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. 33-3353B
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 __ pages.
-There are no exhibits-
<PAGE>
PARKER & PARSLEY 86-B, 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
Signatures.............................................. 15
2
<PAGE>
PARKER & PARSLEY 86-B, 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 $447,090 at September 30
and $151,136 at December 31 $ 447,718 $ 151,763
Accounts receivable - oil and gas sales 167,126 178,375
Accounts receivable - affiliate 13,229 -
---------- ----------
Total current assets 628,073 330,138
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 12,282,365 14,156,180
Accumulated depletion (8,211,756) (9,685,808)
---------- ----------
Net oil and gas properties 4,070,609 4,470,372
---------- ----------
$ 4,698,682 $ 4,800,510
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 128,051 $ 70,218
Partners' capital:
Limited partners (17,208 interests) 4,526,201 4,684,266
Managing general partner 44,430 46,026
---------- ----------
4,570,631 4,730,292
---------- ----------
$ 4,698,682 $ 4,800,510
========== ==========
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-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- -----------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
Revenues:
Oil and gas $ 375,549 $ 339,278 $1,178,727 $1,121,134
Interest 5,584 3,476 10,969 8,859
Litigation settlement - - 565,756 -
Salvage income from
equipment disposals - 125 12,859 3,991
Gain (loss) on sale of
assets (7,186) - 59,870 -
-------- -------- --------- ---------
373,947 342,879 1,828,181 1,133,984
-------- -------- --------- ---------
Costs and expenses:
Oil and gas production 183,227 186,906 578,191 583,009
General and administrative 11,267 10,196 35,362 33,652
Depletion 74,715 114,128 245,884 375,599
Abandoned property - - 8,340 1,658
-------- -------- --------- ---------
269,209 311,230 867,777 993,918
-------- -------- --------- ---------
Net income $ 104,738 $ 31,649 $ 960,404 $ 140,066
======== ======== ========= =========
Allocation of net income:
Managing general partner $ 1,047 $ 317 $ 9,604 $ 1,401
======== ======== ========= =========
Limited partners $ 103,691 $ 31,332 $ 950,800 $ 138,665
======== ======== ========= =========
Net income per limited
partnership interest $ 6.02 $ 1.82 $ 55.25 $ 8.06
======== ======== ========= =========
Distributions per limited
partnership interest $ 10.60 $ 9.79 $ 64.44 $ 28.47
======== ======== ========= =========
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)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ----------- -----------
Balance at January 1, 1996 $ 46,026 $ 4,684,266 $ 4,730,292
Distributions (11,200) (1,108,865) (1,120,065)
Net income 9,604 950,800 960,404
-------- ---------- ----------
Balance at September 30, 1996 $ 44,430 $ 4,526,201 $ 4,570,631
======== ========== ==========
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)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
-------------------------
1996 1995
----------- ---------
Cash flows from operating activities:
Net income $ 960,404 $ 140,066
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 245,884 375,599
Salvage income from equipment disposals (12,859) (3,991)
Gain on sale of assets (59,870) -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (1,980) 29,154
Increase in accounts payable 43,696 33,392
---------- --------
Net cash provided by operating activities 1,175,275 574,220
---------- --------
Cash flows from investing activities:
(Additions) disposals of oil and gas properties 10,145 (40,976)
Proceeds from salvage income on equipment
disposals 12,859 3,991
Proceeds from sale of assets 217,741 -
---------- --------
Net cash provided by (used in) investing
activities 240,745 (36,985)
---------- --------
Cash flows from financing activities:
Cash distributions to partners (1,120,065) (494,916)
---------- --------
Net increase in cash and cash equivalents 295,955 42,319
Cash and cash equivalents at beginning of period 151,763 141,681
---------- --------
Cash and cash equivalents at end of period $ 447,718 $ 184,000
========== ========
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-B, LTD.
(A Texas Limited Partnership)
NOTES FINANCIAL STATEMENTS
September 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 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 $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
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 $547,002, or $31.79 per limited partnership interest
to the Registrant and its partners.
8
<PAGE>
Note 4.
A gain of $55,538 from the sale of six 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, resulting from proceeds received of $213,409, less the
write-off of remaining capitalized well costs of $157,871.
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 $1,178,727 from $1,121,134
for the nine months ended September 30, 1996 and 1995, respectively, an increase
of 5%. The increase in revenues resulted from a 19% increase in the average
price received per barrel of oil and a 31% increase in the average price
received per mcf of gas, offset by a 14% decline in barrels of oil produced and
sold and a 15% decline in mcf of gas produced and sold. For the nine months
ended September 30, 1996, 40,327 barrels of oil were sold compared to 46,809 for
the same period in 1995, a decrease of 6,482 barrels. Of the decrease, 2,114
barrels, or 5%, was attributable to the sale of six oil and gas wells during the
nine months ended September 30, 1996. The remaining decrease of 9%, or 4,368
barrels, was due to the decline characteristics of the Registrant's oil and gas
properties. For the nine months ended September 30, 1996, 155,807 mcf of gas
were sold compared to 182,989 for the same period in 1995, a decrease of 27,182
mcf. Of the decrease, 8,343 mcf, or 5%, was attributable to the sale of ten oil
and gas wells. The remaining decrease of 18,839 mcf, or 10%, 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 $3.29 from $17.32 for the
nine months ended September 30, 1995 to $20.61 for the same period in 1996 while
the average price received per mcf of gas increased from $1.70 for the nine
months ended September 30, 1995 to $2.23 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 nine months ended
September 30, 1996.
Salvage income of $12,859 received during the nine months ended September 30,
1996 consisted of equipment credits received on two fully depleted wells, as
compared to equipment credits of $3,991 received during the nine months ended
September 30, 1995 on one fully depleted well.
9
<PAGE>
For the nine months ended September 30, 1996, the Registrant recognized a gain
on sale of assets of $59,870. Of this amount, $55,538, from the sale of six oil
and gas wells and four saltwater disposal wells to Costilla Energy, L.L.C., was
attributable to proceeds received of $213,409 less the write-off of remaining
capitalized well costs of $157,871. 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 $867,777 for the nine months ended
September 30, 1996 as compared to $993,918 for the same period in 1995, a
decrease of $126,141, or 13%. This decrease was due to declines in production
costs and depletion, offset by increases in general and administrative expenses
("G&A") and abandoned property costs.
Production costs were $578,191 for the nine months ended September 30, 1996 and
$583,009 for the same period in 1995, resulting in a $4,818 decrease. The
decrease was due to a reduction 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, 5% from $33,652 for the nine months ended
September 30, 1995 to $35,362 for the same period in 1996. The Partnership
agreement limits G&A to 3% of gross oil and gas revenues.
Depletion was $245,884 for the nine months ended September 30, 1996 compared to
$375,599 for the same period in 1995, representing a decrease of $129,715, or
35%. 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 6,482 barrels, partially 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.
Abandoned property costs of $8,340 were incurred on the abandonment of one well
during the nine months ended September 30, 1996 compared to $1,658 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
10
<PAGE>
defendants, and Southmark, the Registrant, and the other plaintiffs indemnified
the defendants against the claims of Jack N. Price. The managing general partner
received the funds, deducted incurred legal expenses, accrued interest,
determined the general partner's portion of the funds and calculated any
inter-partnership allocations.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G. "Zeke"
Lancaster in the Federal Court lawsuit, filed suit in State Court in Beaumont
against all of the plaintiff partnerships, including the Registrant and others,
alleging his entitlement to 12% of the settlement proceeds. Price's lawsuit
claim for approximately $13.8 million is predicated on a purported contract
entered into with Southmark Corporation in August 1988 in which he allegedly
binds the Registrant and the other defendants, as well as Southmark. Although
PPDLP believes the lawsuit was without merit and has vigorously defended it,
PPDLP has held in reserve approximately 12.5% of the total settlement (the
"Reserve") pending final resolution of the litigation.
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 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.
11
<PAGE>
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 $547,002, or $31.79 per limited partnership interest
to the Registrant and its partners.
Three months ended September 30, 1996 compared with three months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $375,549 from $339,278 for
the three months ended September 30, 1996 and 1995, respectively, an increase of
11%. The increase in revenues resulted from a 30% increase in the average price
received per barrel of oil and a 40% increase in the average price received per
mcf of gas, offset by a 15% decrease in barrels of oil produced and sold and a
19% decrease in mcf of gas produced and sold. For the three months ended
September 30, 1996, 12,418 barrels of oil were sold compared to 14,659 for the
same period in 1995, a decrease of 2,241 barrels. Of the decrease, 1,340
barrels, or 9%, was attributable to the sale of six oil and gas wells. The
additional decrease of 6%, or 901 barrels, was due to the decline
characteristics of the Registrant's oil and gas properties. For the three months
ended September 30, 1996, 51,674 mcf of gas were sold compared to 64,019 for the
same period in 1995, a decrease of 12,345 mcf. Of the decrease, 4,822 mcf, or
7%, was attributable to the sale of six oil and gas wells. The additional
decrease of 7,523 mcf, or 12%, was due to the decline characteristics of the
Registrant's oil and gas properties.
The average price received per barrel of oil increased $4.90 from $16.49 for the
three months ended September 30, 1995 to $21.39 for the same period in 1996
while the average price received per mcf of gas increased from $1.52 during the
three months ended September 30, 1995 to $2.13 in 1996.
Salvage income of $125 received during the three months ended September 30, 1995
consisted of equipment credits received on one fully depleted well. There was no
salvage income received for the same period ended September 30, 1996.
Costs and Expenses:
Total costs and expenses decreased to $269,209 for the three months ended
September 30, 1996 as compared to $311,230 for the same period in 1995, a
decrease of $42,021, or 14%. This decrease was due to declines in production
costs and depletion, offset by an increase in G&A.
Production costs were $183,227 for the three months ended September 30, 1996 and
$186,906 for the same period in 1995, resulting in a $3,679 decrease, or 2%. The
decrease resulted from a reduction 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
12
<PAGE>
period, G&A increased in aggregate, 11% from $10,196 for the three months ended
September 30, 1995 to $11,267 for the same period in 1996.
Depletion was $74,715 for the three months ended September 30, 1996 compared to
$114,128 for the same period in 1995, representing a decrease of $39,413, or
35%, 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,
1995 of 2,241 barrels, partially 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.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $601,055 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 receipts.
Net Cash Provided by (Used in) Investing Activities
The Registrant's investing activities during the nine months ended September 30,
1996 included proceeds received from the disposal of oil and gas equipment on
active properties, while the nine months ended September 30, 1995 included
expenditures related to a capitalized workover on one well.
Proceeds from salvage income of $12,859 and of $3,991 were received during the
nine months ended September 30, 1996 and 1995, respectively, from the sale of
oil and gas equipment on one fully depleted well.
Proceeds of $217,741 were received during the nine months ended September 30,
1996 from the sale of ten oil and gas 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 $1,120,065 of which $1,108,865 was distributed
to the limited partners and $11,200 to the managing general partner. For the
same period ended September 30, 1995, cash was sufficient for distributions to
the partners of $494,916 of which $489,966 was distributed to the limited
partners and $4,950 to the managing general partner.
Cash distributions to the partners of $1,120,065 for the nine months ended
September 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.
13
<PAGE>
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 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 hereof is
described in Note 3 of Notes to Financial Statements above.
14
<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: 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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<ARTICLE> 5
<CIK> 0000789790
<NAME> 86B.TXT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 447,718
<SECURITIES> 0
<RECEIVABLES> 180,355
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 628,073
<PP&E> 12,282,365
<DEPRECIATION> 8,211,756
<TOTAL-ASSETS> 4,698,682
<CURRENT-LIABILITIES> 128,051
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,570,631
<TOTAL-LIABILITY-AND-EQUITY> 4,698,682
<SALES> 1,178,727
<TOTAL-REVENUES> 1,828,181
<CGS> 0
<TOTAL-COSTS> 867,777
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 960,404
<INCOME-TAX> 0
<INCOME-CONTINUING> 960,404
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 960,404
<EPS-PRIMARY> 55.25
<EPS-DILUTED> 0
</TABLE>
