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, 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. 33-3353B
PARKER & PARSLEY 86-B, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2140235
(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 16 pages.
There are no exhibits.
<PAGE>
PARKER & PARSLEY 86-B, LTD.
(A Texas Limited Partnership)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
June 30, December 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including
interest bearing deposits of $431,402
at June 30 and $151,136 at December 31 $ 432,029 $ 151,763
Accounts receivable - oil and gas sales 191,184 178,375
Accounts receivable - affiliate 13,229 -
---------- ----------
Total current assets 636,442 330,138
Oil and gas properties - at cost, based
on the successful efforts accounting
method 12,437,587 14,156,180
Accumulated depletion (8,287,535) (9,685,808)
---------- ----------
Net oil and gas properties 4,150,052 4,470,372
---------- ----------
$ 4,786,494 $ 4,800,510
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 136,433 $ 70,218
Partners' capital:
Limited partners (17,208 interests) 4,604,837 4,684,266
Managing general partner 45,224 46,026
---------- ----------
4,650,061 4,730,292
---------- ----------
$ 4,786,494 $ 4,800,510
========== ==========
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 86-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Oil and gas sales $ 407,378 $ 392,091 $ 803,178 $ 781,856
Interest income 2,975 2,958 5,385 5,383
Salvage income from
equipment disposals 5,972 3,866 12,859 3,866
Gain on sale of assets 62,724 - 67,056 -
Litigation proceeds 565,756 - 565,756 -
--------- --------- --------- ---------
Total revenues 1,044,805 398,915 1,454,234 791,105
Costs and expenses:
Production costs 194,705 197,754 394,964 394,407
General and admin-
istrative expenses 12,221 11,763 24,095 23,456
Depletion 79,117 121,109 171,169 261,471
Abandoned property
costs 6,854 26 8,340 3,354
--------- --------- --------- ---------
Total costs and
expenses 292,897 330,652 598,568 682,688
--------- --------- --------- ---------
Net income $ 751,908 $ 68,263 $ 855,666 $ 108,417
========= ========= ========= =========
Allocation of net income:
Managing general
partner $ 7,519 $ 683 $ 8,557 $ 1,084
========= ========= ========= =========
Limited partners $ 744,389 $ 67,580 $ 847,109 $ 107,333
========= ========= ========= =========
Net income per limited
partnership interest $ 43.26 $ 3.93 $ 49.23 $ 6.24
========= ========= ========= =========
Distributions per limited
partnership interest $ 43.80 $ 8.35 $ 53.84 $ 18.68
========= ========= ========= =========
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 86-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
----------- ----------- -----------
Balance at January 1, 1995 $ 52,788 $ 5,353,642 $ 5,406,430
Distributions (3,248) (321,528) (324,776)
Net income 1,084 107,333 108,417
---------- ---------- ----------
Balance at June 30, 1995 $ 50,624 $ 5,139,447 $ 5,190,071
========== ========== ==========
Balance at January 1, 1996 $ 46,026 $ 4,684,266 $ 4,730,292
Distributions (9,359) (926,538) (935,897)
Net income 8,557 847,109 855,666
---------- ---------- ----------
Balance at June 30, 1996 $ 45,224 $ 4,604,837 $ 4,650,061
========== ========== ==========
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-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 855,666 $ 108,417
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 171,169 261,471
Salvage income from equipment disposals (12,859) (3,866)
Gain on sale of assets (67,056) -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (26,038) 13,879
Increase in accounts payable 52,487 35,285
--------- ---------
Net cash provided by operating
activities 973,369 415,186
Cash flows from investing activities:
(Additions) disposals of oil and gas
properties 12,078 (40,650)
Proceeds from salvage income on
equipment disposals 12,859 3,866
Proceeds from sale of assets 217,857 -
--------- ---------
Net cash provided by (used in)
investing activities 242,794 (36,784)
Cash flows from financing activities:
Cash distributions to partners (935,897) (324,776)
--------- ---------
Net increase in cash and cash equivalents 280,266 53,626
Cash and cash equivalents at beginning
of period 151,763 141,681
--------- ---------
Cash and cash equivalents at end of period $ 432,029 $ 195,307
========= =========
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-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1.
Parker & Parsley 86-B, 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 June 30, 1996 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 $5,500,648, or $319.66 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 to be
determined. Pursuant to their indemnity obligations, the Registrant, Southmark,
PPDLP and other original plaintiffs vigorously protected the rights of both
Dresser and Baker Hughes. Southmark vigorously pursued its appeal of the
judgment, and 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. The managing general partner conducted an accounting of income and
expenses among the parties, and, on June 28, 1996, made a final $9.3 million
distribution to the working interest owners, including the Registrant and its
partners, resulting in a distribution of $547,002 to the limited partners, or
$31.79 per limited partnership interest. The distribution was allocated to the
limited partners using the same methodology as the original $91 million
distribution in 1993.
NOTE 4.
A gain of $62,724 from the sale of six oil and gas wells to Costilla Energy,
L.L.C. was recognized during the six months ended June 30, 1996, resulting from
proceeds received of $213,525, less the write-off of remaining capitalized well
costs of $150,801.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (1)
Results of Operations
Six months ended June 30, 1996 compared with six months ended June 30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $803,178 from $781,856 for
the six months ended June 30, 1996 and 1995, respectively, an increase of 3%.
The increase in revenues resulted from a 15% increase in the average price
received per barrel of oil and a 27% increase in the average price received per
mcf of gas, offset by a 13% decrease in barrels of oil produced and sold and a
12% decrease in mcf of gas produced and sold. For the six months ended June 30,
1996, 27,909 barrels of oil were sold compared to 32,150 for the same period in
8
<PAGE>
1995, a decrease of 4,241 barrels. Of the decrease, 774 barrels, or 2%, was
attributable to the sale of ten oil and gas wells during the six months ended
June 30, 1996. The remaining decrease of 11%, or 3,467 barrels, was due to the
decline characteristics of the Registrant's oil and gas properties. For the six
months ended June 30, 1996, 104,133 mcf of gas were sold compared to 118,970 for
the same period in 1995, a decrease of 14,837 mcf. Of the decrease, 3,519 mcf,
or 3%, was attributable to the sale of ten oil and gas wells. The remaining
decrease of 11,318 mcf, or 9%, was due to the decline characteristics of the
Registrant's oil and gas properties. Because of these characteristics,
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 $2.57 from $17.70 for the
six months ended June 30, 1995 to $20.27 for the same period in 1996 while the
average price received per mcf of gas increased from $1.79 for the six months
ended June 30, 1995 to $2.28 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 six months ended June 30,
1996.
Salvage income of $3,866 received during the six months ended June 30, 1995
consisted of equipment credits received on one fully depleted well. There was no
salvage income for the same period ended June 30, 1996.
For the six months ended June 30, 1996, the Partnership recognized a gain on
sale of assets of $67,056. Of this amount, $62,724 was from the sale of six oil
and gas wells to Costilla Energy, L.L.C., attributable to proceeds received of
$213,525 less the write-off of remaining capitalized well costs of $150,801. An
additional unrelated sale of four fully depleted oil and gas wells resulted in
proceeds received of $4,332.
Costs and Expenses:
Total costs and expenses decreased to $598,568 for the six months ended June 30,
1996 as compared to $682,688 for the same period in 1995, a decrease of $84,120,
or 12%. This decrease was due to a decline in depletion, offset by increases in
production costs, general and administrative expenses ("G&A") and abandoned
property costs.
Production costs were $394,964 for the six months ended June 30, 1996 and
$394,407 for the same period in 1995 resulting in a $557 increase. The increase
9
<PAGE>
was primarily due to an increase in workover expense incurred in an effort to
stimulate well production, offset by 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 $23,456 for the six months ended
June 30, 1995 to $24,095 for the same period in 1996. The Partnership agreement
limits G&A to 3% of gross oil and gas revenues.
Depletion was $171,169 for the six months ended June 30, 1996 compared to
$261,471 for the same period in 1995. This represented a decrease in depletion
of $90,302, or 35%, 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"
("FAS 121") effective the fourth quarter of 1995 and the reduction of net
depletable basis resulting from the charge taken upon such adoption. In
addition, of the decrease, $23,209, or 9%, was attributable to the sale of ten
oil and gas wells during the six months ended June 30, 1996. Depletion was
computed property-by-property utilizing the unit-of-production method based upon
the dominant mineral produced, generally oil. Oil production decreased 4,241
barrels for the six months ended June 30, 1996 from the same period in 1995,
while oil reserves of barrels were revised upward by 15,292 barrels, or 2%.
Abandoned property costs of $8,340 were incurred on one well during the six
months ended June 30, 1996 compared to $3,354 for the same period in 1995.
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 $5,500,648, or $319.66 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 to be
determined. Pursuant to their indemnity obligations, the Registrant, Southmark,
PPDLP and other original plaintiffs vigorously protected the rights of both
Dresser and Baker Hughes. Southmark vigorously pursued its appeal of the
judgment, and posted a supersedeas bond using the Reserve as collateral. On
11
<PAGE>
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. The managing general partner conducted an accounting of income and
expenses among the parties, and, on June 28, 1996, made a final $9.3 million
distribution to the working interest owners, including the Registrant and its
partners, resulting in a distribution of $547,002 to the limited partners, or
$31.79 per limited partnership interest. The distribution was allocated to the
limited partners using the same methodology as the original $91 million
distribution in 1993.
Three months ended June 30, 1996 compared with three months ended June 30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $407,378 from $392,091 for
the three months ended June 30, 1996 and 1995, respectively, an increase of 4%.
The increase in revenues resulted from a 19% increase in the average price
received per barrel of oil and a 50% increase in the average price received per
mcf of gas, offset by an 18% decrease in barrels of oil produced and sold and a
21% decrease in mcf of gas produced and sold. For the three months ended June
30, 1996, 13,083 barrels of oil were sold compared to 15,871 for the same period
in 1995, a decrease of 2,788 barrels. Of the decrease, 942 barrels, or 6%, was
attributable to the sale of six oil and gas wells. The additional decrease of
12%, or 1,846 barrels, was due to the decline characteristics of the
Registrant's oil and gas properties. For the three months ended June 30, 1996,
51,266 mcf of gas were sold compared to 64,537 for the same period in 1995, a
decrease of 13,271 mcf. Of the decrease, 4,876 mcf, or 8%, was attributable to
the sale of six oil and gas wells. The additional decrease of 8,395 mcf, or 13%,
was due to the decline characteristics of the Registrant's oil and gas
properties.
The average price received per barrel of oil increased $3.53 from $18.18 for the
three months ended June 30, 1995 to $21.71 for the same period in 1996 while the
average price received per mcf of gas increased from $1.61 during the three
months ended June 30, 1995 to $2.41 in 1996.
12
<PAGE>
Salvage income of $3,866 received during the three months ended June 30, 1995
consisted of equipment credits received on one fully depleted well. There was no
salvage income received for the same period ended June 30, 1996.
A gain of $62,724 from the sale of six oil and gas wells was recognized during
the three months ended June 30, 1996, resulting from proceeds received of
$213,525 less the write-off of remaining capitalized well costs of $150,801.
Costs and Expenses:
Total costs and expenses decreased to $292,897 for the three months ended June
30, 1996 as compared to $330,652 for the same period in 1995, a decrease of
$37,755, or 11%. This decrease was due to declines in production costs and
depletion, offset by increases in G&A and abandoned property costs.
Production costs were $194,705 for the three months ended June 30, 1996 and
$197,754 for the same period in 1995 resulting in a $3,049 decrease, or 2%. The
decrease was due to a decline in well repair and maintenance costs, offset by an
increase in workover expense 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, 4% from $11,763 for the three months ended
June 30, 1995 to $12,221 for the same period in 1996.
Depletion was $79,117 for the three months ended June 30, 1996 compared to
$121,109 for the same period in 1995. This represented a decrease in depletion
of $41,992, or 35%, primarily attributable to the adoption of FAS 121 the fourth
quarter of 1995, as discussed previously. In addition, of the decrease, $15,005,
or 12% was attributable to the sale of six oil and gas wells during the three
months ended June 30, 1996. Oil production decreased 2,788 barrels for the three
months ended June 30, 1996 from the same period in 1995.
Abandoned property costs of $6,854 and $26 were incurred during the three months
ended June 30, 1996 and 1995, respectively.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased during the six months ended
June 30, 1996 $558,183 from the same period ended June 30, 1995. This increase
13
<PAGE>
was primarily due to the receipt of proceeds from the litigation settlement as
discussed in Note 3 and a reduction in well repair and maintenance costs paid,
offset by a decline in oil and gas sales receipts.
Net Cash Provided by (Used in) Investing Activities
The Registrant's investing activities during the six months ended June 30, 1996
included proceeds received from the disposal of oil and gas equipment on active
properties, while the six months ended June 30, 1995 included expenditures
related to a capitalized workover on one well.
Proceeds from salvage income of $12,859 and $3,866 were received during the six
months ended June 30, 1996 and 1995, respectively, from the sale of oil and gas
equipment on one fully depleted well.
Proceeds of $217,857 were received during the six months ended June 30, 1996
from the sale of ten oil and gas wells.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1996 to cover
distributions to the partners of $935,897 of which $926,538 was distributed to
the limited partners and $9,359 to the managing general partner. For the same
period ended June 30, 1995, cash was sufficient for distributions to the
partners of $324,776 of which $321,528 was distributed to the limited partners
and $3,248 to the managing general partner.
Cash distributions to the partners of $935,897 for the six months ended June 30,
1996 included $547,002 to the limited partners and $5,525 to the managing
general partner, resulting from proceeds received in the litigation settlement
as discussed in Note 3. A receivable of $13,229 from the settlement will be
received and distributed, pending revision of division orders after pay-out
provisions on one well.
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.
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is 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
15
<PAGE>
PARKER & PARSLEY 86-B, 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-B, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: August 12, 1996 By: /s/ Steven L. Beal
---------------------------------------
Steven L. Beal, Senior Vice
President and Chief Financial
Officer of PPUSA
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000789790
<NAME> 86B.TXT
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 432,029
<SECURITIES> 0
<RECEIVABLES> 204,413
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 636,442
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0
0
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</TABLE>
