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. 33-11193-1
PARKER & PARSLEY PRODUCING PROPERTIES 87-A, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2195512
(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 15 pages.
-There are no exhibits-
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PARKER & PARSLEY PRODUCING PROPERTIES 87-A, 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
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PARKER & PARSLEY PRODUCING PROPERTIES 87-A, 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 $537,935 at September 30
and $133,580 at December 31 $ 538,135 $ 133,580
Accounts receivable - affiliate 133,101 53,753
---------- ----------
Total current assets 671,236 187,333
---------- ----------
Oil and gas properties - at cost, based on
the successful efforts accounting method 6,466,213 7,039,141
Accumulated depletion (4,230,482) (4,505,198)
---------- ----------
Net oil and gas properties 2,235,731 2,533,943
---------- ----------
$ 2,906,967 $ 2,721,276
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - other $ 6,782 $ -
Partners' capital:
Limited partners (24,426 interests) 2,869,942 2,692,822
Managing general partner 30,243 28,454
---------- ----------
2,900,185 2,721,276
---------- ----------
$ 2,906,967 $ 2,721,276
========== ==========
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
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PARKER & PARSLEY PRODUCING PROPERTIES 87-A, 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 $ 349,138 $ 363,040 $1,187,162 $1,140,712
Interest 7,677 3,055 11,905 8,526
Salvage income from
equipment disposal 11,377 - 32,435 -
Litigation settlement - - 19,935 -
Gain (loss) on sale of
assets (60) - 376,894 321
-------- -------- --------- ---------
368,132 366,095 1,628,331 1,149,559
-------- -------- --------- ---------
Costs and expenses:
Oil and gas production 224,288 259,831 693,368 785,090
General and administrative 10,474 10,891 35,615 34,221
Depletion 70,556 93,729 183,394 296,025
(Gain) loss on abandoned
properties 1,242 (1,904) 1,976 12,435
Abandoned property 5,155 1,052 53,600 7,269
-------- -------- --------- ---------
311,715 363,599 967,953 1,135,040
-------- -------- --------- ---------
Net income $ 56,417 $ 2,496 $ 660,378 $ 14,519
======== ======== ========= =========
Allocation of net income:
Managing general partner $ 564 $ 25 $ 6,604 $ 145
======== ======== ========= =========
Limited partners $ 55,853 $ 2,471 $ 653,774 $ 14,374
======== ======== ========= =========
Net income per limited
partnership interest $ 2.29 $ .10 $ 26.77 $ .59
======== ======== ========= =========
Distributions per limited
partnership interest $ 7.20 $ 4.60 $ 19.51 $ 15.40
======== ======== ========= =========
The financial information included herein has been prepared by
management management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
4
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PARKER & PARSLEY PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ----------- -----------
Balance at January 1, 1996 $ 28,454 $ 2,692,822 $ 2,721,276
Distributions (4,815) (476,654) (481,469)
Net income 6,604 653,774 660,378
-------- ---------- ----------
Balance at September 30, 1996 $ 30,243 $ 2,869,942 $ 2,900,185
======== ========== ==========
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
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PARKER & PARSLEY PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
----------------------
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 660,378 $ 14,519
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 183,394 296,025
Loss on abandoned properties 1,976 12,435
Salvage income from equipment disposal (32,435) -
Gain on sale of assets (376,894) (321)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (74,635) 54,440
Increase in accounts payable - 34,061
-------- --------
Net cash provided by operating activities 361,784 411,159
-------- --------
Cash flows from investing activities:
(Additions) deletions to oil and gas property 2,358 (6,068)
Proceeds from equipment salvage on abandoned
properties 55,440 3,409
Proceeds from salvage income from equipment
disposal 22,044 24,163
Proceeds from sale of assets 444,398 323
-------- --------
Net cash provided by investing activities 524,240 21,827
-------- --------
Cash flows from financing activities:
Cash distributions to partners (481,469) (379,897)
-------- --------
Net increase in cash and cash equivalents 404,555 53,089
Cash and cash equivalents at beginning of period 133,580 99,355
-------- --------
Cash and cash equivalents at end of period $ 538,135 $ 152,444
======== ========
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
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PARKER & PARSLEY PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
Note 1.
Parker & Parsley Producing Properties 87-A, Ltd. (the "Registrant") is a limited
partnership organized in 1987 under the laws of the State of Texas.
The Registrant engages primarily in oil and gas 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 $208,711, or $8.54 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 $19,736, or $.81 per limited partnership interest
to the Registrant and its partners.
8
<PAGE>
Note 4.
During the nine months ended September 30, 1996, a gain of $376,894 was realized
from the sale of three oil and gas wells and one saltwater disposal well to
Costilla Energy, L.L.C. The gain resulted from proceeds received from the sale
of $437,616 less the write-off of remaining capitalized well costs of $60,722.
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 $1,187,162 from $1,140,712
for the nine months ended September 30, 1996 and 1995, respectively, an increase
of 4%. The increase in revenues resulted from higher average prices received per
barrel of oil and mcf of gas, offset by a 12% 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, 47,957 barrels of oil were sold compared to 54,345 for
the same period in 1995, a decrease of 6,388 barrels. Of the decrease, 1,835
barrels, or 3%, was attributable to the sale of three oil and gas wells during
the nine months ended September 30, 1996. The remaining decrease of 4,553
barrels, or 9%, was due to the decline characteristics of the Registrant's oil
and gas properties. For the nine months ended September 30, 1996, 109,356 mcf of
gas were sold compared to 128,608 for the same period in 1995, a decrease of
19,252 mcf, of which 8,340 mcf, or 6%, was attributable to the sale of three oil
and gas wells, with the remaining decrease of 10,912 mcf, or 9%, due to the
decline characteristics of the properties. 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 $3.40, or 20%, from
$17.26 for the nine months ended September 30, 1995 to $20.66 for the same
period in 1996 while the average price received per mcf of gas increased 13%
from $1.58 during the nine months ended September 30, 1995 to $1.79 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 $32,435 for the nine months ended September 30, 1996 was
derived from proceeds received from the sale of equipment on several wells that
were plugged and abandoned in prior years.
During the nine months ended September 30, 1996, a gain of $376,894 was realized
from the sale of three oil and gas wells and one saltwater disposal well. The
gain resulted from proceeds received from the sale of $437,616 less the
9
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write-off of remaining capitalized well costs of $60,722. A gain of $321 from
the sale of one fully depleted well was realized during the nine months ended
September 30, 1995.
Costs and Expenses:
Total costs and expenses decreased to $967,953 for the nine months ended
September 30, 1996 as compared to $1,135,040 for the same period in 1995, a
decrease of $167,087, or 15%. This decrease was due to declines in production
costs, depletion and loss on abandoned properties, offset by increases in
general and administrative expenses ("G&A") and abandoned property costs.
Production costs were $693,368 for the nine months ended September 30, 1996 and
$785,090 for the same period in 1995, resulting in a $91,722 decrease, or 12%.
The decrease was the result of reductions 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, 4%, from $34,221 for the nine months ended
September 30, 1995 to $35,615 for the same period in 1996.
Depletion was $183,394 for the nine months ended September 30, 1996 compared to
$296,025 for the same period in 1995, representing a decrease of $112,631, or
38%. 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 of 6,388 barrels for the
nine months ended September 30, 1996 as compared to the same period in 1995, and
(iii) an increase in oil and gas reserves during the third quarter of 1996 as a
result of higher commodity prices.
A loss on abandoned properties of $1,976 was recognized during the nine months
ended September 30, 1996. This loss resulted from the write-off of remaining
capitalized well costs in four oil and gas wells and two saltwater disposal
wells of $52,406, less proceeds received from equipment credits of $50,430. The
loss on abandoned properties at September 30, 1995 of $12,435 resulted from the
write-off of remaining capitalized well costs of $39,007, less proceeds received
from equipment credits of $26,572. Associated expenses of $53,600 and $7,269
were incurred on the abandonment of these properties during the nine months
ended September 30, 1996 and 1995, respectively.
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
10
<PAGE>
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.
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 $208,711, or $8.54 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
11
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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 $19,736, or $.81 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 decreased to $349,138 from $363,040 for
the three months ended September 30, 1996 and 1995, respectively, a decrease of
4%. The decrease in revenues was the result of a 22% decline in barrels of oil
produced and sold and a 27% decline in mcf of gas produced and sold, offset by
higher average prices received per barrel of oil and mcf of gas. For the three
months ended September 30, 1996, 13,756 barrels of oil were sold compared to
17,615 for the same period in 1995, a decrease of 3,859 barrels. Of the
decrease, 1,167 barrels, or 7%, was attributable to the sale of three oil and
gas wells during the three months ended September 30, 1996, with the remaining
decrease of 2,692 barrels, or 15%, due to the decline characteristics of the oil
and gas properties. For the three months ended September 30, 1996, 34,507 mcf of
gas were sold compared to 47,343 for the same period in 1995, a decrease of
12,836 mcf, of which 4,965 mcf, or 10%, was attributable to the sale of
properties, with the remaining decrease of 7,871 mcf, or 17%, due to the decline
characteristics of the properties.
The average price received per barrel of oil increased $4.91, or 30%,from $16.53
for the three months ended September 30, 1995 to $21.44 for the same period in
1996 while the average price received per mcf of gas increased 3% from $1.52
during the three months ended September 30, 1995 to $1.57 in 1996.
Salvage income of $11,377 for the three months ended September 30, 1996 was
derived from proceeds received from the sale of equipment on wells that were
plugged and abandoned in prior years.
Costs and Expenses:
Total costs and expenses decreased to $311,715 for the three months ended
September 30, 1996 as compared to $363,599 for the same period in 1995, a
decrease of $51,884, or 14%. This decrease was due to declines in production
costs, G&A, depletion and gain on abandoned properties, offset by an increase in
abandoned property costs.
Production costs were $224,288 for the three months ended September 30, 1996 and
$259,831 for the same period in 1995, resulting in a $35,543 decrease, or 14%.
12
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The decrease was attributable to a reduction in well repair and maintenance
costs, offset by an increase in workover expenses 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 decreased, in aggregate, 4% from $10,891 for the three months ended
September 30, 1995 to $10,474 for the same period in 1996.
Depletion was $70,556 for the three months ended September 30, 1996 compared to
$93,729 for the same period in 1995. This represented a decrease in depletion of
$23,173, or 25%, primarily attributable to the following factors: (i) a
a reduction in the Registrant's net depletable basis from charges taken in
accordance with FAS 121, (ii) a reduction in oil production of 3,859 barrels for
the three months ended September 30, 1996 as compared to the same period in
1995, and (iii) an increase in oil and gas reserves during the third quarter of
1996 as a result of higher commodity prices.
A loss on abandoned properties of $1,242 was recognized during the three months
ended September 30, 1996, resulting from the write-off of remaining capitalized
well costs. A gain of $1,904 on abandoned properties was derived from proceeds
received from equipment credits on one well abandoned during the same period in
1995.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $49,375 during the nine
months ended September 30, 1996 from the same period ended September 30, 1995.
The decrease was primarily attributable to an increase in production and
abandoned property costs paid, offset by an increase in oil and gas sales
received and the receipt of litigation proceeds.
Net Cash Provided by Investing Activities
The Registrant's investing activities during the nine months ended September 30,
1996 and 1995, respectively, were related to the disposal or addition of oil and
gas equipment on active properties.
Proceeds from salvage income of $22,044 from the disposal of oil and gas
equipment on properties abandoned in prior years were received during the nine
months ended September 30, 1996, compared to $24,163 received during the same
period in 1995. Proceeds of $55,440 and $3,409 were received from the sale of
equipment on several properties abandoned during the nine months ended September
30, 1996 and 1995, respectively.
Three oil and gas wells and one saltwater disposal well were sold during the
nine months ended September 30, 1996, resulting in the receipt of $444,398 in
proceeds from the sale compared to $323 in proceeds received during the same
period in 1995 from the sale of one fully depleted well.
13
<PAGE>
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1996 to cover
distributions to the partners of $481,469 of which $476,654 was distributed to
the limited partners and $4,815 to the managing general partner. For the same
period ended September 30, 1995, cash was sufficient for distributions to the
partners of $379,897 of which $376,098 was distributed to the limited partners
and $3,799 to the managing general partner.
Cash distributions to the partners of $481,469 for the nine months ended
September 30, 1996 included $19,736 to the limited partners and $199 to the
managing general partner, resulting from proceeds received in the litigation
settlement as discussed in Note 3.
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 thereof is
described in Note 3 of Notes to Financial Statements above.
14
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PARKER & PARSLEY PRODUCING PROPERTIES 87-A, 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 PRODUCING
PROPERTIES 87-A, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: November 6, 1996 By: /s/ Steven L. Beal
---------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
15
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0
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