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 June 30, 1998
or
/ / Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File 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 / /
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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 June 30, 1998 and
December 31, 1997........................................ 3
Statements of Operations for the three and six
months ended June 30, 1998 and 1997....................... 4
Statement of Partners' Capital for the six months
ended June 30, 1998....................................... 5
Statements of Cash Flows for the six months
ended June 30, 1998 and 1997.............................. 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
27.1 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
June 30, December 31,
1998 1997
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $277,882 at June 30 and
$150,579 at December 31 $ 278,382 $ 151,079
Accounts receivable:
Oil and gas sales 51,786 60,072
Other - 152,402
---------- ----------
Total current assets 330,168 363,553
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 8,424,690 8,420,466
Accumulated depletion (7,401,973) (7,327,693)
---------- ----------
Net oil and gas properties 1,022,717 1,092,773
---------- ----------
$ 1,352,885 $ 1,456,326
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 14,783 $ 16,723
Partners' capital:
General partners 156,389 167,998
Limited partners (6,126 interests) 1,181,713 1,271,605
---------- ----------
1,338,102 1,439,603
---------- ----------
$ 1,352,885 $ 1,456,326
========== ==========
The financial information included as of June 30, 1998 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 Six months ended
June 30, June 30,
--------------------- ---------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Revenues:
Oil and gas $ 106,337 $ 140,301 $ 215,630 $ 316,893
Interest 3,470 2,367 6,660 4,597
Gain on disposition of assets 1,281 3,620 1,281 3,620
-------- -------- -------- --------
111,088 146,288 223,571 325,110
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 76,077 77,737 139,621 154,892
General and administrative 3,151 5,346 7,166 11,413
Depletion 49,684 34,813 74,280 68,389
Abandoned property - 666 - 666
-------- -------- -------- --------
128,912 118,562 221,067 235,360
-------- -------- -------- --------
Net income (loss) $ (17,824) $ 27,726 $ 2,504 $ 89,750
======== ======== ======== ========
Allocation of net income (loss):
General partners $ 2,805 $ 11,999 $ 11,535 $ 32,567
======== ======== ======== ========
Limited partners $ (20,629) $ 15,727 $ (9,031) $ 57,183
======== ======== ======== ========
Net income (loss) per limited
partnership interest $ (3.36) $ 2.56 $ (1.47) $ 9.33
======== ======== ======== ========
Distributions per limited
partnership interest $ 3.80 $ 11.60 $ 13.20 $ 27.60
======== ======== ======== ========
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, 1998 $ 167,998 $1,271,605 $1,439,603
Distributions (23,144) (80,861) (104,005)
Net income (loss) 11,535 (9,031) 2,504
--------- --------- ---------
Balance at June 30, 1998 $ 156,389 $1,181,713 $1,338,102
========= ========= =========
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)
Six months ended
June 30,
-------------------------
1998 1997
---------- ----------
Cash flows from operating activities:
Net income $ 2,504 $ 89,750
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 74,280 68,389
Gain on disposition of assets (1,281) (3,620)
Changes in assets and liabilities:
Accounts receivable 8,286 46,635
Accounts payable (1,940) 722
--------- ---------
Net cash provided by operating activities 81,849 201,876
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (4,224) (32)
Proceeds from asset dispositions 153,683 3,620
--------- ---------
Net cash provided by investing activities 149,459 3,588
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (104,005) (220,935)
--------- ---------
Net increase (decrease) in cash and cash equivalents 127,303 (15,471)
Cash and cash equivalents at beginning of period 151,079 179,158
--------- ---------
Cash and cash equivalents at end of period $ 278,382 $ 163,687
========= =========
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
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PARKER & PARSLEY 82-II, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 82-II, Ltd. (the "Partnership") is a limited partnership
organized in 1982 under the laws of the State of Texas.
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. Basis of presentation
In the opinion of management, the unaudited financial statements of the
Partnership as of June 30, 1998 and for the three and six months ended June 30,
1998 and 1997 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. However, these interim results are not
necessarily indicative of results for a full year.
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, 1997, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square
West, Irving, Texas 75039-3746.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Six months ended June 30, 1998 compared with six months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 32% to $215,630 from $316,893
for the six months ended June 30, 1998 and 1997, respectively. The decrease in
revenues resulted from lower average prices received, offset by an increase in
production. For the six months ended June 30, 1998, 10,417 barrels of oil, 4,340
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barrels of natural gas liquids ("NGLs") and 22,148 mcf of gas were sold, or
18,448 barrel of oil equivalents ("BOEs"). For the six months ended June 30,
1997, 11,177 barrels of oil and 34,041 mcf of gas were sold, or 16,851 BOEs.
As of September 30, 1997, the Partnership began accounting for processed natural
gas production as processed natural gas liquids and dry residue gas.
Consequently, separate product volumes will not be comparable to 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 three and six months ended June 30,
1998 is the price received for dry residue gas and the price per mcf for natural
gas for the three and six months ended June 30, 1997 is a price for wet gas
(i.e., natural gas liquids combined with dry residue gas).
The average price received per barrel of oil decreased $6.56, or 32%, from
$20.43 for the six months ended June 30, 1997 to $13.87 for the same period in
1998. The average price received per barrel of NGLs during the six months ended
June 30, 1998 was $7.79. The average price received per mcf of gas decreased 35%
from $2.60 during the six months ended June 30, 1997 to $1.68 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 during the six months ended
June 30, 1998.
During most of 1997, 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 1998. On July 29, 1998,
the market price for West Texas intermediate crude was $11.58 per barrel. A
continuation of the oil price environment experienced during the first half of
1998 will have an adverse effect on the Partnership's revenues and operating
cash flow and could result in additional decreases in the carrying value of the
Partnership's oil and gas properties.
A gain on disposition of assets of $1,281 was recognized during the six months
ended June 30, 1998 from post closing adjustments received from the sale of six
oil and wells and an overriding royalty interest in one well during 1997. During
the same period in 1997, a gain of $3,620 was received due to the sale of
equipment on abandoned wells. Expenses incurred to plug and abandon these wells
totaled $666.
Costs and Expenses:
Total costs and expenses decreased to $221,067 for the six months ended June 30,
1998 as compared to $235,360 for the same period in 1997, a decrease of $14,293,
or 6%. This decrease was due to declines in production costs, general and
administrative expenses ("G&A") and abandoned property costs, offset by an
increase in depletion.
Production costs were $139,621 for the six months ended June 30, 1998 and
$154,892 for the same period in 1997 resulting in a $15,271 decrease, or 10%.
The decrease was due to declines in well maintenance costs and production taxes
and the sale of six oil and gas wells during 1997.
8
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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, 37% from $11,413 for the six months ended June 30, 1997
to $7,166 for the same period in 1998.
Depletion was $74,280 for the six months ended June 30, 1998 compared to $68,389
for the same period in 1997. This represented an increase in depletion of
$5,891, or 9%. This increase was primarily attributable to a decrease in oil
reserves during the six months ended June 30, 1998 as a result of lower
commodity prices, offset by a reduction in oil production of 760 barrels for the
period ended June 30, 1998 as compared to the same period in 1997.
Three months ended June 30, 1998 compared with three months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 24% to $106,337 from $140,301
for the three months ended June 30, 1998 and 1997, respectively. The decrease in
revenues resulted from lower average prices received, offset by an increase in
production. For the three months ended June 30, 1998, 5,384 barrels of oil,
2,165 barrels of NGLs and 11,027 mcf of gas were sold, or 9,387 BOEs. For the
three months ended June 30, 1997, 5,330 barrels of oil and 17,071 mcf of gas
were sold, or 8,175 BOEs.
The average price received per barrel of oil decreased $5.65, or 30%, from
$18.76 for the three months ended June 30, 1997 to $13.11 for the three months
ended June 30, 1998. The average price received per barrel of NGLs during the
three months ended June 30, 1998 was $8.02. The average price received per mcf
of gas decreased 29% to $1.67 during the three months ended June 30, 1998 from
$2.36 during the same period in 1997.
A gain on disposition of assets of $1,281 was recognized during the three months
ended June 30, 1998 from post closing adjustments received from the sale of six
oil and wells and an overriding royalty interest in one well during 1997. During
the same period in 1997, a gain of $3,620 was received due to the sale of
equipment on abandoned wells. Expenses incurred to plug and abandon these wells
totaled $666.
Costs and Expenses:
Total costs and expenses increased to $128,912 for the three months ended June
30, 1998 as compared to $118,562 for the same period in 1997, an increase of
$10,350, or 9%. This increase was due to an increase in depletion, offset by
decreases in G&A, production costs and abandoned property costs.
Production costs were $76,077 for the three months ended June 30, 1998 and
$77,737 for the same period in 1997 resulting in a $1,660 decrease. The decrease
was due to a decline in production taxes.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
9
<PAGE>
decreased, in aggregate, 41% from $5,346 for the three months ended June 30,
1997 to $3,151 for the same period in 1998.
Depletion was $49,684 for the three months ended June 30, 1998 compared to
$34,813 for the same period in 1997. This represented an increase in depletion
of $14,871, or 43%. This increase was primarily attributable to a decrease in
oil reserves during the three months ended June 30, 1998 as a result of lower
commodity prices and a slight increase in oil production for the three months
ended June 30, 1998 compared to the same period in 1997.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $120,027 during the six
months ended June 30, 1998 from the same period ended June 30, 1997. This
decrease was due to a decline in oil and gas sales receipts, offset by decreases
in production costs and G&A expenses paid.
Net Cash Provided by Investing Activities
The Partnership's investing activities during the six months ended June 30, 1998
and 1997 were related to the addition of oil and gas equipment on active
properties.
Proceeds from asset dispositions of $153,683 were received during the six months
ended June 30, 1998 from the sale of six oil and gas wells during 1997. Proceeds
of $3,620 were received during the same period during 1997, of which $2,092 was
received from the disposal of oil and gas equipment on one well abandoned in a
prior year and $1,528 was received from the disposal of equipment on one fully
depleted well abandoned during the current period.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1998 to cover
distributions to the partners of $104,005 of which $23,144 was distributed to
the general partners and $80,861 to the limited partners. For the same period
ended June 30, 1997, cash was sufficient for distributions to the partners of
$220,935 of which $51,858 was distributed to the general partners and $169,077
to the limited partners.
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.
Information systems for the year 2000
The managing general partner will be required to modify its information systems
in order to accurately process Partnership data referencing the year 2000.
Because of the importance of occurrence dates in the oil and gas industry, the
10
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consequences of not pursuing these modifications could be very significant to
the Partnership's ability to manage and report operating activities. Currently,
the managing general partner plans to contract with third parties to perform the
software programming changes necessary to correct any existing deficiencies.
Such programming changes are anticipated to be completed and tested by June
1999. The managing general partner will allocate a portion of the costs of the
year 2000 programming charges to the Partnership when they are incurred, along
with recurring general and administrative expenses. Although the costs are not
estimable at this time, they should not be significant to the Partnership.
- ---------------
(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.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 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: August 6, 1998 By: /s/ Rich Dealy
---------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
12
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<ARTICLE> 5
<CIK> 0000717374
<NAME> 82II.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 278,382
<SECURITIES> 0
<RECEIVABLES> 51,786
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 330,168
<PP&E> 8,424,690
<DEPRECIATION> 7,401,973
<TOTAL-ASSETS> 1,352,885
<CURRENT-LIABILITIES> 14,783
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,338,102
<TOTAL-LIABILITY-AND-EQUITY> 1,352,885
<SALES> 215,630
<TOTAL-REVENUES> 223,571
<CGS> 0
<TOTAL-COSTS> 221,067
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,504
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,504
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<EPS-DILUTED> 0
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