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, 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 September 30, 1997 and
December 31, 1996 ..................................... 3
Statements of Operations for the three and nine
months ended September 30, 1997 and 1996.................. 4
Statement of Partners' Capital for the nine months
ended September 30, 1997.................................. 5
Statements of Cash Flows for the nine months ended
September 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
September 30, December 31,
1997 1996
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $202,982 at September 30
and $327,271 at December 31 $ 203,182 $ 327,443
Accounts receivable - affiliate 149,803 297,667
----------- ----------
Total current assets 352,985 625,110
----------- ----------
Oil and gas properties - at cost, based on
the successful efforts accounting method 6,074,987 6,465,143
Accumulated depletion (4,123,759) (4,272,670)
----------- ----------
Net oil and gas properties 1,951,228 2,192,473
----------- ----------
$ 2,304,213 $ 2,817,583
=========== ==========
PARTNERS' CAPITAL
Partners' capital:
Managing general partner $ 24,283 $ 29,417
Limited partners (24,426 interests) 2,279,930 2,788,166
----------- ----------
$ 2,304,213 $ 2,817,583
=========== ==========
The financial information included as of September 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 Nine months ended
September 30, September 30,
--------------------- ----------------------
1997 1996 1997 1996
--------- --------- --------- ----------
Revenues:
Oil and gas $ 249,937 $ 349,138 $ 904,183 $1,187,162
Interest 4,453 7,677 15,144 11,905
Gain (loss) on disposition
of assets (6,349) 10,075 (74,351) 407,353
Litigation settlement - - - 19,935
-------- -------- -------- ---------
248,041 366,890 844,976 1,626,355
-------- -------- -------- ---------
Costs and expenses:
Oil and gas production 260,489 224,288 681,154 693,368
General and administrative 7,248 10,474 27,125 35,615
Depletion 37,411 70,556 118,633 183,394
Abandoned property 11,943 5,155 42,786 53,600
-------- -------- -------- ---------
317,091 310,473 869,698 965,977
-------- -------- -------- ---------
Net income (loss) $ (69,050) $ 56,417 $ (24,722) $ 660,378
======== ======== ======== =========
Allocation of net income (loss):
Managing general partner $ (690) $ 564 $ (247) $ 6,604
======== ======== ======== =========
Limited partners $ (68,360) $ 55,853 $ (24,475) $ 653,774
======== ======== ======== =========
Net income (loss) per limited
partnership interest $ (2.80) $ 2.29 $ (1.00) $ 26.77
======== ======== ======== =========
Distributions per limited
partnership interest $ 4.16 $ 7.20 $ 19.81 $ 19.51
======== ======== ======== =========
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
<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 (4,887) (483,761) (488,648)
Net loss (247) (24,475) (24,722)
-------- --------- ---------
Balance at September 30, 1997 $ 24,283 $2,279,930 $2,304,213
======== ========= =========
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)
Nine months ended
September 30,
------------------------
1997 1996
----------- ----------
Cash flows from operating activities:
Net income (loss) $ (24,722) $ 660,378
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depletion 118,633 183,394
(Gain) loss on disposition of assets 74,351 (407,353)
Changes in assets:
(Increase) decrease in accounts receivable 156,396 (74,635)
--------- ----------
Net cash provided by operating activities 324,658 361,784
--------- ---------
Cash flows from investing activities:
Additions to oil and gas property (17,099) -
Proceeds from disposition of assets 56,828 524,240
--------- ---------
Net cash provided by investing activities 39,729 524,240
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (488,648) (481,469)
--------- ---------
Net increase (decrease) in cash and cash equivalents (124,261) 404,555
Cash and cash equivalents at beginning of period 327,443 133,580
--------- ---------
Cash and cash equivalents at end of period $ 203,182 $ 538,135
========= =========
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
September 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 September 30,
1997 and for the three and nine months ended September 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 reclassifications have been made to prior period
financial statements to conform to the 1997 financial presentations.
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, Vice President and
Controller, 303 West Wall, Suite 101, Midland, Texas 79701.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
As of August 8, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA") became
the general partner of the Partnership. Prior to August 8, 1997, the
Partnership's general partner was Parker & Parsley Development L.P. ("PPDLP"), a
wholly-owned subsidiary of Parker & Parsley Petroleum Company ("Parker &
Parsley"). On August 7, 1997, Parker & Parsley and Mesa Inc. received
shareholder approval to merge and create Pioneer Natural Resources Company
("Pioneer"). On August 8, 1997, PPDLP was merged with and into Pioneer USA, a
wholly-owned subsidiary of Pioneer, resulting in Pioneer USA becoming the
general partner of the Partnership as PPDLP's successor by merger. For a more
complete description of the Parker & Parsley and Mesa Inc. merger, see Pioneer's
Registration Statement on Form S-4 as filed with the Securities and Exchange
Commission.
Results of Operations
Nine months ended September 30, 1997 compared with nine months ended
September 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 24% to $904,183 from $1,187,162
for the nine months ended September 30, 1997 as compared to the nine months
ended September 30, 1996. The decline in revenues resulted from declines in
7
<PAGE>
barrels of oil and mcf of gas produced and sold and a lower average price
received per barrel of oil, offset by an increase in the average price received
per mcf of gas. For the nine months ended September 30, 1997, 38,537 barrels of
oil were sold compared to 47,957 for the same period in 1996, a decrease of
9,420 barrels, or 20%. Of the decrease, 1,380 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 8,040 barrels, or 17%, was due to the
decline characteristics of the Partnership's oil and gas properties. For the
nine months ended September 30, 1997, 80,617 mcf of gas were sold compared to
109,356 for the same period in 1996, a decrease of 28,739 mcf, or 26%, of which
6,664 mcf, or 6%, was attributable to the sale of three oil and gas wells, with
the remaining decrease of 22,075 mcf, or 20%, due to the decline characteristics
of the properties. 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 $1.23, or 6%, from $20.66
for the nine months ended September 30, 1996 to $19.43 for the same period in
1997, while the average price received per mcf of gas increased 8% from $1.79
during the nine months ended September 30, 1996 to $1.93 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 nine months ended
September 30, 1997.
The $74,351 loss on disposition of assets for the nine months ended September
30, 1997 resulted from an $89,277 loss on the abandonment of five oil and gas
wells, offset by $14,926 in salvage income received during 1997 on properties
that were plugged and abandoned in prior years. The $407,353 gain on disposition
of assets for the nine months ended September 30, 1996 resulted from a $376,894
gain on the sale of three oil and gas wells and one saltwater disposal well to
Costilla Energy, L.L.C. and $32,435 in salvage income received during 1996 on
properties that were plugged and abandoned in prior years, offset by a $1,976
loss on the abandonment of four oil and gas wells and two saltwater disposal
wells.
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 $869,698 for the nine months ended
September 30, 1997 as compared to $965,977 for the same period in 1996, a
decrease of $96,279, or 10%. This decrease was due to declines in depletion,
production costs, abandoned property costs and general and administrative
expenses ("G&A").
Production costs were $681,154 for the nine months ended September 30, 1997 and
$693,368 for the same period in 1996, resulting in a $12,214 decrease. The
decrease was the result of lower well maintenance costs, offset by an increase
in workover costs 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, 24%, from $35,615 for the nine months ended September
30, 1996 to $27,125 for the same period in 1997.
Depletion was $118,633 for the nine months ended September 30, 1997 compared to
$183,394 for the same period in 1996, representing a decrease of $64,761, or
35%. This decrease was primarily attributable to a decline in oil production of
8,040 barrels on the remaining active properties for the nine months ended
September 30, 1997 as compared to the same period in 1996 and a revision of oil
reserves at December 31, 1996.
Abandoned property costs of $42,786 and $53,600 were incurred on the abandonment
of several properties for the nine months ended September 30, 1997 and 1996,
respectively.
Three months ended September 30, 1997 compared with three months ended September
30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 28% to $249,937 from $349,138
for the three months ended September 30, 1997 as compared to the three months
ended September 30, 1996. The decrease in revenues was the result of declines in
barrels of oil and mcf of gas produced and sold and a decline in the average
price received per barrel of oil, offset by an increase in the average price
received per mcf of gas. For the three months ended September 30, 1997, 11,172
barrels of oil were sold compared to 13,756 for the same period in 1996, a
decrease of 2,584 barrels, or 19%. For the three months ended September 30,
1997, 26,277 mcf of gas were sold compared to 34,507 for the same period in
1996, a decrease of 8,230 mcf, or 24%. The decreases in production volumes were
due to the decline characteristics of the Partnership's oil and gas properties.
The average price received per barrel of oil decreased $3.03, or 14%, from
$21.44 for the three months ended September 30, 1996 to $18.41 for the same
period in 1997, while the average price received per mcf of gas increased 7%
from $1.57 during the three months ended September 30, 1996 to $1.68 in 1997.
The $6,349 loss on disposition of assets for the three months ended September
30, 1997 resulted from a $6,881 loss on the abandonment of five oil and gas
wells, offset by $532 in salvage income received during the three months ended
September 30, 1997 on properties that were plugged and abandoned in prior years.
The $10,075 gain on disposition of assets for the three months ended September
30, 1996 resulted from $11,317 in salvage income from properties that were
plugged and abandoned in prior years, offset by a $1,242 loss on the abandonment
of four oil and gas wells and two saltwater disposal wells.
Costs and Expenses:
Total costs and expenses increased to $317,091 for the three months ended
September 30, 1997 as compared to $310,473 for the same period in 1996, an
increase of $6,618. This increase was due to increases in production costs and
abandoned property costs, offset by declines in depletion and G&A.
9
<PAGE>
Production costs were $260,489 for the three months ended September 30, 1997 and
$224,288 for the same period in 1996, resulting in a $36,201 increase, or 16%.
The increase was attributable to additional workover expenses incurred in an
effort to stimulate well production, offset by lower well maintenance costs.
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, 31% from $10,474 for the three months ended September
30, 1996 to $7,248 for the same period in 1997.
Depletion was $37,411 for the three months ended September 30, 1997 compared to
$70,556 for the same period in 1996. This represented a decrease in depletion of
$33,145, or 47%, primarily attributable to a decline in oil production of 2,584
barrels for the three months ended September 30, 1997 as compared to the same
period in 1996 and a revision of reserves at December 31, 1996.
Abandoned property costs of $11,943 and $5,155 were incurred on the abandonment
of several properties for the three months ended September 30, 1997 and 1996,
respectively.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $37,126 during the nine
months ended September 30, 1997 from the same period ended September 30, 1996.
The decrease was attributable to the receipt of proceeds received in 1996 from
the litigation settlement as discussed in Item 2 and a decline in oil and gas
sales receipts, offset by declines in production costs and abandoned property
costs paid.
Net Cash Provided by Investing Activities
The Partnership's investing activities during the nine months ended September
30, 1997 and 1996, respectively, were related to the disposal or addition of oil
and gas equipment on active properties. For the nine months ended September 30,
1997, additions to oil and gas properties were primarily due to the purchase and
recompletion of a producing property.
Proceeds of $41,903 and $55,440 were received from the sale of equipment on
several properties abandoned during the nine months ended September 30, 1997,
and 1996, respectively. Proceeds from salvage income of $14,925 and $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, 1997 and 1996,
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.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1997 to cover
distributions to the partners of $488,648 of which $4,887 was distributed to the
managing general partner and $483,761 to the limited partners. For the same
period ended September 30, 1996, cash was sufficient for distributions to the
partners of $481,469 of which $4,815 was distributed to the managing general
10
<PAGE>
partner and $476,654 to the limited partners. Cash distributions to the partners
of $481,469 for the nine months ended September 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: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 12, 1996 By: /s/ Rich Dealy
--------------------------------
Rich Dealy, Vice President and
Controller
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000809016
<NAME> 87AP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 203,182
<SECURITIES> 0
<RECEIVABLES> 149,803
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 352,985
<PP&E> 6,074,987
<DEPRECIATION> 4,123,759
<TOTAL-ASSETS> 2,304,213
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,304,213
<TOTAL-LIABILITY-AND-EQUITY> 2,304,213
<SALES> 904,183
<TOTAL-REVENUES> 844,976
<CGS> 0
<TOTAL-COSTS> 869,698
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (24,722)
<INCOME-TAX> 0
<INCOME-CONTINUING> (24,722)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,722)
<EPS-PRIMARY> (1.00)
<EPS-DILUTED> 0
</TABLE>
