<PAGE> 1
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, 1995, 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. 33-11193-2
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2205943
(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.
There are no exhibits.
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
June 30, December 31,
1995 1994
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, all
interest bearing deposits $ 121,979 $ 36,910
Accounts receivable - affiliate 43,336 82,820
----------- -----------
Total current assets 165,315 119,730
Oil and gas properties - at cost,
based on the successful efforts
accounting method 4,892,426 4,902,973
Accumulated depletion (2,936,804) (2,864,181)
----------- -----------
Net oil and gas properties 1,955,622 2,038,792
----------- -----------
$ 2,120,937 $ 2,158,522
=========== ===========
PARTNERS' CAPITAL
Partners' capital:
Limited partners (12,191 interests) $ 2,100,270 $ 2,136,837
Managing general partner 20,667 21,685
----------- -----------
$ 2,120,937 $ 2,158,522
=========== ===========
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 statements.
2
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
Revenues:
Oil and gas sales $ 213,847 $ 223,950 $ 451,131 $ 417,960
Interest income 1,687 1,097 2,562 1,961
Salvage income from
equipment disposal - 6,173 569 6,962
--------- --------- --------- ---------
Total revenues 215,534 231,220 454,262 426,883
Costs and expenses:
Production costs 119,097 147,436 243,915 295,334
General and adminis-
trative expenses 6,416 6,719 13,534 12,539
Depletion 36,210 41,785 78,046 90,259
Abandoned property costs 82 485 3,126 485
(Gain) loss on abandoned
property (340) (674) 4,805 (674)
--------- --------- --------- ---------
Total costs and
expenses 161,465 195,751 343,426 397,943
--------- --------- --------- ---------
Net income $ 54,069 $ 35,469 $ 110,836 $ 28,940
========= ========= ========= =========
Allocation of net income:
Managing general
partner $ 540 $ 354 $ 1,108 $ 289
========= ========= ========= =========
Limited partners $ 53,529 $ 35,115 $ 109,728 $ 28,651
========= ========= ========= =========
Net income per limited
partnership interest $ 4.39 $ 2.88 $ 9.00 $ 2.35
========= ========= ========= =========
Distributions per limited
partnership interest $ 7.50 $ 5.00 $ 12.00 $ 10.37
========= ========= ========= =========
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 statements.
3
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
----------- ----------- -----------
Balance at January 1, 1994 $ 25,476 $ 2,568,649 $ 2,594,125
Distributions (1,031) (126,371) (127,402)
Net income 289 28,651 28,940
---------- ---------- ----------
Balance at June 30, 1994 $ 24,734 $ 2,470,929 $ 2,495,663
========== ========== ==========
Balance at January 1, 1995 $ 21,685 $ 2,136,837 $ 2,158,522
Distributions (2,126) (146,295) (148,421)
Net income 1,108 109,728 110,836
---------- ---------- ----------
Balance at June 30, 1995 $ 20,667 $ 2,100,270 $ 2,120,937
========== ========== ==========
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 statements.
4
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
1995 1994
---------- ----------
Cash flows from operating activities:
Net income $ 110,836 $ 28,940
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depletion 78,046 90,259
Salvage income from equipment disposal (569) (6,962)
(Gain) loss on abandoned property 4,805 (674)
Changes in assets:
(Increase) decrease in accounts
receivable 57,788 (26,343)
--------- ---------
Net cash provided by operating
activities 250,906 85,220
Cash flows from investing activities:
Additions to oil and gas equipment (24,258) (12,991)
Proceeds from salvage income on
equipment disposal 5,713 288
Proceeds from equipment salvage on
abandoned property 1,129 501
--------- ---------
Net cash used in investing activities (17,416) (12,202)
Cash flows from financing activities:
Cash distributions to partners (148,421) (127,402)
--------- ---------
Net increase (decrease) in cash and
cash equivalents 85,069 (54,384)
Cash and cash equivalents at beginning
of period 36,910 176,807
--------- ---------
Cash and cash equivalents at end
of period $ 121,979 $ 122,423
========= =========
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 statements.
5
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(Unaudited)
NOTE 1.
In the opinion of management, the unaudited financial statements as of
June 30, 1995 of Parker & Parsley Producing Properties 87-B, Ltd. (the
"Registrant") 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. However, the
results of operations for the six months ended June 30, 1995 are not
necessarily indicative of the results for the full year ending December
31, 1995.
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, 1994, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Registrant was formed December 28, 1987. The managing general
partner of the Registrant at December 31, 1994 was Parker & Parsley
Development Company ("PPDC"), which was merged into Parker & Parsley
Development, L.P. ("PPDLP") on January 1, 1995. On January 1, 1995,
PPDLP, a Texas limited partnership, became the sole managing general
partner of the Registrant, by acquiring the rights and assuming the
obligations of PPDC. PPDLP acquired PPDC's rights and obligations as
managing general partner of the Registrant in connection with the merger
of PPDC, P&P Producing, Inc. And Spraberry Development Corporation into
MidPar L.P., which survived the merger with a change of name to PPDLP.
PPDLP has the power and authority to manage, control and administer all
Registrant affairs. The limited partners contributed $6,095,500
representing 12,191 interests ($500 per interest) sold to a total of 573
limited partners.
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Since its formation, the Registrant invested $5,252,920 in various
producing oil and gas prospects purchased in Texas. At June 30, 1995,
the Registrant had completed seven purchases of producing properties.
These acquisitions involved the purchase of working interests in 54
properties. Seventeen uneconomical wells have been abandoned; one well
in 1989, two wells in 1991, two wells in 1992, six wells in 1993, three
wells in 1994 and three wells in 1995. The Registrant also participated
in the drilling of two oil and gas wells during 1988 which were
completed as producers. Additionally, the Registrant purchased 15
overriding royalty interests effective January 1, 1990. Since January
1, 1991, two development wells have been drilled which resulted in two
additional overriding royalty interests to the Registrant. All the
properties are operated by the managing general partner.
Results of Operations
Six months ended June 30, 1995 compared with six months ended
June 30, 1994
Revenues:
The Registrant's oil and gas revenues increased to $451,131 from
$417,960 for the six months ended June 30, 1995 and 1994, respectively,
an increase of 8%. The increase in revenues was primarily the result of
an increase in the average price received per barrel of oil, offset by a
decline in the average price received per mcf of gas and decreases in
barrels of oil and mcf of gas produced and sold. For the six months
ended June 30, 1995, 20,802 barrels of oil were sold compared to 21,235
for the same period in 1994, a decrease of 433 barrels. For the six
months ended June 30, 1995, 52,442 mcf of gas were sold compared to
54,781 for the same period in 1994, a decrease of 2,339 mcf. The
decreases were due to the decline characteristics of the Registrant'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 Registrant's economically recoverable reserves are
fully depleted.
The average price received per barrel of oil increased $2.61 from $14.97
for the six months ended June 30, 1994 to $17.58 for the same period in
1995. The average price received per mcf of gas decreased to $1.63 for
the six months ended June 30, 1995 compared to $1.83 for the same period
in 1994. The market price for oil and gas has been extremely volatile
in the past decade, and management expects a certain amount of
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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 six months ended June 30, 1995.
Costs and Expenses:
Total costs and expenses decreased to $343,426 for the six months ended
June 30, 1995 as compared to $397,943 for the same period in 1994, a
decrease of $54,517, or 14%. This decrease was due to declines in
production costs and depletion, offset by increases in general and
administrative expenses ("G&A"), abandoned property costs and the loss
on abandoned properties.
Production costs were $243,915 for the six months ended June 30, 1995
and $295,334 for the same period in 1994, resulting in a $51,419
decrease, or 17%. The decrease was primarily attributable to a 16%
reduction in well repair and maintenance costs and lower ad valorem
taxes.
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, 8% from $12,539 for the
six months ended June 30, 1994 to $13,534 for the same period in 1995.
Salvage income received from equipment disposals of $569 and $6,962 for
the six months ended June 30, 1995 and 1994, respectively, was derived
from equipment credits received on wells that were plugged and abandoned
in prior years. A loss on abandoned property of $4,805 was recognized
during the six months ended June 30, 1995. This loss was the result of
$1,129 in proceeds received from equipment salvage on two abandoned
wells, less the loss to write-off remaining capitalized costs of $5,934.
For the same period in 1994, a gain of $674 resulted from proceeds
received from equipment salvage on one fully depleted abandoned
property. Expenses of $3,125 were incurred during the six months ended
June 30, 1995 to plug and abandon three uneconomical wells, compared to
$485 for the same period in 1994.
Depletion was $78,046 for the six months ended June 30, 1995 compared to
$90,259 for the same period in 1994. This represented a decline in
depletion of $12,213, or 14%. Depletion was computed
property-by-property utilizing the unit-of-production method based upon
the dominant mineral produced, generally oil, and using oil prices in
effect at the end of the respective quarter. Oil production decreased
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433 barrels for the six months ended June 30, 1995 from the same period
in 1994. Depletion expense for the six months ended June 30, 1995 was
calculated based on reserves computed utilizing an oil price of $16.35
per barrel. Comparatively, depletion expense for the three months ended
June 30, 1994 was calculated based on reserves computed utilizing an oil
price of $18.25 per barrel while depletion expense for the three months
ended March 31, 1994 was calculated based on reserves computed utilizing
an oil price of $12.75 per barrel.
Three months ended June 30, 1995 compared with three months ended
June 30, 1994
Revenues:
The Registrant's oil and gas revenues decreased to $213,847 from
$223,950 for the three months ended June 30, 1995 and 1994,
respectively, a decrease of 5%. The decrease in revenues resulted from
a 9% decrease in barrels of oil produced and sold and a 2% decrease in
mcf of gas produced and sold, in addition to a decline in the average
price received per mcf of gas, offset by an increase in the average
price received per barrel of oil. For the three months ended June 30,
1995, 9,614 barrels of oil were sold compared to 10,559 for the same
period in 1994, a decrease of 945 barrels. For the three months ended
June 30, 1995, 26,715 mcf of gas were sold compared to 27,394 for the
same period in 1994, a decrease of 679 mcf. The decreases were due to
the decline characteristics of the Registrant's oil and gas properties.
The average price received per barrel of oil increased $1.53 from $16.56
for the three months ended June 30, 1994 to $18.09 for the same period
in 1995 while the average price received per mcf of gas decreased from
$1.79 during the three months ended June 30, 1994 to $1.49 in 1995.
Costs and Expenses:
Total costs and expenses decreased to $161,465 for the three months
ended June 30, 1995 as compared to $195,751 for the same period in 1994,
a decrease of $34,286, or 18%. This decrease was due to declines in
production costs, G&A, depletion and abandoned property costs.
Production costs were $119,097 for the three months ended June 30, 1995
and $147,436 for the same period in 1994, resulting in a $28,339
decrease, or 19%. The decrease was the result of a 17% reduction in
well repair and maintenance costs and lower ad valorem taxes.
9
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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, 5% from $6,719 for the
three months ended June 30, 1994 to $6,416 for the same period in 1995.
Depletion was $36,210 for the three months ended June 30, 1995 compared
to $41,785 for the same period in 1994. This represented a decrease in
depletion of $5,575, or 13%. Depletion was calculated on a
property-by-property basis utilizing the unit-of-production method based
upon the dominant mineral produced, generally oil, and using oil prices
in effect at the end of the respective quarter. Oil production decreased
945 barrels for the three months ended June 30, 1995 from the same period
in 1994. Depletion expense for the three months ended June 30, 1995 was
calculated based on reserves computed utilizing an oil price of $16.35
per barrel. Comparatively, depletion expense for the three months ended
June 30, 1994 was calculated based on reserves computed utilizing an oil
price of $18.25 per barrel.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased to $250,906 during
the six months ended June 30, 1995, a $165,686 increase from the same
period in 1994. This increase was due to an increase in oil and gas
revenues and decreases in production costs and G&A. The increase in oil
and gas revenues was primarily the result of higher average prices
received per barrel of oil. The decrease in production costs was due to
reduced well repair and maintenance costs and production taxes, while
G&A declined due to a reduction in allocated expenses by the managing
general partner.
Net Cash Used in Investing Activities
The Registrant's investments of $24,258 and $12,991 during the six
months ended June 30, 1995 and 1994, respectively, were primarily for
repair and maintenance activity on various oil and gas properties.
Proceeds from salvage income of $5,713 from the sale of oil and gas
equipment on properties abandoned in prior years were received during
the six months ended June 30, 1995. Proceeds of $1,129 were received
from the salvage of equipment on several properties abandoned during the
six months ended June 30, 1995.
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Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1995 to cover
distributions to the partners of $148,421 of which $146,295 was
distributed to the limited partners and $2,126 to the managing general
partner. For the same period ended June 30, 1994, cash was sufficient
for distributions to the partners of $127,402 of which $126,371 was
distributed to the limited partners and $1,031 to the managing general
partner.
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.
Accounting Standard on Impairment of Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 - Accounting for Impairment of
Long-lived Assets and for Long-lived Assets to Be Disposed Of ("FAS
121") regarding the impairment of long-lived assets, identifiable
intangibles and goodwill related to those assets. FAS 121 is effective
for financial statements for fiscal years beginning after December 15,
1995, although earlier adoption is encouraged. The application of FAS
121 to oil and gas companies utilizing the successful efforts method
(such as the Registrant) will require periodic determination of whether
the book value of long-lived assets exceeds the future cash flows
expected to result from the use of such assets and, if so, will require
reduction of the carrying amount of the "impaired" assets to their
estimated fair values. There is currently a great deal of uncertainty
as to how FAS 121 will apply to oil and gas companies using the
successful efforts method, including uncertainty regarding the
determination of expected future cash flows from the relevant assets
and, if an impairment is determined to exist, their estimated fair
value. There is also uncertainty regarding the level at which the test
might be applied. Given this uncertainty, the Registrant is currently
unable to estimate the effect that FAS 121 will have on the Registrant's
results of operations for the period in which it is adopted.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PARKER & PARSLEY PRODUCING
PROPERTIES 87-B, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: August 8, 1995 By: /s/ Steven L. Beal
---------------------------------------
Steven L. Beal, Senior Vice
President and Chief Financial
Officer of PPUSA
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000809017
<NAME> 87BP.FDS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 121,979
<SECURITIES> 0
<RECEIVABLES> 43,336
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 165,315
<PP&E> 4,892,426
<DEPRECIATION> 2,936,804
<TOTAL-ASSETS> 2,120,937
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,120,937
<TOTAL-LIABILITY-AND-EQUITY> 2,120,937
<SALES> 451,131
<TOTAL-REVENUES> 454,262
<CGS> 0
<TOTAL-COSTS> 343,426
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 110,836
<INCOME-TAX> 0
<INCOME-CONTINUING> 110,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,836
<EPS-PRIMARY> 9.00
<EPS-DILUTED> 0
</TABLE>
