(514,521) $ (92,583) $ 219,771 $ (1,041) $ 56,571
======== ========= ========= ========= =========
Limited partners' net in-
come (loss) per limited
partnership interest $ (105.20) $ (18.93) $ 44.93 $ (.21) $ 11.57
======== ========= ========= ========= =========
Limited partners' cash
distributions per
limited partnership
interest $ 19.57 $ 47.31 $ 51.40(a) $ 40.96 $ 31.92
======== ========= ========= ========= =========
At year end:
Total assets $ 474,528 $1,158,135 $1,526,765 $1,585,711 $1,786,274
======== ========= ========= ========= =========
</TABLE>
- ---------------
(a) Including litigation settlement per limited partnership interest of $6.96
in 1996.
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ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of operations
1998 compared to 1997
The Partnership's 1998 oil and gas revenues decreased 35% to $392,883 from
$608,207 in 1997. The decrease in revenues resulted from lower average prices
received. In 1998, 19,150 barrels of oil, 6,748 barrels of natural gas liquids
("NGLs") and 48,971 mcf of gas were sold, or 34,060 barrel of oil equivalents
("BOEs"). In 1997, 20,742 barrels of oil, 2,902 barrels of NGLs and 66,728 mcf
of gas were sold, or 34,765 BOEs. Due to the decline characteristics of the
Partnership's oil and gas properties, management expects a certain amount of
decline in production in the future until the Partnership's economically
recoverable reserves are fully depleted.
Consistent with the managing general partner, the Partnership has historically
accounted for processed natural gas production as wellhead production on a wet
gas basis. Effective September 30, 1997, as a result of the merger with Mesa,
the managing general accounts for processed natural gas production in two
components: natural gas liquids and dry residue gas. As a result of the change
in the managing general partner's policy, the Partnership now accounts for
processed natural gas production as processed natural gas liquids and dry
residue gas. Consequently, separate product volumes will not be comparable for
periods prior to September 30, 1997. Also, prices for gas products will not be
comparable as the price per mcf for natural gas for the year ended December
31, 1998 is the price received for dry residue gas and the price per mcf for
natural gas produced prior to October 1997 was presented as a price for wet
gas (i.e., natural gas liquids combined with dry residue gas).
The average price received per barrel of oil decreased $6.36, or 32%, from
$19.68 in 1997 to $13.32 in 1998. The average price received per barrel of
NGLs decreased $5.14, or 42%, from $12.34 in 1997 to $7.20 in 1998. The
average price received per mcf of gas decreased 26% from $2.46 in 1997 to
$1.82 in 1998. The market price for oil and gas has been extremely volatile in
the past decade, and management expects a certain amount of volatility to
continue in the foreseeable future. The Partnership may therefore sell its
future oil and gas production at average prices lower or higher than that
received in 1998.
A gain on disposition of assets of $199 was recognized during 1998 from post
closing adjustments received from the sale of eight oil and gas wells during
1997. A gain on disposition of assets of $3,621 recognized during 1997 was
comprised of $3,174 in equipment credits received on two fully depleted wells
and a $447 gain from the sale of eight oil and gas wells.
Total costs and expenses increased in 1998 to $961,319 as compared to $678,703
in 1997, an increase of $282,616, or 42%. The increase was primarily due to
increases in depletion and the impairment of oil and gas properties, offset by
declines in general and administrative expenses ("G&A") and production costs.
6
<PAGE>
Production costs were $336,406 in 1998 and $339,942 in 1997, resulting in a
$3,536 decrease. The decrease was due to a decline in production taxes and
lease operating expenses due to the sale of eight oil and gas wells during the
fourth quarter of 1997, offset by an increase in well maintenance costs
incurred in an effort to stimulate well production.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 35% from $22,386 in 1997 to $14,542 in 1998. The
Partnership paid the managing general partner $11,786 in 1998 and $18,246 in
1997 for G&A incurred on behalf of the Partnership. G&A is allocated, in part,
to the Partnership by the managing general partner. Such allocated expenses
are determined by the managing general partner based upon its judgement of the
level of activity of the Partnership relative to the managing general
partner's activities and other entities it manages. The method of allocation
has been consistent over the past several years with certain modifications
incorporated to reflect changes in Pioneer USA's overall business activities.
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" ("SFAS 121"), the managing general partner reviews the
Partnership's oil and gas properties for impairment whenever events or
circumstances indicate a decline in the recoverability of the carrying value
of the Partnership's assets may have occurred. Declining commodity prices
prompted impairment reviews in 1998 and 1997. As a result of the review and
evaluation of its long-lived assets for impairment, the Partnership recognized
non-cash charges of $294,610 and $165,201 related to its oil and gas
properties during 1998 and 1997, respectively.
Depletion was $315,761 in 1998 compared to $151,174 in 1997, representing an
increase of $164,587. This increase was the result of a combination of factors
that included a decline in proved reserves during 1998 due to the lower
commodity prices, offset by a reduction in the Partnership's net depletable
basis from charges taken in accordance with SFAS 121 during the fourth quarter
of 1997 and a reduction in oil production of 1,592 barrels for the period
ended December 31, 1998 compared to the same period in 1997.
1997 compared to 1996
The Partnership's 1997 oil and gas revenues decreased 14% to $608,207 from
$710,173 in 1996. The decrease in revenues resulted from declines in
production and lower average prices received. In 1997, 20,742 barrels of oil,
2,902 barrels of NGLs and 66,728 mcf of gas were sold, or 34,765 BOEs. In
1996, 22,544 barrels of oil and 85,404 mcf of gas were sold, or 36,778 BOEs.
Consistent with the managing general partner, the Partnership has historically
accounted for processed natural gas production as wellhead production on a wet
gas basis. As is described above in "Results of Operations - 1998 compared to
1997", the Partnership changed its method of accounting for processed natural
gas to a dry gas basis in the fourth quarter of 1997. As a result of this
change, the Partnership now accounts for processed natural gas production as
processed natural gas liquids and dry residue gas. Consequently, 1997 and 1996
separate product volumes are not comparable.
7
<PAGE>
The decreases in production volumes were primarily due to the normal decline
characteristics of the Partnership's oil and gas properties.
The average price received per barrel of oil decreased $2.27, or 10%, from
$21.95 in 1996 to $19.68 in 1997. The average price received per barrel of
NGLs during 1997 was $12.34. The average price received per mcf of gas
decreased from $2.52 in 1996 to $2.46 in 1997.
As is described in "Results of Operations - 1998 compared to 1997", gain on
disposition of assets of $3,621 was recognized during 1997 from equipment
credits received on two fully depleted wells plugged and abandoned in 1997 and
a gain on the sale of oil and gas wells.
On April 29, 1996, Southmark Corporation, Pioneer USA and the Partnership
entered into a final $7.4 million settlement agreement with Jack N. Price
resolving all outstanding litigation between the parties. As a result, all of
the pending lawsuits and judgments have been dismissed, the supersedeas bond
released, and the Reserve released as collateral. On June 28, 1996, a final
distribution was made to the working interest owners of $43,618 which included
$34,033, or $6.96 per limited partnership interest, to the Partnership and its
partners.
Total costs and expenses increased in 1997 to $678,703 as compared to $446,662
in 1996, an increase of $232,041, or 52%. The increase was primarily due to
increases in the impairment of oil and gas properties, depletion and
production costs, offset by a decrease in G&A.
Production costs were $339,942 in 1997 and $316,410 in 1996, resulting in a
$23,532 increase, or 7%. The increase was due to an increase in well
maintenance costs.
During this period, G&A decreased, in aggregate, 5% from $23,688 in 1996 to
$22,386 in 1997. The Partnership paid the managing general partner $18,246 in
1997 and $21,308 in 1996 for G&A incurred on behalf of the Partnership.
The Partnership recognized non-cash SFAS 121 impairment provisions of $165,201
and $2,277 related to its proved oil and gas properties during the fourth
quarters of 1997 and 1996, respectively.
Depletion was $151,174 in 1997 compared to $104,287 in 1996, representing an
increase of $46,887, or 45%. This increase was the result of a decline in oil
reserves during 1997 due to the lower commodity prices.
Impact of inflation and changing prices on sales and net income
Inflation impacts the fixed overhead rate charges of the lease operating
expenses for the Partnership. During 1998, the annual change in the index of
average weekly earnings of crude petroleum and gas production workers issued
by the U.S. Department of Labor, Bureau of Labor Statistics increased
(effective April 1, 1998) 10.3%. The 1997 annual change in average weekly
earnings increased by 2%. The 1996 index increased 4.1%. The impact of
inflation for other lease operating expenses is small due to the current
economic condition of the oil industry.
8
<PAGE>
The oil and gas industry experienced volatility during the past decade because
of the fluctuation of the supply of most fossil fuels relative to the demand
for such products and other uncertainties in the world energy markets causing
significant fluctuations in oil and gas prices. During 1998, the price per
barrel for oil production similar to the Partnership's ranged from
approximately $9.50 to $15.50. During most of 1997 and 1996, the Partnership
benefitted from higher oil prices as compared to previous years. However,
during the fourth quarter of 1997, oil prices began a downward trend that has
continued into March 1999. On March 8, 1999, the market price for West Texas
intermediate crude was $11.00 per barrel. A continuation of the current
commodity price environment will continue to have an adverse effect on the
Partnership's revenues, operating cash flow and distributions and could result
in additional decreases in the carrying value of the Partnership's oil and gas
properties.
Prices for natural gas are subject to ordinary seasonal fluctuations, and this
volatility of natural gas prices may result in production being curtailed and,
in some cases, wells being completely shut-in.
Liquidity and capital resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $209,294 during the year
ended December 31, 1998 from 1997. This decrease was primarily due to a
decline in oil and gas sales receipts, offset by a decline in G&A expenses
paid.
Net Cash Provided by Investing Activities
The Partnership's principle investing activities during 1998 and 1997 were
related to the replacement of oil and gas equipment on various oil and gas
properties.
Proceeds from asset dispositions of $14,397 were received during 1998 from the
sale of properties during 1997. During 1997, $18,068 were received, of which
$14,198 was received from the sale of eight oil and gas wells, $696 from the
disposal of oil and gas equipment on one fully depleted well included in the
sale and $3,174 from the disposal of equipment on one fully depleted well
plugged and abandoned during 1997.
Net Cash Used in Financing Activities
Cash was sufficient in 1998 for distributions to the partners of $116,427 of
which $20,715 was distributed to the general partners and $95,712 to the
limited partners. In 1997, cash was sufficient for distributions to the
partners of $306,509 of which $75,131 was distributed to the general partners
and $231,378 to the limited partners.
The current commodity price environment will continue to impact the
distributions and could result in limited or no distributions to the partners.
9
<PAGE>
Year 2000 Project Readiness
Historically, many computer programs have been developed that use only the
last two digits in a date to refer to a year. As the year 2000 nears, the
inability of such computer programs and embedded technologies to distinguish
between "1900" and "2000" has given rise to the "Year 2000" problem.
Theoretically, such computer programs and related technology could fail
outright or communicate inaccurate data, if not remediated or replaced. With
the proliferation of electronic data interchange, the Year 2000 problem
represents a significant exposure to the entire global community, the full
extent of which cannot be accurately assessed.
In proactive response to the Year 2000 problem, the managing general partner
established a "Year 2000" project to assess, to the extent possible, the
Partnership's and the managing general partner's internal Year 2000 problem;
to take remedial actions necessary to minimize the Year 2000 risk exposure to
the managing general partner and significant third parties with whom it has
data interchange; and, to test its systems and processes once remedial actions
have been taken. The managing general partner has contracted with IBM Global
Services to perform the assessment and remedial phases of its Year 2000
project.
The assessment phase of the managing general partner's Year 2000 project is at
varying stages of completion as it pertains to information technology and
non-information technology applications and systems in the United States,
Canada and Argentina. As of December 31, 1998, the managing general partner
estimates that the assessment phase is approximately 86% complete, on a
worldwide basis, and has included, but is not limited to, the following
procedures:
o the identification of necessary remediation, upgrade and/or replacement
of existing information technology applications and systems;
o the assessment of non-information technology exposures, such as
telecommunications systems, security systems, elevators and process
control equipment;
o the initiation of inquiry and dialogue with significant third party
business partners, customers and suppliers in an effort to understand and
assess their Year 2000 problems, readiness and potential impact on the
managing general partner and its Year 2000 problem;
o the implementation of processes designed to reduce the risk of
reintroduction of Year 2000 problems into the managing general partner's
systems and business processes; and,
o the formulation of contingency plans for mission-critical information
technology systems.
The managing general partner expects to complete the assessment phase of its
Year 2000 project by the end of the first quarter of 1999 but is being delayed
by limited responses received on inquiries made of third party businesses. To
date, the managing general partner has distributed Year 2000 problem inquiries
to over 500 entities and has received responses to approximately 37% of those
inquiries.
10
<PAGE>
The remedial phase of the managing general partner's Year 2000 project is also
at varying stages of completion as it pertains to the remediation of
information technology and non-information technology applications and systems
in the United States, Canada and Argentina. As of December 31, 1998, the
managing general partner estimates that the remedial phase is approximately
54% complete, on a worldwide basis, subject to the continuing results of the
third party inquiry assessments and the testing phase. The remedial phase has
included the upgrade and/or replacement of certain application and hardware
systems. The managing general partner has upgraded its Artesia general ledger
accounting systems through remedial coding and is currently testing this
system for Year 2000 compliance. The remediation of non-information technology
is expected to be completed during July 1999. The managing general partner's
Year 2000 remedial actions have not significantly delayed other information
technology projects or upgrades.
The testing phase of the managing general partner's Year 2000 project is on
schedule. The managing general partner expects to complete the testing of the
Artesia system upgrades by March 1999 and all other information technology
systems and non-information technology remediation by the end of the third
quarter of 1999.
The managing general partner expects that its total costs related to the Year
2000 problem will approximate $3.6 million, of which approximately $500
thousand will have been incurred to replace non-compliant information
technology systems. The managing general partner intends to use its working
capital to pay for the costs of the Year 2000 projects. As of December 31,
1998, the managing general partner's total costs incurred on the Year 2000
problem were $1.8 million, of which $200 thousand were incurred to replace
non-compliant systems. The managing general partner will allocate a portion of
the costs of the Year 2000 programming charges to the Partnership in
accordance with the general and administration allocation. (See Note 2 of
Notes to Financial Statements included in "Item 8. Financial Statements and
Supplementary Data".)
The risks associated with the Year 2000 problem are significant. A failure to
remedy a critical Year 2000 problem could have a materially adverse affect on
the Partnership's results of operations and financial condition. The most
likely worst case scenario which may be encountered as a result of a Year 2000
problem could include information and non-information system failures, the
receipt or transmission of erroneous data, lost data or a combination of
similar problems of a magnitude that cannot be accurately assessed at this
time.
In the assessment phase of the managing general partner's Year 2000 project,
contingency plans are being designed to mitigate the exposures to
mission-critical information technology systems, such as oil and gas sales
receipts, vendor and royalty cash distributions, debt compliance, accounting,
and employee compensation. Such contingency plans anticipate the extensive
utilization of third-party data processing services, personal computer
applications and the substitution of courier and mail services in place of
electronic data interchange. Given the uncertainties regarding the scope of
the Year 2000 problem and the compliance of significant third parties, there
can be no assurance that contingency plans will have anticipated all Year 2000
scenarios.
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ITEM 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
Financial Statements of Parker & Parsley 82-I, Ltd:
Independent Auditors' Report - Ernst & Young LLP................ 13
Independent Auditors' Report - KPMG LLP......................... 14
Balance Sheets as of December 31, 1998 and 1997................. 15
Statements of Operations for the Years Ended December 31,
1998, 1997 and 1996........................................... 16
Statements of Partners' Capital for the Years Ended
December 31, 1998, 1997 and 1996.............................. 17
Statements of Cash Flows for the Years Ended December 31,
1998, 1997 and 1996........................................... 18
Notes to Financial Statements................................... 19
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INDEPENDENT AUDITORS' REPORT
The Partners
Parker & Parsley 82-I, Ltd.
(A Texas Limited Partnership):
We have audited the balance sheet of Parker & Parsley 82-I, Ltd. as of
December 31, 1998, and the related statements of operations, partners' capital
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parker & Parsley 82-I, Ltd.
as of December 31, 1998, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Dallas, Texas
March 15, 1999
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Parker & Parsley 82-I, Ltd.
(A Texas Limited Partnership):
We have audited the financial statements of Parker & Parsley 82-I, Ltd. as of
December 31, 1997, and the related statements of operations, partners' capital
and cash flows for the years ended December 31, 1997 and 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parker & Parsley 82-I, Ltd.
as of December 31, 1997, and the results of its operations and its cash flows
for the years ended December 31, 1997 and 1996, in conformity with generally
accepted accounting principles.
KPMG LLP
Midland, Texas
March 20, 1998
14
<PAGE>
PARKER & PARSLEY 82-I, LTD.
(A Texas Limited Partnership)
BALANCE SHEETS
December 31
1998 1997
----------- -----------
ASSETS
Current assets:
Cash $ 44,427 $ 83,286
Accounts receivable:
Oil and gas sales 36,699 63,698
Other - 14,198
---------- ----------
Total current assets 81,126 161,182
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 9,885,470 9,878,650
Accumulated depletion (9,492,068) (8,881,697)
---------- ----------
Net oil and gas properties 393,402 996,953
---------- ----------
$ 474,528 $ 1,158,135
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 12,288 $ 15,475
Partners' capital:
General partners 150,932 221,119
Limited partners (4,891 interests) 311,308 921,541
---------- ----------
462,240 1,142,660
---------- ----------
$ 474,528 $ 1,158,135
========== ==========
The accompanying notes are an integral part of these
financial statements.
15
<PAGE>
PARKER & PARSLEY 82-I, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31
1998 1997 1996
--------- --------- ---------
Revenues:
Oil and gas $ 392,883 $ 608,207 $ 710,173
Interest 4,244 6,028 5,453
Gain on disposition of assets 199 3,621 -
Litigation settlement - - 43,618
-------- -------- --------
397,326 617,856 759,244
-------- -------- --------
Costs and expenses:
Oil and gas production 336,406 339,942 316,410
General and administrative 14,542 22,386 23,688
Impairment of oil and gas properties 294,610 165,201 2,277
Depletion 315,761 151,174 104,287
-------- -------- --------
961,319 678,703 446,662
-------- -------- --------
Net income (loss) $(563,993) $ (60,847) $ 312,582
======== ======== ========
Allocation of net income (loss):
General partners $ (49,472) $ 31,736 $ 92,811
======== ======== ========
Limited partners $(514,521) $ (92,583) $ 219,771
======== ======== ========
Net income (loss) per limited partnership
interest $ (105.20) $ (18.93) $ 44.93
======== ======== ========
The accompanying notes are an integral part of these
financial statements.
16
<PAGE>
PARKER & PARSLEY 82-I, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
General Limited
partners partners Total
---------- ---------- ----------
Partners' capital at January 1, 1996 $ 258,529 $1,277,125 $1,535,654
Distributions (86,826) (251,394) (338,220)
Net income 92,811 219,771 312,582
--------- --------- ---------
Partners' capital at December 31, 1996 264,514 1,245,502 1,510,016
Distributions (75,131) (231,378) (306,509)
Net income (loss) 31,736 (92,583) (60,847)
--------- --------- ---------
Partners' capital at December 31, 1997 221,119 921,541 1,142,660
Distributions (20,715) (95,712) (116,427)
Net loss (49,472) (514,521) (563,993)
--------- --------- ---------
Partners' capital at December 31, 1998 $ 150,932 $ 311,308 $ 462,240
========= ========= =========
The accompanying notes are an integral part of these
financial statements.
17
<PAGE>
PARKER & PARSLEY 82-I, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
For the years ended December 31
1998 1997 1996
--------- --------- ---------
Cash flows from operating activities:
Net income (loss) $(563,993) $ (60,847) $ 312,582
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Impairment of oil and gas properties 294,610 165,201 2,277
Depletion 315,761 151,174 104,287
Gain on disposition of assets (199) (3,621) -
Changes in assets and liabilities:
Accounts receivable 26,999 28,652 (43,962)
Accounts payable (3,187) (1,274) (34,164)
-------- -------- --------
Net cash provided by operating
activities 69,991 279,285 341,020
-------- -------- --------
Cash flows from investing activities:
Additions to oil and gas properties (6,820) (2,089) -
Proceeds from asset dispositions 14,397 18,068 7,841
-------- -------- --------
Net cash provided by investing
activities 7,577 15,979 7,841
-------- -------- ---------
Cash flows from financing activities:
Cash distributions to partners (116,427) (306,509) (338,220)
-------- -------- --------
Net increase (decrease) in cash (38,859) (11,245) 10,641
Cash at beginning of year 83,286 94,531 83,890
-------- -------- --------
Cash at end of year $ 44,427 $ 83,286 $ 94,531
======== ======== ========
The accompanying notes are an integral part of these
financial statements.
18
<PAGE>
PARKER & PARSLEY 82-I, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
Note 1. Organization and nature of operations
Parker & Parsley 82-I, Ltd. (the "Partnership") is a limited partnership
organized in 1982 under the laws of the State of Texas. On August 8, 1997,
Pioneer Natural Resources USA, Inc. ("Pioneer USA") became the managing
general partner of the Partnership, joining the existing general partner, P&P
Employees 82-I, Ltd. ("EMPL"), a Texas limited partnership whose general
partner is Pioneer USA, and 4,891 limited partnership interests as of March 8,
1999. Prior to August 8, 1997, the Partnership's managing general partner and
the general partner of EMPL was Parker & Parsley Development L.P. ("PPDLP"), a
wholly-owned subsidiary of Parker & Parsley Petroleum Company ("Parker &
Parsley"). On August 7, 1997, Parker & Parsley and Mesa Inc. received
shareholder approval to merge and create Pioneer Natural Resources Company
("Pioneer"). On August 8, 1997, PPDLP was merged with and into Pioneer USA, a
wholly-owned subsidiary of Pioneer, resulting in Pioneer USA becoming the
managing general partner of the Partnership and the general partner of EMPL as
PPDLP's successor by merger.
The Partnership engages primarily in oil and gas exploration, development
and production in Texas and New Mexico and is not involved in any industry
segment other than oil and gas.
Note 2. Summary of significant accounting policies
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
Oil and gas properties - The Partnership utilizes the successful efforts
method of accounting for its oil and gas properties and equipment. Under this
method, all costs associated with productive wells and nonproductive
development wells are capitalized while nonproductive exploration costs are
expensed. Capitalized costs relating to proved properties are depleted using
the unit-of-production method on a property-by-property basis based on proved
oil (dominant mineral) reserves as determined by the engineering staff of
Pioneer USA, the Partnership's managing general partner, and reviewed by
independent petroleum consultants. The carrying amounts of properties sold or
otherwise disposed of and the related allowances for depletion are eliminated
from the accounts and any gain or loss is included in operations.
Impairment of long-lived assets - In accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS 121"),
the Partnership reviews its long-lived assets to be held and used on an
individual property basis, including oil and gas properties accounted for
under the successful efforts method of accounting, whenever events or
circumstances indicate that the carrying value of those assets may not be
recoverable. An impairment loss is indicated if the sum of the expected future
19
<PAGE>
cash flows is less than the carrying amount of the assets. In this
circumstance, the Partnership recognizes an impairment loss for the amount by
which the carrying amount of the asset exceeds the estimated fair value of the
asset.
Use of estimates in the preparation of financial statements - Preparation
of the accompanying 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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reporting amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Net income (loss) per limited partnership interest - The net income
(loss) per limited partnership interest is calculated by using the number of
outstanding limited partnership interests.
Income taxes - A Federal income tax provision has not been included in
the financial statements as the income of the Partnership is included in the
individual Federal income tax returns of the respective partners.
Statements of cash flows - For purposes of reporting cash flows, cash
includes depository accounts held by banks.
General and administrative expenses - General and administrative expenses
are allocated in part to the Partnership by the managing general partner or
its affiliates. Such allocated expenses are determined by the managing general
partner based upon its judgement of the level of activity of the Partnership
relative to the managing general partner's activities and other entities it
manages. The method of allocation has been consistent over the past several
years with certain modifications incorporated to reflect changes in Pioneer
USA's overall business activities.
Reclassifications - Certain reclassifications may have been made to the
1997 and 1996 financial statements to conform to the 1998 financial statement
presentation.
Environmental - The Partnership is subject to extensive federal, state
and local environmental laws and regulations. These laws, which are constantly
changing, regulate the discharge of materials into the environment and may
require the Partnership to remove or mitigate the environmental effects of the
disposal or release of petroleum or chemical substances at various sites.
Environmental expenditures are expensed or capitalized depending on their
future economic benefit. Expenditures that relate to an existing condition
caused by past operations and that have no future economic benefits are
expensed. Liabilities for expenditures of a noncapital nature are recorded
when environmental assessment and/or remediation is probable, and the costs
can be reasonably estimated. Such liabilities are generally undiscounted
unless the timing of cash payments for the liability or component are fixed or
reliably determinable. No such liabilities have been accrued as of December
31, 1998.
Revenue recognition - The Partnership uses the entitlements method of
accounting for crude oil and natural gas revenues.
20
<PAGE>
Reporting comprehensive income - Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130")
establishes standards for the reporting and display of comprehensive income
(loss) and its components in a full set of general purpose financial
statements. Comprehensive income (loss) includes net income (loss) and other
comprehensive income (loss). The Partnership has no items of other
comprehensive income (loss), as defined by SFAS No. 130. Consequently, the
provisions of SFAS No. 130 do not apply to the Partnership.
Note 3. Impairment of long-lived assets
In accordance with SFAS 121, the Partnership reviews its proved oil and
gas properties for impairment whenever events and circumstances indicate a
decline in the recoverability of the carrying value of the Partnership's oil
and gas properties. Based upon a decline in the Partnership's outlook for
future commodity prices, the Partnership has estimated the expected future
cash flows of its oil and gas properties as of December 31, 1998, 1997 and
1996, and compared such estimated future cash flows to the respective carrying
amount of the oil and gas properties to determine if the carrying amounts were
likely to be recoverable. For those proved oil and gas properties for which
the carrying amount exceeded the estimated future cash flows, an impairment
was determined to exist; therefore, the Partnership adjusted the carrying
amount of those oil and gas properties to their fair value as determined by
discounting their expected future cash flows at a discount rate commensurate
with the risks involved in the industry. As a result, the Partnership
recognized non-cash impairment provisions of $294,610, $165,201 and $2,277
related to its proved oil and gas properties during 1998, 1997 and 1996,
respectively.
Note 4. Income taxes
The financial statement basis of the Partnership's net assets and
liabilities was $549,986 less than the tax basis at December 31, 1998.
The following is a reconciliation of net income (loss) per statements of
operations with the net income per Federal income tax returns for the years
ended December 31:
1998 1997 1996
--------- --------- ---------
Net income (loss) per statements of
operations $(563,993) $ (60,847) $ 312,582
Depletion and depreciation provisions for
tax reporting purposes less than amounts
for financial reporting purposes 312,201 150,206 100,718
Impairment of oil and gas properties for
financial reporting purposes 294,610 165,201 2,277
Gain on disposition of assets (116) 14,447 7,232
Other, net 786 (6,327) 659
-------- -------- --------
Net income per Federal
income tax returns $ 43,488 $ 262,680 $ 423,468
======== ======== ========
21
<PAGE>
Note 5. Oil and gas producing activities
The following is a summary of the costs incurred, whether capitalized or
expensed, related to the Partnership's oil and gas producing activities for
the years ended December 31:
1998 1997 1996
--------- --------- ---------
Development costs $ 6,820 $ 1,855 $ (6,985)
======== ======== ========
Capitalized oil and gas properties consist of the following:
1998 1997
----------- -----------
Proved properties:
Property acquisition costs $ 360,899 $ 360,899
Completed wells and equipment 9,524,571 9,517,751
---------- ----------
9,885,470 9,878,650
Accumulated depletion (9,492,068) (8,881,697)
---------- ----------
Net capitalized costs $ 393,402 $ 996,953
========== ==========
Note 6. Related party transactions
Pursuant to the limited partnership agreement, the Partnership had the
following related party transactions with the managing general partner or its
affiliates during the years ended December 31:
1998 1997 1996
-------- -------- --------
Payment of lease operating and supervision
charges in accordance with standard
industry operating agreements $150,391 $146,626 $137,520
Reimbursement of general
and administrative expenses $ 11,786 $ 18,246 $ 21,308
Pioneer USA, EMPL and the Partnership are parties to the Partnership
agreement. EMPL is a limited partnership in which Pioneer USA owns 77.5% and
the remaining portion is owned by former affiliates. In addition, Pioneer USA
owned 594 limited partner interests at January 1, 1999.
22
<PAGE>
The costs and revenues of the Partnership are allocated as follows:
General Limited
partners partners
-------- --------
Revenues:
Proceeds from property dispositions prior
to cost recovery 10% 90%
All other Partnership revenues 25% 75%
Costs and expenses:
Lease acquisition costs, drilling and
completion costs 10% 90%
Operating costs, direct costs and general
and administrative expenses 25% 75%
Note 7. Oil and gas information (unaudited)
The following table presents information relating to the Partnership's
estimated proved oil and gas reserves at December 31, 1998, 1997 and 1996 and
changes in such quantities during the years then ended. Due to a change in the
accounting policy of the managing general partner in 1997, the Partnership
began accounting for processed natural gas production in two components:
processed natural gas liquids ("NGLs") and dry residue gas. NGLs are reflected
in "Oil and NGLs" in the table below. All of the Partnership's reserves are
proved developed and located within the United States. The Partnership's
reserves are based on an evaluation prepared by the engineering staff of
Pioneer USA and reviewed by Williamson Petroleum Consultants, Inc., an
independent petroleum consultant, using criteria established by the Securities
and Exchange Commission. Reserve value information is available to limited
partners pursuant to the Partnership agreement and, therefore, is not
presented.
Oil and NGLs Gas
(bbls) (mcf)
----------- ----------
Net proved reserves at January 1, 1996 335,301 1,294,119
Revisions (30,088) (179,795)
Production (22,544) (85,404)
----------- ----------
Net proved reserves at December 31, 1996 282,669 1,028,920
Revisions 68,237 (494,786)
Sale of reserves (5,785) (19,359)
Production (23,644) (66,728)
----------- ----------
Net proved reserves at December 31, 1997 321,477 448,047
Revisions (230,755) (305,609)
Production (25,898) (48,971)
----------- ----------
Net proved reserves at December 31, 1998 64,824 93,467
=========== ==========
As of December 31, 1998, the estimated present value of future net
revenues of proved reserves, calculated using December 31, 1998 prices of
23
<PAGE>
$10.35 per barrel of oil, $6.09 per barrel of NGLs and $1.48 per mcf of gas,
discounted at 10% was approximately $66,000 and undiscounted was $77,000.
Numerous uncertainties exist in estimating quantities of proved reserves
and future net revenues therefrom. The estimates of proved reserves and
related future net revenues set forth in this report are based on various
assumptions, which may ultimately prove to be inaccurate. Therefore, such
estimates should not be construed as estimates of the current market value of
the Partnership's proved reserves. The Partnership emphasizes that reserve
estimates are inherently imprecise and, accordingly, the estimates are
expected to change as future information becomes available.
Note 8. Major customers
The following table reflects the major customers of the Partnership's oil
and gas sales (a major customer is defined as a customer whose sales exceed
10% of total sales) during the years ended December 31:
1998 1997 1996
-------- -------- --------
Genesis Crude Oil, L.P. 65% 65% 67%
GPM Gas Corporation 13% 10% 10%
Western Gas Resources, Inc. 10% 9% 8%
At December 31, 1998, the amounts receivable from Genesis Crude Oil,
L.P., GPM Gas Corporation and Western Gas Resources, Inc. were $13,887,
$10,238 and $6,244, respectively, which are included in the caption "Accounts
receivable - oil and gas sales" in the accompanying Balance Sheet.
The Partnership's share of oil and gas production is sold to various
purchasers. Pioneer USA is of the opinion that the loss of any one purchaser
would not have an adverse effect on the ability of the Partnership to sell its
oil and gas production.
Note 9. Organization and operations
The Partnership was organized June 1, 1982 as a limited partnership under
the Texas Uniform Limited Partnership Act for the purpose of acquiring and
developing oil and gas properties. The following is a brief summary of the
more significant provisions of the limited partnership agreement:
General partners - The general partners of the Partnership are Pioneer
USA and EMPL. Pioneer USA, the managing general partner, has the power
and authority to manage, control and administer all Partnership affairs.
As managing general partner and operator of the Partnership's properties,
all production expenses are incurred by Pioneer USA and billed to the
Partnership and a portion of revenue is initially received by Pioneer USA
prior to being paid to the Partnership.
Limited partner liability - The maximum amount of liability of any
limited partner is the total contributions of such partner plus his share
of any undistributed profits.
24
<PAGE>
Initial capital contributions - The limited partners entered into
subscription agreements for aggregate capital contributions of
$9,782,000. During 1985, the Partnership received a total of $1,372,500
from its limited partners in response to an assessment called by the
general partner. Additionally, $650,000 was contributed by the managing
general partner for limited partnership interests on unpaid assessments
of which $500,000 was paid in 1985 and $150,000 in 1986. The general
partners are required to contribute amounts equal to 10% of Partnership
expenditures for lease acquisition, drilling and completion and 25% of
direct, general and administrative and operating expenses, and by
agreement must maintain a calculated minimum capital balance.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
25
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of the Partnership
The Partnership does not have any officers or directors. Under the limited
partnership agreement, the Partnership's managing general partner, Pioneer
USA, is granted the exclusive right and full authority to manage, control and
administer the Partnership's business.
Set forth below are the names, ages and positions of the directors and
executive officers of Pioneer USA. Directors of Pioneer USA are elected to
serve until the next annual meeting of stockholders or until their successors
are elected and qualified.
Age at
December 31,
Name 1998 Position
---- ----------- --------
Scott D. Sheffield 46 President and Director
Timothy L. Dove 42 Executive Vice President and Director
Dennis E. Fagerstone 49 Executive Vice President and Director
Mark L. Withrow 51 Executive Vice President, General
Counsel and Director
M. Garrett Smith 37 Executive Vice President, Chief
Financial Officer and Director
Mel Fischer (a) 64 Executive Vice President
Lon C. Kile 43 Executive Vice President
Rich Dealy 32 Vice President and Chief Accounting
Officer
(a) Mr. Fischer was a director and officer until his retirement from Pioneer
and Pioneer USA on February 15, 1999.
Scott D. Sheffield. Mr. Sheffield is a distinguished graduate of The
University of Texas with a B.S. in Petroleum Engineering. Since August 1997,
he has served as President, Chief Executive Officer and a director of Pioneer
and President and a director of Pioneer USA. Mr. Sheffield was the President
and a director of Parker & Parsley from May 1990 until August 1997 and was the
Chairman of the Board and Chief Executive Officer of Parker & Parsley from
October 1990 until August 1997. He was the sole director of Parker & Parsley
from May 1990 until October 1990. Mr. Sheffield joined Parker & Parsley
Development Company ("PPDC"), a predecessor of Parker & Parsley, as a
petroleum engineer in 1979. He served as Vice President - Engineering of PPDC
from September 1981 until April 1985 when he was elected President and a
director. In March 1989, Mr. Sheffield was elected Chairman of the Board and
Chief Executive Officer of PPDC. Before joining PPDC, Mr. Sheffield was
employed as a production and reservoir engineer for Amoco Production Company.
26
<PAGE>
Timothy L. Dove. Mr. Dove became Executive Vice President - Business
Development of Pioneer and Pioneer USA in August 1997. He was also appointed
a director of Pioneer USA in August 1997. Mr. Dove joined Parker & Parsley in
May 1994 as Vice President - International and was promoted to Senior Vice
President - Business Development in October 1996, in which position he served
until August 1997. Prior to joining Parker & Parsley, Mr. Dove was employed
with Diamond Shamrock Corp., and its successor, Maxus Energy Corp, in various
capacities in international exploration and production, marketing, refining
and marketing and planning and development. Mr. Dove earned a B.S. in
Mechanical Engineering from Massachusetts Institute of Technology in 1979 and
received his M.B.A. in 1981 from the University of Chicago.
Dennis E. Fagerstone. Mr. Fagerstone, a graduate of the Colorado School
of Mines with a B.S. in Petroleum Engineering, became an Executive Vice
President of Pioneer and Pioneer USA in August 1997. He was also appointed a
director of Pioneer USA in August 1997. He served as Executive Vice President
and Chief Operating Officer of Mesa from March 1, 1997 until August 1997. From
October 1996 to February 1997, Mr. Fagerstone served as Senior Vice President
and Chief Operating Officer of Mesa and from May 1991 to October 1996, he
served as Vice President - Exploration and Production of Mesa. From June 1988
to May 1991, Mr. Fagerstone served as Vice President - Operations of Mesa.
Mark L. Withrow. Mr. Withrow, a graduate of Abilene Christian
University with a B.S. in Accounting and Texas Tech University with a Juris
Doctorate degree, became Executive Vice President, General Counsel and
Secretary of Pioneer and Pioneer USA in August 1997. He was also appointed a
director of Pioneer USA in August 1997. Mr. Withrow was Vice President -
General Counsel of Parker & Parsley from January 1991, when he joined Parker &
Parsley, to January 1995, when he was appointed Senior Vice President -
General Counsel. He was Parker & Parsley's Secretary from August 1992 until
August 1997. Prior to joining Parker & Parsley, Mr. Withrow was the managing
partner of the law firm of Turpin, Smith, Dyer, Saxe & MacDonald, Midland,
Texas.
M. Garrett Smith. Mr. Smith, a graduate of The University of Texas with
a B.S. in Electrical Engineering and Southern Methodist University with an
M.B.A., was appointed Executive Vice President and Chief Financial Officer of
Pioneer in December 1997. He served as Senior Vice President - Finance of
Pioneer from August 1997 until December 1997. Mr. Smith was elected Senior
Vice President - Finance and a director of Pioneer USA in August 1997. He
served as Vice President - Corporate Acquisitions of Mesa from January 1997
until August 1997. From October 1996 to December 1996, Mr. Smith served as
Vice President - Finance of Mesa and from 1994 to 1996 he served as Director
of Financial Planning of Mesa. Mr. Smith was employed by BTC Partners, Inc. (a
former financial advisor to Mesa) from 1989 to 1994.
Mel Fischer. Mr. Fischer, a graduate of the University of California at
Berkeley with a Masters degree in Geology, became Executive Vice President -
Worldwide Exploration of Pioneer and Pioneer USA in August 1997. He served as
a director of Parker & Parsley from November 1995 until August 1997 and was
Executive Vice President - Worldwide Exploration for Parker & Parsley from
27
<PAGE>
February 1997 to August 1997. Mr. Fischer retired from Pioneer and Pioneer USA
effective February 15, 1999. He worked in the petroleum industry for 32 years,
starting as a Petroleum Geologist with Texaco in 1962, and retiring as
President, Occidental International Exploration and Production Company in
March 1994. For the 10 years prior to becoming President of Occidental
International, he served as Executive Vice President, World Wide Exploration
with Occidental Oil and Gas Corporation. He is a registered geologist in the
State of California, a member of the American Association of Petroleum
Geologists and an emeritus member of the Board of Advisors for the Earth
Sciences Research Institute at the University of Utah.
Lon C. Kile. Mr. Kile, a graduate of Oklahoma State University with a
B.B.A. in Accounting, became Executive Vice President of Pioneer and Pioneer
USA in August 1997. Mr. Kile was Senior Vice President - Investor Relations
from October 1996 to August 1997. Previously, he served as Vice President and
Manager of the Mid-Continent Division, Vice President - Equity Finance &
Analysis and Vice President - Marketing & Program Administration. Prior to
joining Parker & Parsley in 1985, he was employed as Supervisor - Senior,
Audit, in charge of Parker & Parsley's audit, with Arthur Young.
Rich Dealy. Mr. Dealy is a graduate of Eastern New Mexico University
with a B.B.A. in Accounting and Finance and is a Certified Public Accountant.
He became Vice President and Chief Accounting Officer of Pioneer and Pioneer
USA in February 1998. Mr. Dealy served as Controller of Pioneer USA from
August 1997 to February 1998. He served as Controller of Parker & Parsley from
August 1995 to August 1997. Mr. Dealy joined Parker & Parsley as an Accounting
Manager in July, 1992. He was previously employed with KPMG Peat Marwick as
an Audit Senior, in charge of Parker & Parsley's audit.
ITEM 11. Executive Compensation
The Partnership does not have any directors or officers. Management of the
Partnership is vested in Pioneer USA, the managing general partner. Under the
Partnership agreement, Pioneer USA pays 8% of the Partnership's acquisition,
drilling and completion costs and 20% of its operating and general and
administrative expenses. In return, Pioneer USA is allocated 20% of the
Partnership's revenues. See Notes 6 and 9 of Notes to Financial Statements
included in "Item 8. Financial Statements and Supplementary Data" for
information regarding fees and reimburse ments paid to the managing general
partner or its affiliates by the Partnership.
EMPL is a co-general partner of the Partnership. Under this arrangement, EMPL
pays 2% of the Partnership's acquisition, drilling and completion costs and 5%
of its operating and general and administrative expenses. In return, EMPL is
allocated 5% of the Partnership's revenues. EMPL does not receive any fees or
reimbursements from the Partnership.
The Partnership does not directly pay any salaries of the executive officers
of Pioneer USA, but does pay a portion of Pioneer USA's general and
administrative expenses of which these salaries are a part. See Note 6 of
Notes to Financial Statements included in "Item 8. Financial Statements and
Supplementary Data".
28
<PAGE>
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) Beneficial owners of more than five percent
The Partnership is not aware of any person who beneficially owns 5% or more of
the outstanding limited partnership interests of the Partnership. Pioneer USA
and EMPL respectively own 80% and 20% of the general partners' interests in
the Partnership. Pioneer USA owned 594 limited partner interests at January 1,
1999.
(b) Security ownership of management
The Partnership does not have any officers or directors. The managing general
partner of the Partnership, Pioneer USA, has the exclusive right and full
authority to manage, control and administer the Partnership's business. Under
the limited partnership agreement, limited partners holding a majority of the
outstanding limited partnership interests have the right to take certain
actions, including the removal of the managing general partner or any other
general partner. The Partnership is not aware of any current arrangement or
activity which may lead to such removal. The Partnership is not aware of any
officer or director of Pioneer USA who beneficially owns limited partnership
interests in the Partnership.
ITEM 13. Certain Relationships and Related Transactions
Transactions with the managing general partner or its affiliates
Pursuant to the limited partnership agreement, the Partnership had the
following related party transactions with the managing general partner or its
affiliates during the years ended December 31:
1998 1997 1996
--------- --------- ---------
Payment of lease operating and supervision
charges in accordance with standard
industry operating agreements $ 150,391 $ 146,626 $ 137,520
Reimbursement of general and
administrative expenses $ 11,786 $ 18,246 $ 21,308
Under the limited partnership agreement, the general partners, Pioneer USA and
EMPL, together pay 10% of Partnership's acquisition, drilling and completion
costs and 25% of its operating and general and administrative expenses. In
return, they are allocated 25% of the Partnership's revenues. Twenty percent
of the general partners' share of costs and revenues is allocated to EMPL and
the remainder is allocated to Pioneer USA. Certain former affiliates of
Pioneer USA are limited partners of EMPL. Also, see Notes 6 and 9 of Notes to
Financial Statements included in "Item 8. Financial Statements and
Supplementary Data" regarding the Partnership's participation with the
managing general partner in oil and gas activities of the Partnership.
29
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial statements
The following are filed as part of this annual report:
Independent Auditors' Report - Ernst & Young LLP
Independent Auditors' Report - KPMG LLP
Balance sheets as of December 31, 1998 and 1997
Statements of operations for the years ended December 31, 1998,
1997 and 1996
Statements of partners' capital for the years ended December 31,
1998, 1997 and 1996
Statements of cash flows for the years ended December 31, 1998,
1997 and 1996
Notes to financial statements
2. Financial statement schedules
All financial statement schedules have been omitted since the
required information is in the financial statements or notes thereto,
or is not applicable nor required.
(b) Reports on Form 8-K
None.
(c) Exhibits
The exhibits listed on the accompanying index to exhibits are filed or
incorporated by reference as part of this annual report.
30
<PAGE>
S I G N A T U R E S
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.
PARKER & PARSLEY 82-I, LTD.
Dated: March 23, 1999 By: Pioneer Natural Resources USA, Inc.
Managing General Partner
By: /s/ Scott D. Sheffield
--------------------------------
Scott D. Sheffield, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
/s/ Scott D. Sheffield President and Director of March 23, 1999
------------------------ Pioneer USA
Scott D. Sheffield
/s/ Timothy L. Dove Executive Vice President and March 23, 1999
------------------------ Director of Pioneer USA
Timothy L. Dove
/s/ Dennis E. Fagerstone Executive Vice President and March 23, 1999
------------------------ Director of Pioneer USA
Dennis E. Fagerstone
/s/ Mark L. Withrow Executive Vice President, General March 23, 1999
------------------------ Counsel and Director of Pioneer USA
Mark L. Withrow
/s/ M. Garrett Smith Executive Vice President, Chief March 23, 1999
------------------------ Financial Officer and Director
M. Garrett Smith of Pioneer USA
/s/ Lon C. Kile Executive Vice President of March 23, 1999
------------------------ Pioneer USA
Lon C. Kile
/s/ Rich Dealy Vice President and Chief Accounting March 23, 1999
------------------------ Officer of Pioneer USA
Rich Dealy
31
<PAGE>
PARKER & PARSLEY 82-I, LTD.
INDEX TO EXHIBITS
The following documents are incorporated by reference in response to Item
14(c):
Exhibit No. Description Page
----------- ----------- ----
3.1 Agreement of Limited Partnership of Parker -
& Parsley 82-I, Ltd. incorporated by reference
to Exhibit 4(e) of Partnership's Registration
Statement on Form S-1 (Registration No.
2-75503A), as amended on February 4, 1982,
the effective date thereof (hereinafter called,
the Partnership's Registration Statement)
3.2 Amended and Restated Certificate of Limited -
Partnership of Parker & Parsley 82-I, Ltd.
incorporated by reference to Exhibit 3.2 of
the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1983
4.1 Form of Subscription Agreement and Power -
of Attorney incorporated by reference to
Exhibit 4(b) of the Partnership's Registration
Statement
4.2 Specimen Certificate of Limited Partnership -
Interest incorporated by reference to Exhibit
4(d) of the Partnership's Registration Statement
27.1* Financial Data Schedule
99.1 Mutual Release and Indemnity Agreement dated -
May 25, 1993 incorporated by reference to
Exhibit 99.1 of the Partnership's Annual Report
on Form 10-K for the year ended December 31,
1993
* filed herewith
32
<PAGE>
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