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 June 30, 1997
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 12 pages.
Exhibit index on page 11.
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-A, LTD.
TABLE OF CONTENTS
Page
----
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of June 30, 1997 and
December 31, 1996 ................................... 3
Statements of Operations for the three and six
months ended June 30, 1997 and 1996..................... 4
Statement of Partners' Capital for the six months
ended June 30, 1997..................................... 5
Statements of Cash Flows for the six months ended
June 30, 1997 and 1996.................................. 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.......................... 11
27. Financial Data Schedule
Signatures................................................ 12
2
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $299,729 at June 30
and $327,271 at December 31 $ 299,929 $ 327,443
Accounts receivable - affiliate 160,491 297,667
----------- -----------
Total current assets 460,420 625,110
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 6,151,971 6,465,143
Accumulated depletion (4,136,606) (4,272,670)
----------- -----------
Net oil and gas properties 2,015,365 2,192,473
----------- -----------
$ 2,475,785 $ 2,817,583
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Partners' capital:
Managing general partner 25,999 29,417
Limited partners (24,426 interests) 2,449,786 2,788,166
----------- ------------
$ 2,475,785 $ 2,817,583
=========== ============
The financial information included as of June 30, 1997 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 PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
--------- ---------- --------- ----------
Revenues:
Oil and gas $ 296,477 $ 416,547 $ 654,246 $ 838,024
Interest 5,786 2,254 10,691 4,228
Salvage income from equipment
disposal - 538 14,394 21,058
Gain on sale of assets - 376,954 - 376,954
Litigation settlement - 19,935 - 19,935
-------- -------- -------- ---------
302,263 816,228 679,331 1,260,199
-------- -------- -------- ---------
Costs and expenses:
Oil and gas production 193,103 231,464 420,665 469,080
General and administrative 9,249 12,497 19,877 25,141
Depletion 40,623 50,807 81,222 112,838
Loss on abandoned properties 79,010 6,902 82,396 734
Abandoned property 27,877 25,709 30,843 48,445
-------- -------- -------- ---------
349,862 327,379 635,003 656,238
-------- -------- -------- ---------
Net income (loss) $ (47,599) $ 488,849 $ 44,328 $ 603,961
======== ======== ======== =========
Allocation of net income (loss):
Managing general partner $ (476) $ 4,889 $ 443 $ 6,040
======== ======== ======== =========
Limited partners $ (47,123) $ 483,960 $ 43,885 $ 597,921
======== ======== ======== =========
Net income (loss) per limited
partnership interest $ (1.93) $ 19.81 $ 1.80 $ 24.48
======== ======== ======== =========
Distributions per limited
partnership interest $ 5.90 $ 7.81 $ 15.65 $ 12.31
======== ======== ======== =========
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 PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- -----------
Balance at January 1, 1997 $ 29,417 $2,788,166 $2,817,583
Distributions (3,861) (382,265) (386,126)
Net income 443 43,885 44,328
-------- --------- ---------
Balance at June 30, 1997 $ 25,999 $2,449,786 $2,475,785
======== ========= =========
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 PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
------------------------
1997 1996
---------- ----------
Cash flows from operating activities:
Net income $ 44,328 $ 603,961
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 81,222 112,838
Loss on abandoned properties 82,396 734
Salvage income from equipment disposal (14,394) (21,058)
Gain on sale of assets - (376,954)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 142,873 (50,077)
--------- ---------
Net cash provided by operating activities 336,425 269,444
--------- ---------
Cash flows from investing activities:
(Additions to) deletions of oil and gas properties (2,944) 7,818
Proceeds from equipment salvage on abandoned
properties 10,737 33,479
Proceeds from salvage income from equipment disposal 14,394 19,980
Proceeds from sale of asset - 437,676
--------- ---------
Net cash provided by investing activities 22,187 498,953
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (386,126) (303,671)
--------- ---------
Net increase (decrease) in cash and cash equivalents (27,514) 464,726
Cash and cash equivalents at beginning of period 327,443 133,580
--------- ---------
Cash and cash equivalents at end of period $ 299,929 $ 598,306
========= =========
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 PRODUCING PROPERTIES 87-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
Note 1. Basis of presentation
In the opinion of management, the unaudited financial statements of Parker &
Parsley Producing Properties 87-A, Ltd. (the "Partnership") as of June 30, 1997
and for the three and six months ended June 30, 1997 and 1996 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 Partnership's Report on Form 10-K for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Controller, 303
West Wall, Suite 101, Midland, Texas 79701.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Six months ended June 30, 1997 compared with six months ended
June 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 22% to $654,246 from $838,024
for the six months ended June 30, 1997 as compared to the six months ended June
30, 1996. The decrease in revenues resulted from a 27% decline in mcf of gas
produced and sold, a 20% decline in barrels of oil produced and sold, and a
decline in the average price received per barrel of oil, offset by a higher
average price received per mcf of gas. For the six months ended June 30, 1997,
27,364 barrels of oil were sold compared to 34,202 for the same period in 1996,
a decrease of 6,838 barrels. Of the decrease, 1,380 barrels, or 4%, was
attributable to the sale of three oil and gas wells during the six months ended
June 30, 1996. The remaining decrease of 5,458 barrels, or 16%, was due to the
decline characteristics of the Partnership's oil and gas properties. For the six
months ended June 30, 1997, 54,351 mcf of gas were sold compared to 74,849 for
7
<PAGE>
the same period in 1996, a decrease of 20,498 mcf. Of the decrease, 6,664 mcf,
or 9%, was attributable to the sale of three oil and gas wells and the remaining
13,834 mcf decrease, or 18%, was due to the decline characteristics of the
Partnership'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 Partnership's economically recoverable reserves are fully
depleted.
The average price received per barrel of oil decreased slightly from $20.35 for
the six months ended June 30, 1996 to $19.85 for the same period in 1997, while
the average price received per mcf of gas increased 7% from $1.90 for the six
months ended June 30, 1996 to $2.04 for the same period in 1997. 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, 1997.
During the six months ended June 30, 1997 and 1996, salvage income of $14,394
and $21,058, respectively, was derived from equipment credits received from the
disposal of oil and gas equipment on properties that were plugged and abandoned
in prior years.
During the six months ended June 30, 1996, a gain of $376,954 was realized from
the sale of three oil and gas wells and one saltwater disposal well to Costilla
Energy, L.L.C.
On April 29, 1996, Southmark Corporation, the managing general partner and the
Partnership entered into a final $7.4 million settlement agreement with Jack N.
Price resolving all outstanding litigation between the parties. As a result, 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 of $19,935, which included
$19,736, or $.81 per limited partnership interest, to the Partnership and its
partners.
Costs and Expenses:
Total costs and expenses decreased to $635,003 for the six months ended June 30,
1997 as compared to $656,238 for the same period in 1996, a decrease of $21,235,
or 3%. This decrease was due to reductions in production costs, depletion,
abandoned property costs and general and administrative expenses ("G&A"), offset
by an increase in loss on abandoned properties.
Production costs were $420,665 for the six months ended June 30, 1997 and
$469,080 for the same period in 1996, resulting in a $48,415 decrease, or 10%.
The decrease was attributable to less well repair and maintenance costs and
production taxes, offset by an increase in workover expenses incurred in an
effort to stimulate production.
8
<PAGE>
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 21% from $25,141 for the six months ended June 30, 1996
to $19,877 for the same period in 1997.
Depletion was $81,222 for the six months ended June 30, 1997 compared to
$112,838 for the same period in 1996. This represented a decrease in depletion
of $31,616, or 28%, primarily attributable to the sale of properties during 1996
and a decline in oil production of 5,458 barrels on the remaining active
properties for the six months ended June 30, 1997 from the same period in 1996.
A loss on abandoned properties of $82,396 was recognized for the six months
ended June 30, 1997 on the abandonment of four oil and gas wells. For the six
months ended June 30, 1996, a loss of $734 was recognized from the abandonment
of three oil and gas wells and two saltwater disposal wells. Expenses incurred
during 1997 and 1996 to plug and abandon several uneconomical wells totaled
$30,843 and $48,445, respectively.
Three months ended June 30, 1997 compared with three months ended
June 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 29% to $296,477 from $416,547
for the three months ended June 30, 1997 as compared to the three months ended
June 30, 1996. The decrease in revenues resulted from a 24% decline in mcf of
gas produced and sold, a 16% decline in barrels of oil produced and sold, and
declines in the average prices received per barrel of oil and mcf of gas. For
the three months ended June 30, 1997, 13,389 barrels of oil were sold compared
to 16,002 for the same period in 1996, a decrease of 2,613 barrels. For the
three months ended June 30, 1997, 27,668 mcf of gas were sold compared to 36,255
for the same period in 1996, a decrease of 8,587 mcf. Of the decrease, 1,443
mcf, or 4%, was attributable to the sale of three oil and gas wells during 1996.
The remaining decrease of 7,144 mcf, or 20%, was due to the decline
characteristics of the Partnership's oil and gas properties. The decrease in oil
production was due to the decline characteristics of the Partnership's oil and
gas properties.
The average price received per barrel of oil decreased $3.37, or 15%, from
$21.89 for the three months ended June 30, 1996 to $18.52 for the same period in
1997, while the average price received per mcf of gas decreased 5% from $1.83
during the three months ended June 30, 1996 to $1.75 in 1997.
Salvage income of $538 for the three months ended June 30, 1996 was derived from
equipment credits received on several wells that were plugged and abandoned in
prior years.
During the three months ended June 30, 1996, a gain of $376,954 was realized
from the sale of three oil and gas wells and one saltwater disposal well to
Costilla Energy, L.L.C.
9
<PAGE>
On April 29, 1996, Southmark Corporation, the managing general partner and the
Partnership entered into a final $7.4 million settlement agreement with Jack N.
Price resolving all outstanding litigation between the parties. As a result, 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 of $19,935, which included
$19,736, or $.81 per limited partnership interest, to the Partnership and its
partners.
Costs and Expenses:
Total costs and expenses increased to $349,862 for the three months ended June
30, 1997 as compared to $327,379 for the same period in 1996, an increase of
$22,483, or 7%. This increase was due to increases in loss on abandoned
properties and abandoned property costs, offset by declines in production costs,
depletion, and G&A.
Production costs were $193,103 for the three months ended June 30, 1997 and
$231,464 for the same period in 1996, resulting in a $38,361 decrease, or 17%.
The decrease was attributable to less well repair and maintenance costs, offset
by an increase in workover expenses incurred in an effort to stimulate
production.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 26% from $12,497 for the three months ended June 30,
1996 to $9,249 for the same period in 1997.
Depletion was $40,623 for the three months ended June 30, 1997 compared to
$50,807 for the same period in 1996. This represented a decrease in depletion of
$10,184, or 20%, primarily attributable to a decline in oil production of 2,613
barrels for the three months ended June 30, 1997 from the same period in 1996.
A loss on abandoned properties of $79,010 was recognized for the three months
ended June 30, 1997 on the abandonment of four oil and gas wells. For the three
months ended June 30, 1996, a loss of $6,902 resulted from the abandonment of
three oil and gas wells and two saltwater disposal wells during the three months
ended June 30, 1996. Expenses incurred during the three months ended June 30,
1997 and 1996 to plug and abandon several uneconomical wells totaled $27,877 and
$25,709, respectively.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $66,981 during the six
months ended June 30, 1997 from the same period in 1996. The increase was
attributable to an increase in oil and gas sales receipts and declines in
production costs and abandoned property costs paid, offset by a decline due to
the receipt of proceeds received in 1996 from the litigation settlement as
discussed in Item 2.
10
<PAGE>
Net Cash Provided by Investing Activities
The Partnership's principal investing activities during the six months ended
June 30, 1997 and 1996 were related to the additions or disposal of oil and gas
equipment on active properties.
Proceeds of $10,737 and $33,479 were received from the salvage of equipment on
several properties abandoned during the six months ended June 30, 1997 and 1996,
respectively. Proceeds from salvage income of $14,394 and $19,980, from the sale
of oil and gas equipment on properties abandoned in prior years, were received
during the six months ended June 30, 1997 and 1996, respectively.
Three oil and gas wells and one saltwater disposal well were sold during the six
months ended June 30, 1996, resulting in the receipt of $437,676 in proceeds
from the sale.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1997 to cover
distributions to the partners of $386,126 of which $3,861 was distributed to the
managing general partner and $382,265 to the limited partners. For the same
period ended June 30, 1996, cash was sufficient for distributions to the
partners of $303,671 of which $3,037 was distributed to the managing general
partner and $300,634 to the limited partners. Cash distributions to the partners
of $386,126 for the six months ended June 30, 1996 included $199 to the managing
general partner and $19,736 to the limited partners, resulting from proceeds
received in the litigation settlement as discussed in Item 2.
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 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K - none
11
<PAGE>
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: August 12, 1997 By: /s/ Rich Dealy
--------------
Rich Dealy, Controller of PPUSA
12
<PAGE>
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<ARTICLE> 5
<CIK> 0000809016
<NAME> 87APP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 299,929
<SECURITIES> 0
<RECEIVABLES> 160,491
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 460,420
<PP&E> 6,151,971
<DEPRECIATION> 4,136,606
<TOTAL-ASSETS> 2,475,785
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,475,785
<TOTAL-LIABILITY-AND-EQUITY> 2,475,785
<SALES> 654,246
<TOTAL-REVENUES> 679,331
<CGS> 0
<TOTAL-COSTS> 635,003
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 44,328
<INCOME-TAX> 0
<INCOME-CONTINUING> 44,328
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<NET-INCOME> 44,328
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