UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
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)
1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas 75039
---------------------------------------------------------------- ---------
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (972) 444-9001
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>
PARKER & PARSLEY 86-A, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of June 30, 2000 and
December 31, 1999...................................... 3
Statements of Operations for the three and six
months ended June 30, 2000 and 1999..................... 4
Statement of Partners' Capital for the six months
ended June 30, 2000..................................... 5
Statements of Cash Flows for the six months
ended June 30, 2000 and 1999............................ 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.......................... 10
27.1 Financial Data Schedule
Signatures................................................ 11
2
<PAGE>
PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
BALANCE SHEETS
June 30, December 31,
2000 1999
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 68,294 $ 76,838
Accounts receivable - oil and gas sales 114,450 74,543
---------- ----------
Total current assets 182,744 151,381
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,130,961 7,125,711
Accumulated depletion (6,696,716) (6,682,822)
---------- ----------
Net oil and gas properties 434,245 442,889
---------- ----------
$ 616,989 $ 594,270
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 24,082 $ 19,222
Partners' capital:
Managing general partner 4,622 4,444
Limited partners (10,131 interests) 588,285 570,604
---------- ----------
592,907 575,048
---------- ----------
$ 616,989 $ 594,270
========== ==========
</TABLE>
The financial information included as of June 30, 2000 has been prepared by
the managing general partner 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 Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas $ 196,767 $ 140,014 $ 393,746 $ 233,419
Interest 1,681 748 2,821 1,384
Gain on disposition of assets 18,734 - 28,971 -
-------- -------- -------- --------
217,182 140,762 425,538 234,803
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 86,961 84,182 176,913 162,882
General and administrative 5,903 4,200 11,812 7,002
Depletion 6,831 9,628 13,894 62,361
-------- -------- -------- --------
99,695 98,010 202,619 232,245
-------- -------- -------- --------
Net income $ 117,487 $ 42,752 $ 222,919 $ 2,558
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 1,175 $ 428 $ 2,229 $ 26
======== ======== ======== ========
Limited partners $ 116,312 $ 42,324 $ 220,690 $ 2,532
======== ======== ======== ========
Net income per limited
partnership interest $ 11.48 $ 4.18 $ 21.78 $ .25
======== ======== ======== ========
</TABLE>
The financial information included herein has been prepared by
the managing general partner 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)
<TABLE>
Managing
general Limited
partner partners Total
--------- ---------- ----------
<S> <C> <C> <C>
Balance at January 1, 2000 $ 4,444 $ 570,604 $ 575,048
Distributions (2,051) (203,009) (205,060)
Net income 2,229 220,690 222,919
-------- --------- ---------
Balance at June 30, 2000 $ 4,622 $ 588,285 $ 592,907
======== ========= =========
</TABLE>
The financial information included herein has been prepared by
the managing general partner 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)
<TABLE>
Six months ended
June 30,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 222,919 $ 2,558
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 13,894 62,361
Gain on disposition of assets (28,971) -
Changes in assets and liabilities:
Accounts receivable (39,907) (40,102)
Accounts payable 4,860 9,845
--------- ---------
Net cash provided by operating activities 172,795 34,662
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (5,250) -
Proceeds from asset dispositions 28,971 90
--------- ---------
Net cash provided by investing activities 23,721 90
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (205,060) (30,917)
--------- ---------
Net increase (decrease) in cash (8,544) 3,835
Cash at beginning of period 76,838 58,223
--------- ---------
Cash at end of period $ 68,294 $ 62,058
========= =========
</TABLE>
The financial information included herein has been prepared by
the managing general partner 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
June 30, 2000
(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 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 of the
Partnership as of June 30, 2000 and for the three and six months ended June 30,
2000 and 1999 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 may have been
made to the June 30, 1999 financial statements to conform to the June 30, 2000
financial statement presentations.
Certain information and footnote disclosures 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, 1999, 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, 2000 compared with six months ended
June 30, 1999
Revenues:
The Partnership's oil and gas revenues increased 69% to $393,746 for the six
months ended June 30, 2000 as compared to $233,419 for the same period in 1999.
The increase in revenues resulted from higher average prices received, offset by
a decrease in production. For the six months ended June 30, 2000, 9,168 barrels
of oil, 6,254 barrels of natural gas liquids ("NGLs") and 26,019 mcf of gas were
7
<PAGE>
sold, or 19,759 barrel of oil equivalents ("BOEs"). For the six months ended
June 30, 1999, 9,862 barrels of oil, 7,595 barrels of NGLs and 33,171 mcf of gas
were sold, or 22,986 BOEs.
The average price received per barrel of oil increased $14.41, or 108%, from
$13.30 for the six months ended June 30, 1999 to $27.71 for the same period in
2000. The average price received per barrel of NGLs increased $6.84, or 93%,
from $7.35 during the six months ended June 30, 1999 to $14.19 for the same
period in 2000. The average price received per mcf of gas increased 40% from
$1.40 during the six months ended June 30, 1999 to $1.96 for the same period in
2000. 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, 2000.
The volatility of commodity prices has had, and continues to have, a significant
impact on the Partnership's revenues and operating cash flow and could result in
additional decreases to the carrying value of the Partnership's oil and gas
properties.
A gain on disposition of assets of $28,971 was recognized during the six months
ended June 30, 2000 resulting from equipment credits received on two fully
depleted wells.
Costs and Expenses:
Total costs and expenses decreased to $202,619 for the six months ended June 30,
2000 as compared to $232,245 for the same period in 1999, a decrease of $29,626,
or 13%. This decrease was due to a decline in depletion, offset by increases in
production costs and general and administrative expenses ("G&A").
Production costs were $176,913 for the six months ended June 30, 2000 and
$162,882 for the same period in 1999 resulting in a $14,031 increase, or 9%.
This increase was due to higher production taxes due to higher oil and gas
prices and additional well maintenance costs incurred 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
increased, in aggregate, 69% from $7,002 for the six months ended June 30, 1999
to $11,812 for the same period in 2000 primarily due to a higher allocation of
the managing general partner's G&A being allocated (limited to 3% of oil and gas
revenues) as a result of increased oil and gas revenues.
Depletion was $13,894 for the six months ended June 30, 2000 compared to $62,361
for the same period in 1999, a decrease of $48,467, or 78%. This decrease was
the result of an increase in proved reserves during the period ended June 30,
2000 due to higher commodity prices, a reduction in the Partnership'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" ("SFAS 121") during the
fourth quarter of 1999 and a decline in oil production of 694 barrels for the
six months ended June 30, 2000 compared to the same period in 1999.
8
<PAGE>
Three months ended June 30, 2000 compared with three months ended June 30, 1999
Revenues:
The Partnership's oil and gas revenues increased 41% to $196,767 for the three
months ended June 30, 2000 as compared to $140,014 for the same period in 1999.
The increase in revenues resulted from higher average prices received, offset by
a decrease in production. For the three months ended June 30, 2000, 4,548
barrels of oil, 2,908 barrels of NGLs and 11,558 mcf of gas were sold, or 9,382
BOEs. For the three months ended June 30, 1999, 4,808 barrels of oil, 4,260
barrels of NGLs and 19,255 mcf of gas were sold, or 12,277 BOEs.
The average price received per barrel of oil increased $13.28, or 90%, from
$14.69 for the three months ended June 30, 1999 to $27.97 for the same period in
2000. The average price received per barrel of NGLs increased $5.31, or 58%,
from $9.22 during the three months ended June 30, 1999 to $14.53 for the same
period in 2000. The average price received per mcf of gas increased 51% from
$1.56 during the three months ended June 30, 1999 to $2.36 for the same period
in 2000.
Gain on disposition of assets of $18,734 was recognized during the three months
ended June 30, 2000 resulting from equipment credits received on two fully
depleted wells.
Costs and Expenses:
Total costs and expenses increased to $99,695 for the three months ended June
30, 2000 as compared to $98,010 for the same period in 1999, an increase of
$1,685, or 2%. This increase was due to increases in production costs and G&A,
offset by a decline in depletion.
Production costs were $86,961 for the three months ended June 30, 2000 and
$84,182 for the same period in 1999 resulting in a $2,779 increase, or 3%. This
increase was due to higher production taxes due to higher oil and gas prices,
offset by lower well maintenance costs.
During this period, G&A increased, in aggregate, 41% from $4,200 for the three
months ended June 30, 1999 to $5,903 for the same period in 2000 primarily due
to a higher allocation of the managing general partner's G&A being allocated
(limited to 3% of oil and gas revenues) as a result of increased oil and gas
revenues.
Depletion was $6,831 for the three months ended June 30, 2000 compared to $9,628
for the same period in 1999, a decrease of $2,797, or 29%. This decrease was
attributable to an increase in proved reserves during the period ended June 30,
2000 due to higher commodity prices, a reduction in the Partnership's net
depletable basis from charges taken in accordance with SFAS 121 during the
fourth quarter of 1999 and a decline in oil production of 260 barrels for the
three months ended June 30, 2000 compared to the same period in 1999.
9
<PAGE>
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $138,133 during the six
months ended June 30, 2000 from the same period ended June 30, 1999. This
increase was due to an increase in oil and gas sales receipts of $161,959,
offset by increases in operating costs paid of $14,437 and G&A expenses paid of
$9,389.
Net Cash Provided by Investing Activities
The Partnership's principal investing activities for the six months ended June
30, 2000 included expenditures related to equipment upgrades on various oil and
gas properties.
Proceeds from asset dispositions of $28,971 received during the six months ended
June 30, 2000 were due to equipment credits received on two fully depleted
wells.
Net Cash Used in Financing Activities
For the six months ended June 30, 2000 cash distributions to the partners were
$205,060, of which $2,051 was distributed to the managing general partner and
$203,009 to the limited partners. For the same period ended June 30, 1999, cash
distributions to the partners were $30,917, of which $309 was distributed to the
managing general partner and $30,608 to the limited partners.
---------------
(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
10
<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: Pioneer Natural Resources USA, Inc.
Managing General Partner
Dated: August 10, 2000 By: /s/ Rich Dealy
-------------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
11
<PAGE>
