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, 1998
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 / /
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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 June 30, 1998 and
December 31, 1997 ..................................... 3
Statements of Operations for the three and six
months ended June 30, 1998 and 1997...................... 4
Statement of Partners' Capital for the six months
ended June 30, 1998...................................... 5
Statements of Cash Flows for the six months ended
June 30, 1998 and 1997................................... 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
27.1 Financial Data Schedule
Signatures................................................. 12
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
June 30, December 31,
1998 1997
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $209,360 at June 30 and
$219,315 at December 31 $ 209,560 $ 219,515
Accounts receivable - affiliate 73,954 163,949
---------- ----------
Total current assets 283,514 383,464
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 5,874,605 6,060,618
Accumulated depletion (4,578,755) (4,619,483)
---------- ----------
Net oil and gas properties 1,295,850 1,441,135
---------- ----------
$ 1,579,364 $ 1,824,599
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Partners' capital:
Managing general partner $ 17,035 $ 19,487
Limited partners (24,426 interests) 1,562,329 1,805,112
---------- ----------
$ 1,579,364 $ 1,824,599
========== ==========
The financial information included as of June 30, 1998 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 Six months ended
June 30, June 30,
--------------------- ----------------------
1998 1997 1998 1997
--------- --------- ---------- ---------
Revenues:
Oil and gas $ 211,467 $ 296,477 $ 433,040 $ 654,246
Interest 3,304 5,786 6,704 10,691
-------- -------- --------- --------
214,771 302,263 439,744 664,937
-------- -------- --------- --------
Costs and expenses:
Oil and gas production 176,577 193,103 360,313 420,665
General and administrative 15,117 9,249 21,764 19,877
Depletion 59,005 40,623 99,488 81,222
Loss on disposition of assets 44,930 79,010 9,441 68,002
Abandoned property 18,767 27,877 65,758 30,843
-------- -------- --------- --------
314,396 349,862 556,764 620,609
-------- -------- --------- --------
Net income (loss) $ (99,625) $ (47,599) $ (117,020) $ 44,328
======== ======== ========= ========
Allocation of net income (loss):
Managing general partner $ (996) $ (476) $ (1,170) $ 443
======== ======== ========= ========
Limited partners $ (98,629) $ (47,123) $ (115,850) $ 43,885
======== ======== ========= ========
Net income (loss) per limited
partnership interest $ (4.03) $ (1.93) $ (4.74) $ 1.80
======== ======== ========= ========
Distributions per limited
partnership interest $ 1.18 $ 5.90 $ 5.20 $ 15.65
======== ======== ========= ========
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
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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, 1998 $ 19,487 $1,805,112 $1,824,599
Distributions (1,282) (126,933) (128,215)
Net loss (1,170) (115,850) (117,020)
-------- --------- ---------
Balance at June 30, 1998 $ 17,035 $1,562,329 $1,579,364
======== ========= =========
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)
Six months ended
June 30,
-------------------------
1998 1997
---------- ----------
Cash flows from operating activities:
Net income (loss) $ (117,020) $ 44,328
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 99,488 81,222
Loss on disposition of assets 9,441 68,002
Changes in assets and liabilities:
Accounts receivable 89,995 142,873
--------- ---------
Net cash provided by operating activities 81,904 336,425
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (5,454) (2,944)
Proceeds from asset dispositions 41,810 25,131
--------- ---------
Net cash provided by investing activities 36,356 22,187
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (128,215) (386,126)
--------- ---------
Net decrease in cash and cash equivalents (9,955) (27,514)
Cash and cash equivalents at beginning of period 219,515 327,443
--------- ---------
Cash and cash equivalents at end of period $ 209,560 $ 299,929
========= =========
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
June 30, 1998
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley Producing Properties 87-A, Ltd. (the "Partnership") is a
limited partnership organized in 1987 under the laws of the State of Texas.
The Partnership engages primarily in oil and gas 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, 1998 and for the three and six months ended June 30,
1998 and 1997 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, 1997, 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, 1998 compared with six months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 34% to $433,040 from $654,246
for the six months ended June 30, 1998 and 1997, respectively. The decrease in
revenues resulted from lower average prices received, offset by an increase in
production. For the six months ended June 30, 1998, 25,655 barrels of oil, 6,204
barrels of natural gas liquids ("NGLs") and 29,158 mcf of gas were sold, or
7
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36,719 barrel of oil equivalents ("BOEs"). For the six months ended June 30,
1997, 27,364 barrels of oil and 54,351 mcf of gas were sold, or 36,423 BOEs.
As of September 30, 1997, the Partnership began accounting for processed natural
gas production as processed natural gas liquids and dry residue gas.
Consequently, separate product volumes will not be comparable to periods prior
to September 30, 1997. Also, prices for gas products will not be comparable as
the price per mcf for natural gas for the three and six months ended June 30,
1998 is the price received for dry residue gas and the price per mcf for natural
gas for the three and six months ended June 30, 1997 is a price for wet gas
(i.e., natural gas liquids combined with dry residue gas).
The average price received per barrel of oil decreased $5.84, or 29%, from
$19.85 for the six months ended June 30, 1997 to $14.01 for the same period in
1998. The average price received per barrel of NGLs during the six months ended
June 30, 1998 was $6.00. The average price received per mcf of gas decreased 39%
from $2.04 for the six months ended June 30, 1997 to $1.25 for the same period
in 1998. 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, 1998.
During most of 1997, the Partnership benefitted from higher oil prices as
compared to previous years. However, during the fourth quarter of 1997, oil
prices began a downward trend that has continued into 1998. On July 29, 1998,
the market price for West Texas intermediate crude was $11.58 per barrel. A
continuation of the oil price environment experienced during the first half of
1998 will have an adverse effect on the Partnership's revenues and operating
cash flow and could result in additional decreases in the carrying value of the
Partnership's oil and gas properties.
Costs and Expenses:
Total costs and expenses decreased to $556,764 for the six months ended June 30,
1998 as compared to $620,609 for the same period in 1997, a decrease of $63,845,
or 10%. This decrease was due to a reduction in production costs and loss on
disposition of assets, offset by increases in abandoned property costs,
depletion and general and administrative expenses ("G&A").
Production costs were $360,313 for the six months ended June 30, 1998 and
$420,665 for the same period in 1997, resulting in a $60,352 decrease, or 14%.
The decrease was attributable to declines in well maintenance costs, workover
expenses and production taxes.
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, 9% from $19,877 for the six months ended June 30, 1997
to $21,764 for the same period in 1998.
Depletion was $99,488 for the six months ended June 30, 1998 compared to $81,222
for the same period in 1997. This represented an increase in depletion of
8
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$18,266, or 22%. This increase was due to a decrease in oil reserves during the
six months ended June 30, 1998 as a result of lower commodity prices, offset by
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 1997 and a reduction in oil
production of 1,709 barrels for the period ended June 30, 1998 compared to the
same period in 1997.
A loss on disposition of assets of $9,441 and $68,002 was recognized for the six
months ended June 30, 1998 an 1997, respectively, on the abandonment of two and
four oil and gas wells during each period. Expenses incurred during 1998 and
1997 to plug and abandon these wells totaled $65,758 and $30,843, respectively.
Three months ended June 30, 1998 compared with three months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 29% to $211,467 from $296,477
for the three months ended June 30, 1998 and 1997, respectively. The decrease in
revenues resulted from lower average prices received, offset by an increase in
production. For the three months ended June 30, 1998, 13,131 barrels of oil,
2,945 barrels of NGLs and 14,644 mcf of gas were sold, or 18,517 BOEs. For the
three months ended June 30, 1997, 13,389 barrels of oil and 27,668 mcf of gas
were sold, or 18,000 BOEs.
The average price received per barrel of oil decreased $5.15, or 28%, from
$18.52 for the three months ended June 30, 1997 to $13.37 for the same period in
1998. The average price received per barrel of NGLs during the three months
ended June 30, 1998 was $5.95. The average price received per mcf of gas
decreased 28% from $1.75 during the three months ended June 30, 1997 to $1.26 in
1998.
Costs and Expenses:
Total costs and expenses decreased to $314,396 for the three months ended June
30, 1998 as compared to $349,862 for the same period in 1997, a decrease of
$35,466, or 10%. This decrease was due to declines in loss on abandoned
properties, production costs and abandoned property costs, offset by increases
in depletion and G&A.
Production costs were $176,577 for the three months ended June 30, 1998 and
$193,103 for the same period in 1997, resulting in a $16,526 decrease, or 9%.
The decrease was attributable to less workover expenses and production taxes,
offset by an increase in 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
increased, in aggregate, 63% from $9,249 for the three months ended June 30,
1997 to $15,117 for the same period in 1998.
9
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Depletion was $59,005 for the three months ended June 30, 1998 compared to
$40,623 for the same period in 1997. This represented an increase in depletion
of $18,382, or 45%. This increase was primarily attributable to a reduction in
oil reserves during the three months ended June 30, 1998 as a result of lower
commodity prices.
A loss on disposition of assets of $44,930 and $79,010 was recognized for the
three months ended June 30, 1998 and 1997, respectively, on the abandonment of
two and four oil and gas wells during each period. Expenses incurred during the
three months ended June 30, 1998 and 1997 to plug and abandon these wells
totaled $18,767 and $27,877, respectively.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $254,521 during the six
months ended June 30, 1998 from the same period in 1997. The decrease was
attributable to a decrease in oil and gas sales receipts and an increase in
abandoned property costs paid, offset by a decrease in production costs paid.
Net Cash Provided by Investing Activities
The Partnership's principal investing activities during the six months ended
June 30, 1998 and 1997 were related to expenditures for oil and gas equipment on
active properties.
Proceeds of $41,810 and $25,131 were received during the six months ended June
30, 1998 and 1997, respectively, from the sale of oil and gas equipment on
properties abandoned in current and prior years.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1998 to cover
distributions to the partners of $128,215 of which $1,282 was distributed to the
managing general partner and $126,933 to the limited partners. For the same
period ended June 30, 1997, cash was sufficient for 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.
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.
Information systems for the year 2000
The managing general partner will be required to modify its information systems
in order to accurately process Partnership data referencing the year 2000.
Because of the importance of occurrence dates in the oil and gas industry, the
consequences of not pursuing these modifications could be very significant to
10
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the Partnership's ability to manage and report operating activities. Currently,
the managing general partner plans to contract with third parties to perform the
software programming changes necessary to correct any existing deficiencies.
Such programming changes are anticipated to be completed and tested by June
1999. The managing general partner will allocate a portion of the costs of the
year 2000 programming charges to the Partnership when they are incurred, along
with recurring general and administrative expenses. Although the costs are not
estimable at this time, they should not be significant to the Partnership.
- ---------------
(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
11
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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: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: August 6, 1998 By: /s/ Rich Dealy
------------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
12
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<ARTICLE> 5
<CIK> 0000809016
<NAME> 87APP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 209,560
<SECURITIES> 0
<RECEIVABLES> 73,954
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 283,514
<PP&E> 5,874,605
<DEPRECIATION> 4,578,755
<TOTAL-ASSETS> 1,579,364
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0
0
<COMMON> 0
<OTHER-SE> 1,579,364
<TOTAL-LIABILITY-AND-EQUITY> 1,579,364
<SALES> 433,040
<TOTAL-REVENUES> 439,744
<CGS> 0
<TOTAL-COSTS> 556,764
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<INCOME-PRETAX> (117,020)
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<INCOME-CONTINUING> (117,020)
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