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 March 31, 1996, 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. 2-90417
PARKER & PARSLEY 84-A, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-1974814
(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 14 pages.
There are no exhibits.
<PAGE>
PARKER & PARSLEY 84-A, LTD.
(A Texas Limited Partnership)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including
interest bearings deposits of $118,804
at March 31 and $157,138 at December 31 $ 119,304 $ 157,388
Accounts receivable - oil and gas sales 191,675 180,964
----------- -----------
Total current assets 310,979 338,352
Oil and gas properties - at cost, based
on the successful efforts accounting
method 18,200,914 18,200,723
Accumulated depletion (14,029,643) (13,940,516)
----------- -----------
Net oil and gas properties 4,171,271 4,260,207
----------- -----------
$ 4,482,250 $ 4,598,559
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 62,077 $ 105,738
Partners' capital:
Limited partners (19,435 interests) 3,943,804 4,013,044
General partners 476,369 479,777
----------- -----------
4,420,173 4,492,821
----------- -----------
$ 4,482,250 $ 4,598,559
=========== ===========
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.
2
<PAGE>
PARKER & PARSLEY 84-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
1996 1995
---------- ----------
Revenues:
Oil and gas sales $ 422,643 $ 412,623
Interest income 1,923 1,616
--------- ---------
Total revenues 424,566 414,239
Costs and expenses:
Production costs 241,442 254,966
General and administrative expenses 12,929 13,930
Depletion 89,127 153,119
--------- ---------
Total costs and expenses 343,498 422,015
--------- ---------
Net income (loss) $ 81,068 $ (7,776)
========= =========
Allocation of net income (loss):
General partners $ 33,699 $ 21,349
========= =========
Limited partners $ 47,369 $ (29,125)
========= =========
Net income (loss) per limited
partnership interest $ 2.44 $ (1.50)
========= =========
Distributions per limited partnership
interest $ 6.00 $ 6.20
========= =========
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.
3
<PAGE>
PARKER & PARSLEY 84-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
General Limited
partners partners Total
----------- ----------- -----------
Balance at January 1, 1995 $ 661,306 $ 5,639,089 $ 6,300,395
Distributions (42,174) (120,472) (162,646)
Net income (loss) 21,349 (29,125) (7,776)
---------- ---------- ----------
Balance at March 31, 1995 $ 640,481 $ 5,489,492 $ 6,129,973
========== ========== ==========
Balance at January 1, 1996 $ 479,777 $ 4,013,044 $ 4,492,821
Distributions (37,107) (116,609) (153,716)
Net income 33,699 47,369 81,068
---------- ---------- ----------
Balance at March 31, 1996 $ 476,369 $ 3,943,804 $ 4,420,173
========== ========== ==========
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
<PAGE>
PARKER & PARSLEY 84-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income (loss) $ 81,068 $ (7,776)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depletion 89,127 153,119
Changes in assets and liabilities:
Increase in accounts receivable (10,711) (15,155)
Increase (decrease) in accounts payable (42,988) 16,334
--------- ---------
Net cash provided by operating
activities 116,496 146,522
Cash flows from investing activities:
(Additions) disposals of oil and gas
properties (864) 116
Cash flows from financing activities:
Cash distributions to partners (153,716) (162,646)
--------- ---------
Net decrease in cash and cash
equivalents (38,084) (16,008)
Cash and cash equivalents at beginning
of period 157,388 68,542
--------- ---------
Cash and cash equivalents at end of period $ 119,304 $ 52,534
========= =========
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
<PAGE>
PARKER & PARSLEY 84-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
NOTE 1.
Parker & Parsley 84-A, Ltd. (the "Registrant") is a limited partnership
organized in 1984 under the laws of the State of Texas.
The Registrant engages primarily in oil and gas development and production in
Texas and is not involved in any industry segment other than oil and gas.
NOTE 2.
In the opinion of management, the unaudited financial statements as of March 31,
1996 of the Registrant 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.
The financial statements should be read in conjunction with the financial
statements and the notes thereto contained in the Registrant's Report on Form
10-K for the year ended December 31, 1995, as filed with the Securities and
Exchange Commission, a copy of which is available upon request by writing to
Steven L. Beal, Senior Vice President, 303 West Wall, Suite 101, Midland, Texas
79701.
NOTE 3.
On May 25, 1993, a final settlement agreement was negotiated, drafted and
finally executed, ending litigation which had begun on September 5, 1989, when
the Registrant filed suit along with other parties against Dresser Industries,
Inc.; Titan Services, Inc.; BJ-Titan Services Company; BJ- Hughes Holding
Company; Hughes Tool Company; Baker Hughes Production Tools, Inc.; and Baker
Hughes Incorporated alleging that the defendants had intentionally failed to
provide the materials and services ordered and paid for by the Registrant and
other parties in connection with the fracturing and acidizing of 523 wells, and
then fraudulently concealed the shorting practice from Parker & Parsley
Development L.P. ("PPDLP"). The May 25, 1993 settlement agreement called for a
payment of $115 million in cash by the defendants, and Southmark, the
6
<PAGE>
Registrant, and the other plaintiffs indemnified the defendants against the
claims of Jack N. Price. The managing general partner received the funds,
deducted incurred legal expenses, accrued interest, determined the general
partner's portion of the funds and calculated any inter-partnership allocations.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G. "Zeke"
Lancaster in the Federal Court lawsuit, filed suit in State Court in Beaumont
against all of the plaintiff partnerships, including the Registrant and others,
alleging his entitlement to 12% of the settlement proceeds. Price's lawsuit
claim for approximately $13.8 million is predicated on a purported contract
entered into with Southmark Corporation in August 1988 in which he allegedly
binds the Registrant and the other defendants, as well as Southmark. Although
PPDLP believes the lawsuit was without merit and has vigorously defended it,
PPDLP has held in reserve approximately 12.5% of the total settlement (the
"Reserve") pending final resolution of the litigation.
A distribution of $91,000,000 was made to the working interest owners, including
the Registrant, on July 30, 1993. The limited partners received their
distribution of $8,512,603, or $438.00 per limited partnership interest, in
September 1993. The allocation of the lawsuit settlement amount was based on the
original verdict entered on October 26, 1990. The allocation to the working
interest owners in each well (including the Registrant) was based on a ratio of
the relative amount of damages due to overcharges for services and materials
("Materials") and damages for loss of past and future production ("Production"),
each as determined in that initial judgment. Within the Registrant, damages for
Materials were allocated between the partners based on their original sharing
percentages for costs of acquiring and/or drilling of wells. Similarly, damages
related to Production were allocated to the partners in the Registrant based on
their respective share of revenues from the subject wells.
As a condition of the purchase by Parker & Parsley Petroleum Company of Parker &
Parsley Development Company ("PPDC"), which was merged into PPDLP on January 1,
1995, from its former parent in May 1989, PPDC's interest in the lawsuit and
subsequent settlement was retained by the former parent. Consequently, all of
PPDC's share of the settlement related to its separately held interests in the
wells and its partnership interests in the sponsored partnerships (except that
portion allocable to interests acquired by PPDC after May 1989) was paid to the
former parent.
On September 20, 1995, the Beaumont trial judge entered a summary judgment
against Southmark for the $13,790,000 contingent fee sought by Price, together
with prejudgment interest, and also awarded Price an additional $5,498,525 in
attorneys' fees. On January 22, 1996, the trial judge entered an interlocutory
7
<PAGE>
summary judgment against Dresser Industries and Baker Hughes for an amount yet
to be determined. Pursuant to their indemnity obligations, the Registrant,
Southmark, PPDLP and other original plaintiffs have vigorously protected the
rights of both Dresser and Baker Hughes. Southmark has vigorously pursued its
appeal of the judgment, and has posted a supersedeas bond using the Reserve as
collateral. On April 29, 1996, all of the parties, including the Registrant and
Southmark, entered into a $7.4 million settlement with Price which fully and
finally resolves all of the litigation and disputes between the parties,
including the Registrant's indemnity obligations to Dresser and Baker Hughes.
Pursuant to the settlement agreement, all of the pending lawsuits and judgments
will be dismissed, the supersedeas bond released, and the Reserve released as
collateral. It is expected that before the end of the third quarter, the
necessary dismissals and releases will be effected, the managing general partner
will conduct an accounting of income and expenses among the parties, and a final
distribution will be made to the working interest owners, including the
Registrant and its partners.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS(1)
The Registrant was formed July 6, 1984. The general partners of the Registrant
at December 31, 1994 were Parker & Parsley Development Company ("PPDC") and P&P
Employees 84-A, Ltd. ("EMPL") (a Texas limited partnership whose general partner
was PPDC) and 1,386 limited partners. On January 1, 1995, Parker & Parsley
Development L.P. ("PPDLP"), a Texas limited partnership, became the managing
general partner of the Registrant and EMPL, by acquiring the rights and assuming
the obligations of PPDC. PPDLP's co-general partner is EMPL. PPDLP acquired
PPDC's rights and obligations as managing general partner of the Registrant in
connection with the merger of PPDC, P&P Producing, Inc. and Spraberry
Development Corporation into MidPar L.P., which survived the merger with a
change of name to PPDLP. The sole general partner of PPDLP is Parker & Parsley
Petroleum USA, Inc. PPDLP has the power and authority to manage, control and
administer all Registrant affairs. The limited partners contributed $19,435,000
representing 19,435 interests ($1,000 per interest).
Since its formation, the Registrant has invested $19,664,362 in various
prospects that were drilled in Texas. Four wells have been plugged and abandoned
due to unprofitable operations; one in 1989, one in 1990, one in 1992 and one in
1995. The Registrant received interests in six additional producing wells in
1993 due to the Registrant's back-in after payout provisions. At March 31, 1996,
the Registrant had 38 producing oil and gas wells.
8
<PAGE>
Results of Operations
Revenues:
The Registrant's oil and gas revenues increased to $422,643 from $412,623 for
the three months ended March 31, 1996 and 1995, respectively, an increase of
$10,020. The increase in revenues resulted from a 12% increase in the average
price received per barrel of oil and a 25% increase in the average price
received per mcf of gas, offset by a 10% decline in barrels of oil produced and
sold and a 14% decline in mcf of gas produced and sold. For the three months
ended March 31, 1996, 15,792 barrels of oil were sold compared to 17,558 for the
same period in 1995, a decrease of 1,766 barrels. For the three months ended
March 31, 1996, 54,576 mcf of gas were sold compared to 63,398 for the same
period in 1995, a decrease of 8,822 mcf. The decrease in production volumes was
primarily due to the decline characteristics of the Registrant's oil and gas
properties. Management expects a certain amount of decline in production to
continue in the future until the Registrant's economically recoverable reserves
are fully depleted.
The average price received per barrel of oil increased $2.06 from $17.17 for the
three months ended March 31, 1995 to $19.23 for the same period in 1996. The
average price received per mcf of gas increased from $1.75 during the three
months ended March 31, 1995 to $2.18 for the same period in 1996. 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 Registrant may therefore sell its future oil and gas production at
average prices lower or higher than that received during the three months ended
March 31, 1996.
Costs and Expenses:
Total costs and expenses decreased to $343,498 for the three months ended March
31, 1996 as compared to $422,015 for the same period in 1995, a decline of
$78,517, or 19%. This decline was due to decreases in production costs, general
and administrative expenses ("G&A") and depletion.
Production costs were $241,442 for the three months ended March 31, 1996 and
$254,966 for the same period in 1995 resulting in a $13,524 decrease, or 5%. The
decrease primarily consisted of less well repair and maintenance costs and a
decrease in ad valorem taxes.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
9
<PAGE>
period, G&A decreased, in aggregate, 7% from $13,930 for the three months ended
March 31, 1995 to $12,929 for the same period in 1996.
Depletion was $89,127 for the three months ended March 31, 1996 compared to
$153,119 for the same period in 1995. This represented a decrease in depletion
of $63,992, or 42%, primarily attributable to the adoption of the provisions of
Statement of Financial Accounting Standards No. 121. "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
effective for the fourth quarter of 1995 and the reduction of net depletable
basis resulting from the charge taken upon such adoption. Depletion was computed
property-by-property utilizing the unit-of-production method based upon the
dominant mineral produced, generally oil. Oil production decreased 1,766 barrels
for the three months ended March 31, 1996 from the same period in 1995, while
oil reserves of barrels were revised upward by 28,903 barrels, or 4%.
On May 25, 1993, a final settlement agreement was negotiated, drafted and
finally executed, ending litigation which had begun on September 5, 1989, when
the Registrant filed suit along with other parties against Dresser Industries,
Inc.; Titan Services, Inc.; BJ-Titan Services Company; BJ- Hughes Holding
Company; Hughes Tool Company; Baker Hughes Production Tools, Inc.; and Baker
Hughes Incorporated alleging that the defendants had intentionally failed to
provide the materials and services ordered and paid for by the Registrant and
other parties in connection with the fracturing and acidizing of 523 wells, and
then fraudulently concealed the shorting practice from PPDLP. The May 25, 1993
settlement agreement called for a payment of $115 million in cash by the
defendants, and Southmark, the Registrant, and the other plaintiffs indemnified
the defendants against the claims of Jack N. Price. The managing general partner
received the funds, deducted incurred legal expenses, accrued interest,
determined the general partner's portion of the funds and calculated any
inter-partnership allocations.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G. "Zeke"
Lancaster in the Federal Court lawsuit, filed suit in State Court in Beaumont
against all of the plaintiff partnerships, including the Registrant and others,
alleging his entitlement to 12% of the settlement proceeds. Price's lawsuit
claim for approximately $13.8 million is predicated on a purported contract
entered into with Southmark Corporation in August 1988 in which he allegedly
binds the Registrant and the other defendants, as well as Southmark. Although
PPDLP believes the lawsuit was without merit and has vigorously defended it,
PPDLP has held in reserve approximately 12.5% of the total settlement (the
"Reserve") pending final resolution of the litigation.
10
<PAGE>
A distribution of $91,000,000 was made to the working interest owners, including
the Registrant, on July 30, 1993. The limited partners received their
distribution of $8,512,603, or $438.00 per limited partnership interest, in
September 1993. The allocation of the lawsuit settlement amount was based on the
original verdict entered on October 26, 1990. The allocation to the working
interest owners in each well (including the Registrant) was based on a ratio of
the relative amount of damages due to overcharges for services and materials
("Materials") and damages for loss of past and future production ("Production"),
each as determined in that initial judgment. Within the Registrant, damages for
Materials were allocated between the partners based on their original sharing
percentages for costs of acquiring and/or drilling of wells. Similarly, damages
related to Production were allocated to the partners in the Registrant based on
their respective share of revenues from the subject wells.
As a condition of the purchase by Parker & Parsley Petroleum Company of PPDC,
which was merged into PPDLP on January 1, 1995, from its former parent in May
1989, PPDC's interest in the lawsuit and subsequent settlement was retained by
the former parent. Consequently, all of PPDC's share of the settlement related
to its separately held interests in the wells and its partnership interests in
the sponsored partnerships (except that portion allocable to interests acquired
by PPDC after May 1989) was paid to the former parent.
On September 20, 1995, the Beaumont trial judge entered a summary judgment
against Southmark for the $13,790,000 contingent fee sought by Price, together
with prejudgment interest, and also awarded Price an additional $5,498,525 in
attorneys' fees. On January 22, 1996, the trial judge entered an interlocutory
summary judgment against Dresser Industries and Baker Hughes for an amount yet
to be determined. Pursuant to their indemnity obligations, the Registrant,
Southmark, PPDLP and other original plaintiffs have vigorously protected the
rights of both Dresser and Baker Hughes. Southmark has vigorously pursued its
appeal of the judgment, and has posted a supersedeas bond using the Reserve as
collateral. On April 29, 1996, all of the parties, including the Registrant and
Southmark, entered into a $7.4 million settlement with Price which fully and
finally resolves all of the litigation and disputes between the parties,
including the Registrant's indemnity obligations to Dresser and Baker Hughes.
Pursuant to the settlement agreement, all of the pending lawsuits and judgments
will be dismissed, the supersedeas bond released, and the Reserve released as
collateral. It is expected that before the end of the third quarter, the
necessary dismissals and releases will be effected, the managing general partner
will conduct an accounting of income and expenses among the parties, and a final
distribution will be made to the working interest owners, including the
Registrant and its partners.
11
<PAGE>
Liquidity and Capital Resources
Net Cash Provided by Operating Activities:
Net cash provided by operating activities decreased to $116,496 during the three
months ended March 31, 1996, a 20% decrease from the same period ended March 31,
1995. This decrease was due to an increase in expenditures for production costs,
offset by an increase in oil and gas sales receipts. The increase in production
cost expenditures was due to additional well repair and maintenance costs
incurred in an effort to stimulate well production. The increase in oil and gas
sales receipts was due to higher average prices received for both oil and gas,
offset by a decline in barrels of oil and mcf of gas produced and sold.
Net Cash Provided by (Used in) Investing Activities:
The Registrant's principal investing activity during the three months ended
March 31, 1996 was for repair and maintenance activity on various oil and gas
properties.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1996 to cover
distributions to the partners of $153,716 of which $116,609 was distributed to
the limited partners and $37,107 to the general partners. For the same period
ended March 31, 1995, cash was sufficient for distributions to the partners of
$162,646 of which $120,472 was distributed to the limited partners and $42,174
to the general 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.
- - ---------------
(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.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is a party to material litigation which is described in Note 3 of
Notes to Financial Statements above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
13
<PAGE>
PARKER & PARSLEY 84-A, 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 84-A, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: May 14, 1996 By: /s/ Steven L. Beal
--------------------------------------
Steven L. Beal, Senior Vice
President and Chief Financial
Officer of PPUSA
14
<PAGE>
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<CIK> 0000757545
<NAME> 84A.TXT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 119,304
<SECURITIES> 0
<RECEIVABLES> 191,675
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 310,979
<PP&E> 18,200,914
<DEPRECIATION> 14,029,643
<TOTAL-ASSETS> 4,482,250
<CURRENT-LIABILITIES> 62,077
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,420,173
<TOTAL-LIABILITY-AND-EQUITY> 4,482,250
<SALES> 422,643
<TOTAL-REVENUES> 424,566
<CGS> 0
<TOTAL-COSTS> 343,498
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 81,068
<INCOME-TAX> 0
<INCOME-CONTINUING> 81,068
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 81,068
<EPS-PRIMARY> 2.44
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