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 March 31, 2000
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)
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 / /
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PARKER & PARSLEY 86-B, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 2000 and
December 31, 1999..................................... 3
Statements of Operations for the three months
ended March 31, 2000 and 1999.......................... 4
Statement of Partners' Capital for the three months
ended March 31, 2000................................... 5
Statements of Cash Flows for the three months
ended March 31, 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......................... 9
27.1 Financial Data Schedule
Signatures............................................... 10
2
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PARKER & PARSLEY 86-B, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
2000 1999
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash $ 231,089 $ 206,408
Accounts receivable - oil and gas sales 205,726 179,740
----------- -----------
Total current assets 436,815 386,148
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 12,045,659 12,044,833
Accumulated depletion (10,198,541) (10,164,543)
----------- -----------
Net oil and gas properties 1,847,118 1,880,290
----------- -----------
$ 2,283,933 $ 2,266,438
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 35,923 $ 29,193
Partners' capital:
Managing general partner 21,204 21,096
Limited partners (17,208 interests) 2,226,806 2,216,149
----------- -----------
2,248,010 2,237,245
----------- -----------
$ 2,283,933 $ 2,266,438
=========== ===========
The financial information included as of March 31, 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
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PARKER & PARSLEY 86-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
-------------------------
2000 1999
---------- ----------
Revenues:
Oil and gas $ 402,132 $ 175,374
Interest 3,072 1,967
Gain on disposition of assets 1,419 -
--------- ---------
406,623 177,341
--------- ---------
Costs and expenses:
Oil and gas production 169,111 149,617
General and administrative 12,064 5,261
Depletion 33,998 73,783
--------- ---------
215,173 228,661
--------- ---------
Net income (loss) $ 191,450 $ (51,320)
========= =========
Allocation of net income (loss):
Managing general partner $ 1,915 $ (513)
========= =========
Limited partners $ 189,535 $ (50,807)
========= =========
Net income (loss) per limited partnership interest $ 11.01 $ (2.95)
========= =========
Distributions per limited partnership interest $ 10.40 $ 1.53
========= =========
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
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PARKER & PARSLEY 86-B, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ---------- ----------
Balance at January 1, 2000 $ 21,096 $2,216,149 $2,237,245
Distributions (1,807) (178,878) (180,685)
Net income 1,915 189,535 191,450
--------- --------- ---------
Balance at March 31, 2000 $ 21,204 $2,226,806 $2,248,010
========= ========= =========
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
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PARKER & PARSLEY 86-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
-------------------------
2000 1999
---------- ----------
Cash flows from operating activities:
Net income (loss) $ 191,450 $ (51,320)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depletion 33,998 73,783
Gain on disposition of assets (1,419) -
Changes in assets and liabilities:
Accounts receivable (25,986) (22,731)
Accounts payable 6,730 18,241
--------- ---------
Net cash provided by operating activities 204,773 17,973
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (826) (2,172)
Proceeds from asset dispositions 1,419 -
--------- ---------
Net cash provided by (used in) investing
activities 593 (2,172)
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (180,685) (26,665)
--------- ---------
Net increase (decrease) in cash 24,681 (10,864)
Cash at beginning of period 206,408 185,320
--------- ---------
Cash at end of period $ 231,089 $ 174,456
========= =========
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
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PARKER & PARSLEY 86-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 86-B, 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 March 31, 2000 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 March 31, 1999 financial statements to conform to the
March 31, 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
Revenues:
The Partnership's oil and gas revenues increased 129% to $402,132 for the three
months ended March 31, 2000 as compared to $175,374 for the same period in 1999.
The increase in revenues resulted from higher average prices received and a
slight increase in production. For the three months ended March 31, 2000, 10,821
barrels of oil, 5,059 barrels of natural gas liquids ("NGLs") and 20,435 mcf of
gas were sold, or 19,286 barrel of oil equivalents ("BOEs"). For the three
months ended March 31, 1999, 10,291 barrels of oil, 4,894 barrels of NGLs and
21,864 mcf of gas were sold, or 18,829 BOEs.
7
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The average price received per barrel of oil increased $15.94, or 137%, from
$11.66 for the three months ended March 31, 1999 to $27.60 for the same period
in 2000. The average price received per barrel of NGLs increased $8.06, or 152%,
from $5.31 for the three months ended March 31, 1999 to $13.37 for the same
period in 2000. The average price received per mcf of gas increased 31% from
$1.34 during the three months ended March 31, 1999 to $1.76 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
three months ended March 31, 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.
Gain on disposition of assets of $1,419 was recognized during the three months
ended March 31, 2000 due to equipment credits received on one fully depleted
well.
Costs and Expenses:
Total costs and expenses decreased to $215,173 for the three months ended March
31, 2000 as compared to $228,661 for the same period in 1999, a decrease of
$13,488, or 6%. This decrease was primarily due to a decline in depletion,
offset by increases in production costs and general and administrative expenses
("G&A").
Production costs were $169,111 for the three months ended March 31, 2000 and
$149,617 for the same period in 1999, an increase of $19,494, or 13%. The
increase was due to higher production taxes resulting from increased oil and gas
revenues 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, 129% from $5,261 for the three months ended March 31,
1999 to $12,064 for the same period in 2000 primarily due to increased oil and
gas revenues.
Depletion was $33,998 for the three months ended March 31, 2000 compared to
$73,783 for the same period in 1999, a decrease of $39,785, or 54%. This
decrease was the result of an increase in proved reserves during the three
months ended March 31, 2000 due to higher commodity prices, offset by an
increase in oil production of 530 barrels for the three months ended March 31,
2000 compared to the same period in 1999.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $186,800 for the three
months ended March 31, 2000 from the same period in 1999. This increase was
8
<PAGE>
primarily attributable to an increase of $224,608 in oil and gas sales receipts,
offset by increases in operating costs paid of $22,672 and G&A expenses paid of
$15,136.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during the three months ended March 31,
2000 and 1999 were related to expenditures for oil and gas equipment upgrades on
active properties.
Proceeds from asset dispositions of $1,419 recognized during the three months
ended March 31, 2000 were due to equipment credits received on one fully
depleted well.
Net Cash Used in Financing Activities
For the three months ended March 31, 2000, cash distributions to the partners
were $180,685, of which $1,807 was distributed to the managing general partner
and $178,878 to the limited partners. For the same period ended March 31, 1999,
cash distributions to the partners were $26,665, of which $267 was distributed
to the managing general partner and $26,398 to the limited partners.
Other Items
Year 2000
During 1998, the managing general partner established a "Year 2000" project that
assessed the Partnership's and the managing general partner's internal Year 2000
problem; took remedial actions necessary to minimize the Year 2000 risk exposure
to the managing general partner and third parties; and, tested the managing
general partner's systems and processes once remedial actions were taken.
The managing general partner has closely monitored its information and
non-information technology systems since the beginning of 2000 and has
identified no significant Year 2000 failures or problems.
- ---------------
(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.
9
<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: Pioneer Natural Resources USA, Inc.
Managing General Partner
Dated: May 10, 2000 By: /s/ Rich Dealy
-----------------------------------
Rich Dealy, Vice President
and Chief Accounting Officer
10
<PAGE>
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<NAME> 86B
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 231,089
<SECURITIES> 0
<RECEIVABLES> 205,726
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 436,815
<PP&E> 12,045,659
<DEPRECIATION> 10,198,541
<TOTAL-ASSETS> 2,283,933
<CURRENT-LIABILITIES> 35,923
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,248,010
<TOTAL-LIABILITY-AND-EQUITY> 2,283,933
<SALES> 402,132
<TOTAL-REVENUES> 406,623
<CGS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 191,450
<INCOME-TAX> 0
<INCOME-CONTINUING> 191,450
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 191,450
<EPS-BASIC> 11.01
<EPS-DILUTED> 0
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