UNITED STATES
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 No. 2-75530B
PARKER & PARSLEY 82-II, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-1867115
(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
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes / x / No / /
Page 1 of 12 pages.
Exhibit index on page 11.
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PARKER & PARSLEY 82-II, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 1997 and
December 31, 1996 ..................................... 3
Statements of Operations for the three and nine
months ended September 30, 1997 and 1996.................. 4
Statement of Partners' Capital for the nine months
ended September 30, 1997.................................. 5
Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996............................... 6
Notes to Financial Statements............................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.............................. 11
27. Financial Data Schedule
Signatures.................................................... 12
2
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PARKER & PARSLEY 82-II, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1997 1996
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $144,520 at September
30 and $178,658 at December 31 $ 145,020 $ 179,158
Accounts receivable - oil and gas sales 57,192 114,039
----------- ----------
Total current assets 202,212 293,197
----------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 8,860,815 9,058,497
Accumulated depletion (7,358,408) (7,457,953)
----------- ----------
Net oil and gas properties 1,502,407 1,600,544
----------- ----------
$ 1,704,619 $ 1,893,741
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 20,282 $ 17,546
Partners' capital:
General partners 189,356 217,566
Limited partners (6,126 interests) 1,494,981 1,658,629
----------- ----------
1,684,337 1,876,195
----------- ----------
$ 1,704,619 $ 1,893,741
=========== ==========
The financial information included as of September 30, 1997 has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
3
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PARKER & PARSLEY 82-II, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues:
Oil and gas $ 131,336 $ 168,163 $ 448,229 $ 509,720
Interest 2,194 2,502 6,791 6,889
Gain (loss) on disposition
of assets 418 9,044 4,038 (20,098)
Litigation settlement - - - 45,027
-------- -------- -------- --------
133,948 179,709 459,058 541,538
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 85,927 76,132 240,819 236,079
General and administrative 4,688 5,575 16,101 17,060
Depletion 32,331 24,663 100,720 81,435
Abandoned property costs 25 - 691 4,059
-------- -------- -------- --------
122,971 106,370 358,331 338,633
-------- -------- -------- --------
Net income $ 10,977 $ 73,339 $ 100,727 $ 202,905
======== ======== ======== ========
Allocation of net income:
General partners $ 7,597 $ 21,956 $ 40,164 $ 64,763
======== ======== ======== ========
Limited partners $ 3,380 $ 51,383 $ 60,563 $ 138,142
======== ======== ======== ========
Net income per limited
partnership interest $ .56 $ 8.39 $ 9.89 $ 22.55
======== ======== ======== ========
Distributions per limited
partnership interest $ 8.13 $ 11.90 $ 35.73 $ 35.37
======== ======== ======== ========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
4
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PARKER & PARSLEY 82-II, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
General Limited
partners partners Total
---------- ---------- ----------
Balance at January 1, 1997 $ 217,566 $1,658,629 $1,876,195
Distributions (68,374) (224,211) (292,585)
Net income 40,164 60,563 100,727
--------- --------- -------
Balance at September 30, 1997 $ 189,356 $1,494,981 $1,684,337
========= ========= =========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
5
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PARKER & PARSLEY 82-II, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
------------------------
1997 1996
---------- ----------
Cash flows from operating activities:
Net income $ 100,727 $ 202,905
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 100,720 81,435
(Gain) loss on disposition of assets (4,038) 20,098
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 56,847 (15,129)
Increase (decrease) in accounts payable 2,736 (17,588)
--------- ---------
Net cash provided by operating activities 256,992 271,721
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (2,583) (133)
Proceeds from disposition of assets 4,038 9,044
--------- ---------
Net cash provided by investing activities 1,455 8,911
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (292,585) (283,172)
--------- ---------
Net decrease in cash and cash equivalents (34,138) (2,540)
Cash and cash equivalents at beginning of period 179,158 199,420
--------- ---------
Cash and cash equivalents at end of period $ 145,020 $ 196,880
========= =========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
PARKER & PARSLEY 82-II, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
Note 1. Basis of presentation
In the opinion of management, the unaudited financial statements of Parker &
Parsley 82-II, Ltd. (the "Partnership") as of September 30, 1997 and for the
three and nine months ended September 30, 1997 and 1996 include all adjustments
and accruals consisting only of normal recurring accrual adjustments which are
necessary for a fair presentation of the results for the interim period. These
interim results are not necessarily indicative of results for a full year.
Certain reclassifications have been made to prior period financial statements to
conform to the 1997 presentations.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
should be read in conjunction with the financial statements and the notes
thereto contained in the Partnership's Report on Form 10-K for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Controller, 303 West Wall, Suite 101, Midland, Texas 79701.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
As of 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-II, Ltd. ("EMPL"), a Texas limited partnership whose
general partner is Pioneer USA, and 6,126 limited partners as of March 8, 1997.
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. For a more complete description of the Parker &
Parsley and Mesa Inc. merger, see Pioneer's Registration Statement on Form S-4
as filed with the Securities and Exchange Commission.
Results of Operations
Nine months ended September 30, 1997 compared with nine months ended
September 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 12% to $448,229 from $509,720
for the nine months ended September 30, 1997 as compared to the nine months
ended September 30, 1996. The decrease in revenues resulted from declines in
7
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barrels of oil and mcf of gas produced and sold and a lower average price
received per barrel of oil, offset by an increase in the average price received
per mcf of gas. For the nine months ended September 30, 1997, 16,392 barrels of
oil were sold compared to 17,833 for the same period in 1996, a decrease of
1,441 barrels, or 8%. For the nine months ended September 30, 1997, 50,580 mcf
of gas were sold compared to 60,158 for the same period in 1996, a decrease of
9,578 mcf, or 16%. The declines in production volumes were primarily
attributable to the decline characteristics of the Partnership's oil and gas
properties. Because of these characteristics, management expects a certain
amount of decline in production to continue in the future until the
Partnership's economically recoverable reserves are fully depleted.
The average price received per barrel of oil decreased $1.21, or 6%, from $21.02
for the nine months ended September 30, 1996 to $19.81 for the same period in
1997, while the average price received per mcf of gas increased 9% from $2.24
for the nine months ended September 30, 1996 to $2.44 for the same period in
1997. 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 during the nine
months ended September 30, 1997.
Gain on disposition of assets of $4,038 for the nine months ended September 30,
1997 was derived from proceeds of $2,511 received from the sale of equipment on
one fully depleted property and a gain of $1,527 was from the disposal of
equipment on one abandoned well in the same period. Loss on disposition of
assets of $20,098 for the nine months ended September 30, 1996 primarily
resulted from a $28,619 loss on abandoned property, offset by a gain of $8,521
from proceeds received from the sale of equipment on one fully depleted
property. Expenses incurred to plug and abandon these wells totaled $691 and
$4,059 for the nine months ended September 30, 1997 and 1996, respectively.
On April 29, 1996, Southmark Corporation, the managing general partner 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 $45,027, which included
$36,851, or $6.02 per limited partnership interest, to the Partnership and its
partners.
Costs and Expenses:
Total costs and expenses increased to $358,331 for the nine months ended
September 30, 1997 as compared to $338,633 for the same period in 1996, a
decrease of $19,698, or 6%. This increase was due to increases in depletion and
production costs, offset by declines in abandoned property costs and general and
administrative expenses ("G&A").
Production costs were $240,819 for the nine months ended September 30, 1997 and
$236,079 for the same period in 1996 resulting in a $4,740 increase. The
increase was due to higher well maintenance costs.
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, 6% from $17,060 for the nine months ended September 30,
1996 to $16,101 for the same period in 1997.
8
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Depletion was $100,720 for the nine months ended September 30, 1997 compared to
$81,435 for the same period in 1996, representing an increase of $19,285, or
24%. This increase was primarily attributable to a decline in oil reserves
during 1997 due to lower commodity prices, offset by a decline in production of
1,441 barrels for the nine months ended September 30, 1997 as compared to the
same period in 1996.
Three months ended September 30, 1997 compared with three months ended September
30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 22% to $131,336 from $168,163
for the three months ended September 30, 1997 as compared to the three months
ended September 30, 1996. The decrease in revenues resulted from a lower average
price received per barrel of oil and declines in barrels of oil and mcf of gas
produced and sold, offset by a higher average price received per mcf of gas. For
the three months ended September 30, 1997, 5,215 barrels of oil were sold
compared to 5,918 for the same period in 1996, a decrease of 703 barrels, or
12%. For the three months ended September 30, 1997, 16,539 mcf of gas were sold
compared to 19,117 for the same period in 1996, a decrease of 2,578 mcf, or 13%.
The decreases in oil and gas production were due to the decline characteristics
of the Partnership's oil and gas properties.
The average price received per barrel of oil decreased $3.24, or 15%, from
$21.73 for the three months ended September 30, 1996 to $18.49 for the three
months ended September 30, 1997, while the average price received per mcf of gas
increased to $2.11 during the three months ended September 30, 1997 from $2.07
in 1996.
Gain on disposition of assets of $418 for the three months ended September 30,
1997 was derived from proceeds received from the sale of equipment on one fully
depleted well. Gain on disposition of assets of $9,044, for the three months
ended September 30, 1996, was derived from $8,521 in proceeds received from the
sale of equipment on one fully depleted well and $523 from equipment disposals
on one abandoned well.
Costs and Expenses:
Total costs and expenses increased to $122,971 for the three months ended
September 30, 1997 as compared to $106,370 for the same period in 1996, an
increase of $16,601, or 16%. This increase was due to increases in production
costs, depletion and abandoned property costs, offset by a decrease in G&A.
Production costs were $85,927 for the three months ended September 30, 1997 and
$76,132 for the same period in 1996 resulting in a $9,795 increase, or 13%. The
increase was due to additional well maintenance costs and ad valorem taxes.
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, 16% from $5,575 for the three months ended September
30, 1996 to $4,688 for the same period in 1997.
9
<PAGE>
Depletion was $32,331 for the three months ended September 30, 1997 compared to
$24,663 for the same period in 1996, representing an increase of $7,668, or 31%,
primarily attributable to a decline in oil reserves during the third quarter of
1997 due to lower commodity prices, offset by a decline in production of 703
barrels for the three months ended September 30, 1997 as compared to the same
period in 1996.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $14,729 during the nine
months ended September 30, 1997 from the same period ended September 30, 1996.
This decrease was due to proceeds received in 1996 from the litigation
settlement as discussed above and the increase in G&A expenses paid, offset by a
decrease in production and abandoned property costs paid and an increase in oil
and gas sales receipts.
Net Cash Provided by Investing Activities
The Partnership's principal investing activities during the nine months ended
September 30, 1997 and 1996 included expenditures related to equipment
replacement on several oil and gas properties.
Proceeds from disposition of assets of $4,038 received during the nine months
ended September 30, 1997 derived from equipment sold of $2,511 from one fully
depleted well and $1,527 from one abandoned well. Proceeds of $9,044 received
during the nine months ended September 30, 1996 consisted of proceeds from the
sale of equipment of $8,521 from one fully depleted well and $523 on one
abandoned well.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1997 to cover
distributions to the partners of $292,585 of which $68,374 was distributed to
the general partners and $224,211 to the limited partners. For the same period
ended September 30, 1996, cash was sufficient for distributions to the partners
of $283,172 of which $66,495 was distributed to the general partners and
$216,677 to the limited partners. Cash distributions to the partners of $283,172
for the nine months ended September 30, 1996 included $8,176 to the general
partners and $36,851 to the limited partners, resulting from proceeds received
in the litigation settlement as discussed in Item 2.
It is expected that future net cash provided by operating activities will be
sufficient for any capital expenditures and any distributions. As the production
from the properties declines, distributions are also expected to decrease.
- ---------------
(1) "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains 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.
10
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Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K - none
11
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PARKER & PARSLEY 82-II, LTD.
(A Texas Limited Partnership)
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-II, LTD.
By: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 13, 1997 By: /s/ Rich Dealy
--------------------------------
Rich Dealy, Vice President and
Controller
12
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000717374
<NAME> 82II.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 145,020
<SECURITIES> 0
<RECEIVABLES> 57,192
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202,212
<PP&E> 8,860,815
<DEPRECIATION> 7,358,408
<TOTAL-ASSETS> 1,704,619
<CURRENT-LIABILITIES> 20,282
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,684,337
<TOTAL-LIABILITY-AND-EQUITY> 1,704,619
<SALES> 448,229
<TOTAL-REVENUES> 459,058
<CGS> 0
<TOTAL-COSTS> 358,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 100,727
<INCOME-TAX> 0
<INCOME-CONTINUING> 100,727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100,727
<EPS-PRIMARY> 9.89
<EPS-DILUTED> 0
</TABLE>
