UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
Commission File No. 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 June 30, 2000 and
December 31, 1999....................................... 3
Statements of Operations for the three and six
months ended June 30, 2000 and 1999...................... 4
Statement of Partners' Capital for the six months
ended June 30, 2000...................................... 5
Statements of Cash Flows for the six months
ended June 30, 2000 and 1999............................. 6
Notes to Financial Statements.............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................... 10
27.1 Financial Data Schedule
Signatures................................................. 11
2
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
<TABLE>
June 30, December 31,
2000 1999
------------ -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 70,663 $ 74,959
Accounts receivable - oil and gas sales 69,746 59,750
---------- ----------
Total current assets 140,409 134,709
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 5,316,317 5,320,021
Accumulated depletion (4,490,127) (4,462,209)
---------- ----------
Net oil and gas properties 826,190 857,812
---------- ----------
$ 966,599 $ 992,521
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 17,327 $ 12,009
Partners' capital:
Managing general partner 9,843 10,156
Limited partners (7,988 interests) 939,429 970,356
---------- ----------
949,272 980,512
---------- ----------
$ 966,599 $ 992,521
========== ==========
</TABLE>
The financial information included as of June 30, 2000 has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
3
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Oil and gas $ 140,791 $ 85,896 $ 276,113 $ 144,877
Interest 1,335 708 2,322 1,230
-------- -------- -------- --------
142,126 86,604 278,435 146,107
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 79,043 51,665 136,410 101,350
General and administrative 4,223 2,578 8,283 4,347
Depletion 14,055 17,864 27,918 57,507
-------- -------- -------- --------
97,321 72,107 172,611 163,204
-------- -------- -------- --------
Net income (loss) $ 44,805 $ 14,497 $ 105,824 $ (17,097)
======== ======== ======== ========
Allocation of net income (loss):
Managing general partner $ 448 $ 145 $ 1,058 $ (171)
======== ======== ======== ========
Limited partners $ 44,357 $ 14,352 $ 104,766 $ (16,926)
======== ======== ======== ========
Net income (loss) per limited
partnership interest $ 5.56 $ 1.80 $ 13.12 $ (2.12)
======== ======== ======== ========
</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.
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PARKER & PARSLEY 85-B, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
<TABLE>
Managing
general Limited
partner partners Total
--------- ---------- ----------
<S> <C> <C> <C>
Balance at January 1, 2000 $ 10,156 $ 970,356 $ 980,512
Distributions (1,371) (135,693) (137,064)
Net income 1,058 104,766 105,824
-------- --------- ---------
Balance at June 30, 2000 $ 9,843 $ 939,429 $ 949,272
======== ========= =========
</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>
Six months ended
June 30,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 105,824 $ (17,097)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion 27,918 57,507
Changes in assets and liabilities:
Accounts receivable (9,996) (20,672)
Accounts payable 5,318 4,753
--------- ---------
Net cash provided by operating activities 129,064 24,491
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (2,708) (2,909)
Proceeds from asset dispositions 6,412 134
--------- ---------
Net cash provided by (used in)
investing activities 3,704 (2,775)
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (137,064) (25,547)
--------- ---------
Net decrease in cash (4,296) (3,831)
Cash at beginning of period 74,959 47,370
--------- ---------
Cash at end of period $ 70,663 $ 43,539
========= =========
</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
June 30, 2000
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 85-B, Ltd. (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 June 30, 2000 and for the three and six months ended June 30,
2000 and 1999 include all adjustments and accruals consisting only of normal
recurring accrual adjustments which are necessary for a fair presentation of the
results for the interim period. These interim results of operations are not
necessarily indicative of results for a full year. Certain reclassifications may
have been made to the June 30, 1999 financial statements to conform to the June
30, 2000 financial statement presentations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
should be read in conjunction with the financial statements and the notes
thereto contained in the Partnership's Report on Form 10-K for the year ended
December 31, 1999, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square
West, Irving, Texas 75039-3746.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Six months ended June 30, 2000 compared with six months ended June 30, 1999
Revenues:
The Partnership's oil and gas revenues increased 91% to $276,113 for the six
months ended June 30, 2000 as compared to $144,877 for the same period in 1999.
The increase in revenues resulted from higher average prices received, offset by
a decrease in production. For the six months ended June 30, 2000, 6,942 barrels
of oil, 3,123 barrels of natural gas liquids ("NGLs") and 14,832 mcf of gas were
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sold, or 12,537 barrel of oil equivalents ("BOEs"). For the six months ended
June 30, 1999, 6,915 barrels of oil, 3,410 barrels of NGLs and 16,651 mcf of gas
were sold, or 13,100 BOEs.
The average price received per barrel of oil increased $14.72, or 106%, from
$13.86 for the six months ended June 30, 1999 to $28.58 for the same period in
2000. The average price received per barrel of NGLs increased $7.20, or 102%,
from $7.09 during the six months ended June 30, 1999 to $14.29 for the same
period in 2000. The average price received per mcf of gas increased 50% from
$1.49 during the six months ended June 30, 1999 to $2.23 for the same period in
2000. The market price for oil and gas has been extremely volatile in the past
decade and management expects a certain amount of volatility to continue in the
foreseeable future. The Partnership may therefore sell its future oil and gas
production at average prices lower or higher than that received during the six
months ended June 30, 2000.
The volatility of commodity prices has had, and continues to have, a significant
impact on the Partnership's revenues and operating cash flow and could result in
additional decreases to the carrying value of the Partnership's oil and gas
properties.
Costs and Expenses:
Total costs and expenses increased to $172,611 for the six months ended June 30,
2000 as compared to $163,204 for the same period in 1999, an increase of $9,407,
or 6%. This increase was due to increases in production costs and general and
administrative expenses ("G&A"), offset by a decrease in depletion.
Production costs were $136,410 for the six months ended June 30, 2000 and
$101,350 for the same period in 1999 resulting in a $35,060 increase, or 35%.
The increase was the result of additional well maintenance costs incurred to
stimulate well production and higher production taxes due to 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, 91% from $4,347 for the six months ended June 30, 1999
to $8,283 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 $27,918 for the six months ended June 30, 2000 compared to $57,507
for the same period in 1999, a decrease of $29,589, or 51%. This decrease was
the result of an increase in proved reserves during the period ended June 30,
2000 due to higher commodity prices and 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.
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Three months ended June 30, 2000 compared with three months ended June 30, 1999
Revenues:
The Partnership's oil and gas revenues increased 64% to $140,791 for the three
months ended June 30, 2000 as compared to $85,896 for the same period in 1999.
The increase in revenues resulted from higher average prices received, offset by
a decrease in production. For the three months ended June 30, 2000, 3,454
barrels of oil, 1,618 barrels of NGLs and 7,403 mcf of gas were sold, or 6,306
BOEs. For the three months ended June 30, 1999, 3,520 barrels of oil, 1,855
barrels of NGLs and 8,083 mcf of gas were sold, or 6,722 BOEs.
The average price received per barrel of oil increased $12.51, or 78%, from
$16.01 for the three months ended June 30, 1999 to $28.52 for the same period in
2000. The average price received per barrel of NGLs increased $5.77, or 69%,
from $8.41 during the three months ended June 30, 1999 to $14.18 for the same
period in 2000. The average price received per mcf of gas increased 52% from
$1.72 during the three months ended June 30, 1999 to $2.61 for the same period
in 2000.
Costs and Expenses:
Total costs and expenses increased to $97,321 for the three months ended June
30, 2000 as compared to $72,107 for the same period in 1999, an increase of
$25,214, or 35%. This increase was due to increases in production costs and G&A,
offset by a decline in depletion.
Production costs were $79,043 for the three months ended June 30, 2000 and
$51,665 for the same period in 1999 resulting in a $27,378 increase, or 53%. The
increase was the result of additional well maintenance costs incurred to
stimulate well production and higher production taxes due to higher oil and gas
prices.
During this period, G&A increased, in aggregate, 64% from $2,578 for the three
months ended June 30, 1999 to $4,223 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 $14,055 for the three months ended June 30, 2000 compared to
$17,864 for the same period in 1999, a decrease of $3,809, or 21%. This decrease
was primarily attributable to an increase in proved reserves during the period
ended June 30, 2000 as a result of higher commodity prices and a reduction in
the Partnership's net depletable basis from charges taken in accordance with
SFAS 121 during the fourth quarter of 1999.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $104,573 during the six
months ended June 30, 2000 from the same period ended June 30, 1999. This
increase was primarily due to an increase in oil and gas sales receipts of
$143,004, offset by an increase in operating costs paid of $38,431.
9
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Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities for the six months ended June 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 during the six
months ended June 30, 2000 and 1999, respectively, from equipment credits
received on active properties.
Net Cash Used in Financing Activities
For the six months ended June 30, 2000, cash distributions to the partners were
$137,064, of which $1,371 was distributed to the managing general partner and
$135,693 to the limited partners. For the same period ended June 30, 1999, cash
distributions to the partners were $25,547, of which $255 was distributed to the
managing general partner and $25,292 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: August 7, 2000 By: /s/ Rich Dealy
------------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
11
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