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, 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. 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 10 pages.
-There are no exhibits-
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PARKER & PARSLEY 86-A, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 1997 and
December 31, 1996 .................................... 3
Statements of Operations for the three months
ended March 31, 1997 and 1996........................... 4
Statement of Partners' Capital for the three months
ended March 31, 1997.................................... 5
Statements of Cash Flows for the three months
ended March 31, 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.......................... 9
27. Financial Data Schedule
Signatures................................................ 10
2
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PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1997 1996
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $189,024 at March 31
and $231,863 at December 31 $ 189,405 $ 232,139
Accounts receivable - oil and gas sales 85,128 121,894
---------- ----------
Total current assets 274,533 354,033
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,088,676 7,084,599
Accumulated depletion (5,676,878) (5,634,266)
---------- ----------
Net oil and gas properties 1,411,798 1,450,333
---------- ----------
$ 1,686,331 $ 1,804,366
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 55,978 $ 76,557
Partners' capital:
Managing general partner 14,998 15,972
Limited partners (10,131 interests) 1,615,355 1,711,837
--------- ---------
1,630,353 1,727,809
--------- ---------
$ 1,686,331 $ 1,804,366
========= =========
The financial information included as of March 31,1997 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 86-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
-------------------------
1997 1996
--------- ---------
Revenues:
Oil and gas $ 172,398 $ 216,043
Interest 2,416 1,117
Salvage income from equipment disposals - 14,605
-------- --------
174,814 231,765
-------- --------
Costs and expenses:
Oil and gas production 104,951 116,875
General and administrative 5,172 6,481
Depletion 42,612 44,179
-------- --------
152,735 167,535
-------- --------
Net income $ 22,079 $ 64,230
======== ========
Allocation of net income:
Managing general partner $ 221 $ 642
======== ========
Limited partners $ 21,858 $ 63,588
======== ========
Net income per limited partnership interest $ 2.16 $ 6.28
======== ========
Distributions per limited partnership interest $ 11.68 $ 7.51
======== ========
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 86-A, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ----------- -----------
Balance at January 1, 1997 $ 15,972 $ 1,711,837 $ 1,727,809
Distributions (1,195) (118,340) (119,535)
Net income 221 21,858 22,079
-------- ---------- ----------
Balance at March 31, 1997 $ 14,998 $ 1,615,355 $ 1,630,353
======== ========== ==========
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 86-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
-----------------------
1997 1996
--------- ---------
Cash flows from operating activities:
Net income $ 22,079 $ 64,230
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 42,612 44,179
Salvage income from equipment disposals - (14,605)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 36,766 (756)
Decrease in accounts payable (21,393) (3,875)
-------- --------
Net cash provided by operating activities 80,064 89,173
-------- --------
Cash flows from investing activities:
(Additions to) disposals of oil and gas properties (3,263) 526
Proceeds from salvage income on equipment disposals - 14,605
-------- --------
Net cash provided by (used in)
investing activities (3,263) 15,131
-------- --------
Cash flows from financing activities:
Cash distributions to partners (119,535) (76,891)
-------- --------
Net increase (decrease) in cash and cash equivalents (42,734) 27,413
Cash and cash equivalents at beginning of period 232,139 66,625
-------- --------
Cash and cash equivalents at end of period $ 189,405 $ 94,038
======== ========
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.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 86-A, Ltd. (the "Partnership") is a limited partnership
organized in 1986 under the laws of the State of Texas. The Partnership 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. Basis of presentation
In the opinion of management, the unaudited financial statements as of March 31,
1997 of the Partnership 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 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
Steven L. Beal, Senior Vice President, 303 West Wall, Suite 101, Midland, Texas
79701.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Revenues:
The Partnership's oil and gas revenues decreased 20% to $172,398 from $216,043
for the three months ended March 31, 1997 as compared to the three months ended
March 31, 1996. The decrease in revenues resulted from a 28% decline in barrels
of oil produced and sold and a 44% decline in mcf of gas produced and sold,
offset by a 16% increase in the average price received per barrel of oil and a
31% increase in the average price received per mcf of gas. For the three months
ended March 31, 1997, 5,543 barrels of oil were sold compared to 7,728 for the
same period in 1996, a decrease of 2,185 barrels. Of the decrease, 1,832
barrels, or 24%, was attributable to the sale of four oil and gas wells during
1996. The additional decrease of 4%, or 353 barrels, was due to the decline
characteristics of the Partnership's oil and gas properties. For the three
months ended March 31, 1997, 18,961 mcf of gas were sold compared to 33,905 for
the same period in 1996, a decrease of 14,944 mcf. Of the decrease, 7,954 mcf,
7
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or 23%, was attributable to the sale of four oil and gas wells during 1996. The
additional decrease of 6,990, or 21%, was due to the decline characteristics of
the Partnership's oil and gas properties. Due to these decline 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 increased $2.93 from $18.87 for the
three months ended March 31, 1996 to $21.80 for the same period in 1997, while
the average price received per mcf of gas increased from $2.07 during the three
months ended March 31, 1996 to $2.72 as compared to the three months ended March
31, 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
three months ended March 31, 1997.
Costs and Expenses:
Total costs and expenses decreased to $152,735 for the three months ended March
31, 1997 as compared to $167,535 for the same period in 1996, a decrease of
$14,800, or 9%. This decrease was due to declines in production costs, general
and administrative expense ("G&A") and depletion.
Production costs were $104,951 for the three months ended March 31, 1997 and
$116,875 for the same period in 1996 resulting in a $11,924 decrease, or 10%.
This decrease was 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 and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 20% from $6,481 for the three months ended March 31,
1996 to $5,172 for the same period in 1997. The Partnership agreement limits G&A
to 3% of gross oil and gas revenues.
Depletion was $42,612 for the three months ended March 31, 1997 compared to
$44,179 for the same period in 1996. This represented a decrease in depletion of
$1,567, or 4%.
8
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Liquidity and Capital Resources
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during the three months ended March 31,
1997 and 1996 were related to the addition or disposal of oil and gas equipment
on active properties.
Proceeds from salvage income of $14,605 were received during the three months
ended March 31, 1996, resulting from equipment credits received on one fully
depleted well.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1997 to cover
distributions to the partners of $119,535 of which $118,340 was distributed to
the limited partners and $1,195 to the managing general partner. For the same
period ended March 31, 1996, cash was sufficient for distributions to the
partners of $76,891 of which $76,122 was distributed to the limited partners and
$769 to the managing general partner.
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.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedules
(b) Reports on Form 8-K - none
9
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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: May 7, 1997 By: /s/ Steven L. Beal
--------------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
10
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 189,405
<SECURITIES> 0
<RECEIVABLES> 85,128
<ALLOWANCES> 0
<INVENTORY> 0
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<DEPRECIATION> 5,676,878
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0
0
<COMMON> 0
<OTHER-SE> 1,630,353
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<SALES> 172,398
<TOTAL-REVENUES> 174,814
<CGS> 0
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<INCOME-PRETAX> 22,079
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,079
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,079
<EPS-PRIMARY> 2.16
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