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 September 30, 2000
Commission File No. 2-99079B
PARKER & PARSLEY 85-B, LTD.
-----------------------------
(Exact name of Registrant as specified in its charter)
Texas 75-2075492
-------------------------------------------- ---------------------
(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
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(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 85-B, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 2000 and
December 31, 1999....................................... 3
Statements of Operations for the three and nine
months ended September 30, 2000 and 1999................. 4
Statement of Partners' Capital for the nine months
ended September 30, 2000................................. 5
Statements of Cash Flows for the nine months ended
September 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
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
BALANCE SHEETS
<CAPTION>
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 72,091 $ 74,959
Accounts receivable - oil and gas sales 90,659 59,750
----------- -----------
Total current assets 162,750 134,709
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 5,317,256 5,320,021
Accumulated depletion (4,501,976) (4,462,209)
----------- -----------
Net oil and gas properties 815,280 857,812
----------- -----------
$ 978,030 $ 992,521
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 21,081 $ 12,009
Partners' capital:
Managing general partner 9,921 10,156
Limited partners (7,988 interests) 947,028 970,356
----------- -----------
956,949 980,512
----------- -----------
$ 978,030 $ 992,521
=========== ===========
</TABLE>
The financial information included as of September 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
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas $ 168,472 $ 110,165 $ 444,585 $ 255,042
Interest 1,614 833 3,936 2,063
-------- -------- -------- --------
170,086 110,998 448,521 257,105
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 70,821 47,290 207,231 148,640
General and administrative 5,054 3,304 13,337 7,651
Depletion 11,849 14,535 39,767 72,042
-------- -------- -------- --------
87,724 65,129 260,335 228,333
-------- -------- -------- --------
Net income $ 82,362 $ 45,869 $ 188,186 $ 28,772
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 824 $ 459 $ 1,882 $ 288
======== ======== ======== ========
Limited partners $ 81,538 $ 45,410 $ 186,304 $ 28,484
======== ======== ======== ========
Net income per limited
partnership interest $ 10.20 $ 5.69 $ 23.32 $ 3.57
======== ======== ======== ========
</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
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
Managing
general Limited
partner partners Total
---------- ---------- ----------
<S> <C> <C> <C>
Balance at January 1, 2000 $ 10,156 $ 970,356 $ 980,512
Distributions (2,117) (209,632) (211,749)
Net income 1,882 186,304 188,186
--------- --------- ---------
Balance at September 30, 2000 $ 9,921 $ 947,028 $ 956,949
========= ========= =========
</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
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 188,186 $ 28,772
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 39,767 72,042
Changes in assets and liabilities:
Accounts receivable (30,909) (14,575)
Accounts payable 9,072 3,906
--------- ---------
Net cash provided by operating activities 206,116 90,145
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (3,647) (6,399)
Proceeds from asset dispositions 6,412 134
--------- ---------
Net cash provided by (used in) investing
activities 2,765 (6,265)
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (211,749) (58,792)
--------- ---------
Net increase (decrease) in cash (2,868) 25,088
Cash at beginning of period 74,959 47,370
--------- ---------
Cash at end of period $ 72,091 $ 72,458
========= =========
</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
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 85-B, L.P. (the "Partnership") is a limited partnership
organized in 1985 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 September 30, 2000 and for the three and nine months ended
September 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 September 30, 1999 financial statements to conform to
the September 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
Nine months ended September 30, 2000 compared with nine months ended September
30, 1999
Revenues:
The Partnership's oil and gas revenues increased 74% to $444,585 for the nine
months ended September 30, 2000 as compared to $255,042 for the same period in
1999. The increase in revenues resulted from higher average prices received,
7
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offset by a decrease in production. For the nine months ended September 30,
2000, 10,425 barrels of oil, 5,029 barrels of natural gas liquids ("NGLs") and
23,230 mcf of gas were sold, or 19,326 barrel of oil equivalents ("BOEs"). For
the nine months ended September 30, 1999, 10,541 barrels of oil, 5,127 barrels
of NGLs and 24,923 mcf of gas were sold, or 19,822 BOEs.
The average price received per barrel of oil increased $13.46, or 84%, from
$16.06 for the nine months ended September 30, 1999 to $29.52 for the same
period in 2000. The average price received per barrel of NGLs increased $6.54,
or 75%, from $8.71 during the nine months ended September 30, 1999 to $15.25 for
the same period in 2000. The average price received per mcf of gas increased 57%
from $1.65 during the nine months ended September 30, 1999 to $2.59 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 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 nine
months ended September 30, 2000.
Costs and Expenses:
Total costs and expenses increased to $260,335 for the nine months ended
September 30, 2000 as compared to $228,333 for the same period in 1999, an
increase of $32,002, or 14%. This increase was due to increases in production
costs and general and administrative expenses ("G&A"), offset by a decline in
depletion.
Production costs were $207,231 for the nine months ended September 30, 2000 and
$148,640 for the same period in 1999 resulting in a $58,591 increase, or 39%.
The increase was primarily due to additional well maintenance costs of $41,891
incurred to stimulate well production and higher production taxes of $15,224
associated with higher oil and gas prices.
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, 74% from $7,651 for the nine months ended September 30,
1999 to $13,337 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 $39,767 for the nine months ended September 30, 2000 compared to
$72,042 for the same period in 1999, representing a decrease of $32,275, or 45%.
This decrease was the result of an increase in proved reserves due to higher
commodity prices as compared to the same period in 1999, 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 116 barrels for the nine months ended September 30, 2000 compared to the same
period in 1999.
8
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Three months ended September 30, 2000 compared with three months ended September
30, 1999
Revenues:
The Partnership's oil and gas revenues increased 53% to $168,472 for the three
months ended September 30, 2000 as compared to $110,165 for the same period in
1999. The increase in revenues resulted from higher average prices received and
an increase in production. For the three months ended September 30, 2000, 3,483
barrels of oil, 1,906 barrels of NGLs and 8,398 mcf of gas were sold, or 6,789
BOEs. For the three months ended September 30, 1999, 3,626 barrels of oil, 1,717
barrels of NGLs and 8,272 mcf of gas were sold, or 6,722 BOEs.
The average price received per barrel of oil increased $11.12, or 55%, from
$20.25 for the three months ended September 30, 1999 to $31.37 for the same
period in 2000. The average price received per barrel of NGLs increased $4.88,
or 41%, from $11.94 during the three months ended September 30, 1999 to $16.82
for the same period in 2000. The average price received per mcf of gas increased
65% from $1.96 for the three months ended September 30, 1999 to $3.23 for the
same period in 2000.
Costs and Expenses:
Total costs and expenses increased to $87,724 for the three months ended
September 30, 2000 as compared to $65,129 for the same period in 1999, an
increase of $22,595, or 35%. This increase was due to increases in production
costs and G&A, offset by a decline in depletion.
Production costs were $70,821 for the three months ended September 30, 2000 and
$47,290 for the same period in 1999, resulting in a $23,531 increase, or 50%.
The increase was primarily due to additional well maintenance costs of $15,374
incurred to stimulate well production and higher production taxes of $5,732
associated with higher oil and gas prices.
During this period, G&A increased, in aggregate, 53% from $3,304 for the three
months ended September 30, 1999 to $5,054 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 $11,849 for the three months ended September 30, 2000 compared to
$14,535 for the same period in 1999, a decrease of $2,686, or 18%. This decrease
was attributable to an increase in proved reserves as a result of higher
commodity prices as compared to the same period in 1999, 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 143
barrels for the three months ended September 30, 2000 compared to the same
period in 1999.
9
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Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $115,971 during the nine
months ended September 30, 2000 from the same period in 1999. This increase was
due to an increase in oil and gas sales receipts of $175,082, offset by
increases in production costs paid of $52,718 and G&A expenses paid $6,393.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities for the nine months ended September 30,
2000 and 1999 included expenditures related to equipment upgrades on several oil
and gas properties.
Proceeds from asset dispositions of $6,412 and $134 were received from equipment
credits during the nine months ended September 30, 2000 and 1999, respectively.
Net Cash Used in Financing Activities
For the nine months ended September 30, 2000, cash distributions to the partners
were $211,749, of which $2,117 was distributed to the managing general partner
and $209,632 to the limited partners. For the same period ended September 30,
1999, cash distributions to the partners were $58,792, of which $588 was
distributed to the managing general partner and $58,204 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
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PARKER & PARSLEY 85-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 85-B, LTD.
By: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 9, 2000 By: /s/ Rich Dealy
-----------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
11
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