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, 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. 33-3353A
PARKER & PARSLEY 86-A, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2124884
(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 __ pages.
-There are no exhibits-
<PAGE>
PARKER & PARSLEY 86-A, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 1996 and
December 31, 1995 ................................ 3
Statements of Operations for the three and nine
months ended September 30, 1996 and 1995............. 4
Statement of Partners' Capital for the nine months
ended September 30, 1996............................. 5
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995.......................... 6
Notes to Financial Statements.......................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 9
Part II. Other Information
Item 1. Legal Proceedings...................................... 14
Item 6. Exhibits and Reports on Form 8-K....................... 14
Signatures............................................. 15
2
<PAGE>
PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1996 1995
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $558,227 at September 30
and $66,392 at December 31 $ 558,979 $ 66,625
Accounts receivable - oil and gas sales 66,417 106,785
---------- ----------
Total current assets 625,396 173,410
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,086,129 8,008,245
Accumulated depletion (5,588,434) (6,165,170)
---------- ----------
Net oil and gas properties 1,497,695 1,843,075
---------- ----------
$ 2,123,091 $ 2,016,485
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 94,222 $ 62,993
Partners' capital:
Limited partners (10,131 interests) 2,009,886 1,935,262
Managing general partner 18,983 18,230
--------- ---------
2,028,869 1,953,492
---------- ----------
$ 2,123,091 $ 2,016,485
========== ==========
The financial information included as of September 30, 1996 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 86-A, LTD.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ----------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
Revenues:
Oil and gas $ 179,352 $ 173,349 $ 590,230 $ 587,487
Interest 6,032 1,282 8,670 2,900
Litigation settlement - - 290,690 -
Salvage income from
equipment disposals - - 14,605 6,734
Gain (loss) on sale of
assets (4,729) - 158,367 -
-------- -------- --------- --------
180,655 174,631 1,062,562 597,121
-------- -------- --------- --------
Costs and expenses:
Oil and gas production 83,832 109,012 319,793 367,939
General and administrative 5,380 5,201 17,706 17,625
Depletion 30,405 64,483 110,678 219,809
-------- -------- --------- --------
119,617 178,696 448,177 605,373
-------- -------- --------- --------
Net income (loss) $ 61,038 $ (4,065) $ 614,385 $ (8,252)
======== ======== ========= ========
Allocation of net income
(loss):
Managing general partner $ 610 $ (41) $ 6,143 $ (83)
======== ======== ========= ========
Limited partners $ 60,428 $ (4,024) $ 608,242 $ (8,169)
======== ======== ========= ========
Net income (loss) per limited
partnership interest $ 5.97 $ (.40) $ 60.04 $ (.81)
======== ======== ========= ========
Distributions per limited
partnership interest $ 7.46 $ 6.45 $ 52.67 $ 19.64
======== ======== ========= ========
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 86-A, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 1996 $ 18,230 $1,935,262 $1,953,492
Distributions (5,390) (533,618) (539,008)
Net income 6,143 608,242 614,385
-------- --------- ---------
Balance at September 30, 1996 $ 18,983 $2,009,886 $2,028,869
======== ========= =========
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 86-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
----------------------
1996 1995
--------- ---------
Cash flows from operating activities:
Net income (loss) $ 614,385 $ (8,252)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depletion 110,678 219,809
Salvage income from equipment disposals (14,605) (6,734)
Gain on sale of assets (158,367) -
Changes in assets and liabilities:
Decrease in accounts receivable 40,368 24,823
Increase in accounts payable 29,829 31,711
-------- --------
Net cash provided by operating activities 622,288 261,357
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (2,679) (15,628)
Proceeds from salvage income on equipment disposals 14,605 6,734
Proceeds from sale of assets 397,148 -
-------- --------
Net cash provided by (used in) investing
activities 409,074 (8,894)
-------- --------
Cash flows from financing activities:
Cash distributions to partners (539,008) (201,022)
--------- --------
Net increase in cash and cash equivalents 492,354 51,441
Cash and cash equivalents at beginning of period 66,625 25,005
-------- --------
Cash and cash equivalents at end of period $ 558,979 $ 76,446
======== ========
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 86-A, LTD.
(Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
Note 1.
Parker & Parsley 86-A, Ltd. (the "Registrant") is a limited partnership
organized in 1986 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 Registrant's unaudited financial statements as
of September 30, 1996 and for the three and nine months ended September 30, 1996
and 1995 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 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 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
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.
7
<PAGE>
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 $2,882,376, or $284.51 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
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
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, including $287,784, or $28.41 per limited partnership interest
to the Registrant and its partners.
8
<PAGE>
Note 4.
A gain of $158,367 from the sale of four oil and gas wells and four saltwater
disposal wells to Costilla Energy, L.L.C. was recognized during the nine months
ended September 30, 1996, attributable to proceeds received of $397,148 less the
write-off of remaining capitalized well costs of $238,781.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Nine months ended September 30, 1996 compared with nine months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $590,230 from $587,487 for
the nine months ended September 30, 1996 and 1995, respectively. The increase in
revenues resulted from a 21% increase in the average price received per barrel
of oil and a 33% increase in the average price received per mcf of gas, offset
by a 16% decline in barrels of oil produced and sold and a 25% decline in mcf of
gas produced and sold. For the nine months ended September 30, 1996, 19,905
barrels of oil were sold compared to 23,790 for the same period in 1995, a
decrease of 3,885 barrels. Of the decrease, 2,947 barrels, or 12%, was
attributable to the sale of four oil and gas wells. The additional decrease of
4%, or 938 barrels, was due to the decline characteristics of the Registrant's
oil and gas properties. For the nine months ended September 30, 1996, 85,111 mcf
of gas were sold compared to 113,698 for the same period in 1995, a decrease of
28,587 mcf. Of the decrease, 14,724 mcf, or 13%, was attributable to the sale of
four oil and gas wells. The additional decrease of 13,863 mcf, or 12%, was 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 $3.54 from $17.25 for the
nine months ended September 30, 1995 to $20.79 for the same period in 1996 while
the average price received per mcf of gas increased from $1.56 for the nine
months ended September 30, 1995 to $2.07 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 nine months ended September
30, 1996.
Salvage income of $14,605 was received during the nine months ended September
30, 1996 from the disposal of equipment on one fully depleted well. Salvage
income of $6,734 from equipment disposals for the nine months ended September
30, 1995 was derived from equipment credits received on one fully depleted well.
9
<PAGE>
A gain of $158,367 from the sale of four oil and gas wells and four saltwater
disposal wells was recognized during the nine months ended September 30, 1996,
attributable to proceeds received of $397,148 less the write-off of remaining
capitalized well costs of $238,781.
Costs and Expenses:
Total costs and expenses decreased to $448,177 for the nine months ended
September 30, 1996 as compared to $605,373 for the same period in 1995, a
decrease of $157,196, or 26%. This decrease was due to declines in production
costs and depletion, offset by an increase in general and administrative
expenses ("G&A").
Production costs were $319,793 for the nine months ended September 30, 1996 and
$367,939 for the same period in 1995 resulting in a $48,146 decrease, or 13%.
This decrease was primarily the result of a reduction, in well repair and
maintenance costs, offset by an increase in workover expenses incurred in an
effort to stimulate well production.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
period, G&A increased, in aggregate, from $17,625 for the nine months ended
September 30, 1995 to $17,706 for the same period in 1996. The Partnership
agreement limits G&A to 3% of gross oil and gas revenues.
Depletion was $110,678 for the nine months ended September 30, 1996 compared to
$219,809 for the same period in 1995, representing a decrease of $109,131, or
50%. This decrease was primarily attributable to the following factors: (i) a
reduction in the Registrant's net depletable basis from charges taken 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" ("FAS 121"), (ii) a reduction in oil production from the nine months ended
September 30, 1995 of 3,885 barrels, the major portion of which was due to the
sale of properties during the same period in 1996, and (iii) an increase in oil
and gas reserves during the third quarter of 1996 as a result of higher
commodity prices.
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.
10
<PAGE>
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 $2,882,376, or $284.51 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
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, including $287,784, or $28.41 per limited partnership interest
to the Registrant and its partners.
11
<PAGE>
Three months ended September 30, 1996 compared with three months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $179,352 from $173,349 for
the three months ended September 30, 1996 and 1995, respectively, an increase of
3%. The increase in revenues resulted from a 33% increase in the average price
received per barrel of oil and a 36% increase in the average price received per
mcf of gas, offset by an 18% decline in the barrels of oil produced and sold and
a 32% decline in mcf of gas produced and sold. For the three months ended
September 30, 1996, 5,898 barrels of oil were sold compared to 7,213 for the
same period in 1995, a decrease of 1,315 barrels. Of the decrease, 1,554
barrels, or 21%, was attributable to the sale of four oil and gas wells, offset
by an increase of 3%, or 239 barrels, due to operational changes on several
wells. For the three months ended September 30, 1996, 25,689 mcf of gas were
sold compared to 37,752 for the same period in 1995, a decrease of 12,063 mcf.
Of the decrease, 8,278 mcf, or 22%, was attributable to the sale of four oil and
gas wells. The additional decrease of 3,785 mcf, or 10%, was due to the decline
characteristics of the Registrant's oil and gas properties.
The average price received per barrel of oil increased $5.41 from $16.43 for the
three months ended September 30, 1995 to $21.84 for the same period in 1996
while the average price received per mcf of gas increased from $1.45 for the
three months ended September 30, 1995 to $1.97 in 1996.
Costs and Expenses:
Total costs and expenses decreased to $119,617 for the three months ended
September 30, 1996 as compared to $178,696 for the same period in 1995, a
decrease of $59,079, or 33%. This decrease was due to declines in production
costs and depletion, offset by an increase in G&A.
Production costs were $83,832 for the three months ended September 30, 1996 and
$109,012 for the same period in 1995 resulting in a $25,180 decrease, or 23%.
This decrease was primarily due to a decline in well repair and maintenance
costs.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
period, G&A increased, in aggregate, 3% from $5,201 for the three months ended
September 30, 1995 to $5,380 for the same period in 1996.
Depletion was $30,405 for the three months ended September 30, 1996 compared to
$64,483 for the same period in 1995, representing a decrease of $34,078, or 53%,
primarily attributable to the following factors: (i) a reduction in the
Registrant's net depletable basis from charges taken in accordance with FAS 121,
(ii) a reduction in oil production from the three months ended September 30,
1996, of 1,315 barrels, the major portion of which was due to the sale of
properties during the same period in 1996, and (iii) an increase in oil and gas
reserves during the third quarter of 1996 as a result of higher commodity
prices.
12
<PAGE>
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $360,931 during the nine
months ended September 30, 1996 from the same period ended September 30, 1995.
This increase was primarily due to the receipt of proceeds from the litigation
settlement as discussed in Note 3, and an increase in oil and gas sales.
Net Cash Provided by (Used in) Investing Activities
The Registrant's investing activities during the nine months ended September 30,
1996 and 1995 included expenditures related to equipment replacement on various
oil and gas properties.
The Registrant received proceeds of $14,604 and $6,734 during the nine months
ended September 30, 1996 and 1995, respectively, from the disposal of oil and
gas equipment on fully depleted wells.
Proceeds of $397,148 were received during the nine months ended September 30,
1996 from the sale of four oil and gas wells and four saltwater disposal wells.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1996 to cover
distributions to the partners of $539,008 of which $533,618 was distributed to
the limited partners and $5,390 to the managing general partner. For the same
period ended September 30, 1995, cash was sufficient for distributions to the
partners of $201,022 of which $199,009 was distributed to the limited partners
and $2,013 to the managing general partner.
Cash distributions to the partners of $539,008 for the nine months ended
September 30, 1996 included $287,784 to the limited partners and $2,906 to the
managing general partner, resulting from proceeds received in the litigation
settlement as discussed in Note 3.
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.
13
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
During April 1996, the Registrant completed the settlement of a material
litigation to which it was a party. This litigation and settlement thereof is
described in Note 3 of Notes to Financial Statements above.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
(1) None.
Reports on Form 8-K
During the quarter ended September 30, 1996, the Registrant filed the following
Current Report on Form 8-K:
(1) On August 6, 1996, the Registrant filed a Current Report on Form
8-K, dated June 14, 1996 (the "Asset Divestiture - 8-K") reporting
under Item 2 (Acquisition of Disposition of Assets) the sale of
certain interests in oil and gas properties. Such Current Report
did not include any proforma financial statements relating to the
sale.
a. Preliminary Statement
b. Unaudited Pro Forma Balance Sheet as of March 31, 1996
c. Unaudited Pro Forma Statement of Operations for the three
months ended March 31, 1996
d. Unaudited Pro Forma Statement of Operations for the year
ended December 31, 1995
e. Notes to Unaudited Pro Forma Financial Statements
14
<PAGE>
PARKER & PARSLEY 86-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 86-A, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: November 12, 1996 By: /s/ Steven L. Beal
----------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
15
<PAGE>
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<CIK> 0000789789
<NAME> 86A.TXT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 558,979
<SECURITIES> 0
<RECEIVABLES> 66,417
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 625,396
<PP&E> 7,086,129
<DEPRECIATION> 5,588,434
<TOTAL-ASSETS> 2,123,091
<CURRENT-LIABILITIES> 94,222
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,028,869
<TOTAL-LIABILITY-AND-EQUITY> 2,123,091
<SALES> 590,230
<TOTAL-REVENUES> 1,062,562
<CGS> 0
<TOTAL-COSTS> 448,177
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 614,385
<INCOME-TAX> 0
<INCOME-CONTINUING> 614,385
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 614,385
<EPS-PRIMARY> 60.04
<EPS-DILUTED> 0
</TABLE>
