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, 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 11 pages.
There are no exhibits.
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, all interest
bearing deposits $ 133,098 $ 36,910
Accounts receivable - affiliate 5,542 82,820
---------- ----------
Total current assets 138,640 119,730
Oil and gas properties - at cost, based on
the successful efforts accounting method 4,892,171 4,902,973
Accumulated depletion (2,972,610) (2,864,181)
---------- ----------
Net oil and gas properties 1,919,561 2,038,792
---------- ----------
$ 2,058,201 $ 2,158,522
========== ==========
PARTNERS' CAPITAL
Partners' capital:
Limited partners (12,191 interests) $ 2,038,210 $ 2,136,837
Managing general partner 19,991 21,685
---------- ----------
$ 2,058,201 $ 2,158,522
========= ==========
The financial information included as of September 30, 1995 has been
prepared by management without audit by independent public accountants.
The accompanying notes are an integral part of these statements.
2
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
----------------------------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Revenues:
Oil and gas sales $ 222,884 $ 239,291 $ 674,015 $ 657,251
Interest income 1,935 1,482 4,497 3,443
Salvage income from
equipment disposal - 7,459 569 14,421
-------- -------- -------- --------
Total revenues 224,819 248,232 679,081 675,115
Costs and expenses:
Production costs 131,272 140,563 375,187 435,897
General and administrative
expenses 6,686 7,179 20,220 19,718
Depletion 35,806 37,896 113,852 128,155
(Gain) loss on abandoned
properties (26) - 4,779 (674)
Abandoned property costs 5,947 4,839 9,073 5,324
-------- -------- -------- --------
Total costs and expenses 179,685 190,477 523,111 588,420
-------- -------- -------- --------
Net income $ 45,134 $ 57,755 $ 155,970 $ 86,695
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 452 $ 578 $ 1,560 $ 867
======== ======== ======== ========
Limited partners $ 44,682 $ 57,177 $ 154,410 $ 85,828
======== ======== ======== ========
Net income per limited
partnership interest $ 3.67 $ 4.69 $ 12.67 $ 7.04
======== ======== ======== ========
Distributions per limited
partnership interest $ 8.76 $ 6.50 $ 20.76 $ 16.87
======== ======== ======== ========
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
<PAGE>
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 (1,749) (205,610) (207,359)
Net income 867 85,828 86,695
-------- ---------- ----------
Balance at September 30, 1994 $ 24,594 $ 2,448,867 $ 2,473,461
======== ========== ==========
Balance at January 1, 1995 $ 21,685 $ 2,136,837 $ 2,158,522
Distributions (3,254) (253,037) (256,291)
Net income 1,560 154,410 155,970
-------- ---------- ----------
Balance at September 30, 1995 $ 19,991 $ 2,038,210 $ 2,058,201
======== ========== ==========
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
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
1995 1994
Cash flows from operating activities:
Net income $ 155,970 $ 86,695
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 113,852 128,155
Salvage income from equipment disposal (569) (14,421)
(Gain) loss on abandoned property 4,779 (674)
Changes in assets:
(Increase) decrease in accounts receivable 95,748 (44,216)
--------- --------
Net cash provided by operating activities 369,780 155,539
Cash flows from investing activities:
Additions to oil and gas equipment (24,169) (26,283)
Proceeds from salvage income from equipment
disposal 5,713 14,421
Proceeds from equipment salvage on abandoned
property 1,155 674
--------- --------
Net cash used in investing activities (17,301) (11,188)
Cash flows from financing activities:
Cash distributions to partners (256,291) (207,359)
--------- --------
Net increase (decrease) in cash and cash equivalents 96,188 (63,008)
Cash and cash equivalents at beginning of period 36,910 176,807
--------- --------
Cash and cash equivalents at end of period $ 133,098 $ 113,799
========= ========
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
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1.
In the opinion of management, the unaudited financial statements as of September
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 nine months ended
September 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 LP.,
which survived the merger with a change of name to PPDLP. The sole general
partner of PPDLP is Parker & Parsley Petroleum USA, Inc. PPDLP has the power and
authority to manage, control and administer all Registrant affairs. The limited
partners contributed $6,095,000 representing 12,191 interests ($500 per
interest) sold to a total of 573 limited partners.
Since its formation, the Registrant invested $5,252,639 in various producing oil
and gas prospects purchased in Texas. At September 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
6
<PAGE>
resulted in two additional overriding royalty interests to the Registrant. All
the properties are operated by the managing general partner.
RESULTS OF OPERATIONS
Nine months ended September 30, 1995 compared with nine months ended
September 30, 1994
REVENUES:
The Registrant's oil and gas revenues increased to $674,015 from $657,251 for
the nine months ended September 30, 1995 and 1994, respectively, an increase of
3%. The increase in revenues was primarily attributable to an increase in the
average price received per barrel of oil, offset by a 5% decline in mcf of gas
produced and sold, a slight decline in barrels of oil produced and sold and a
decrease in the average price received per mcf of gas. For the nine months ended
September 30, 1995, 31,468 barrels of oil were sold compared to 31,920 for the
same period in 1994, a decrease of 452 barrels. For the nine months ended
September 30, 1995, 81,172 mcf of gas were sold compared to 85,787 for the same
period in 1994, a decrease of 4,615 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 9% from $15.73 for the
nine months ended September 30, 1994 to $17.19 for the same period in 1995. The
average price received per mcf of gas decreased 9% from $1.81 during the nine
months ended September 30, 1994 to $1.64 in 1995. 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, 1995.
COSTS AND EXPENSES:
Total costs and expenses decreased to $523,111 for the nine months ended
September 30, 1995 as compared to $588,420 for the same period in 1994, a
decrease of $65,309, or 11%. This decrease was due to declines in production
costs and depletion, offset by increases in abandoned property costs, loss on
abandoned properties and general and administrative expenses ("G&A").
Production costs were $375,187 for the nine months ended September 30, 1995 and
$435,897 for the same period in 1994, resulting in a $60,710 decrease, or 14%.
The decrease was the result of a reduction 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, 3% from $19,718 for the nine months ended
September 30, 1994 to $20,220 for the same period in 1995. The Partnership
agreement limits G&A to 3% of gross oil and gas income.
7
<PAGE>
Salvage income of $569 and $14,421 for the nine months ended September 30, 1995
and 1994, respectively, was derived from equipment credits received on several
wells that were plugged and abandoned in prior years. A loss on abandoned
property of $4,779 was recognized during the nine months ended September 30,
1995. This loss was the result of $1,155 in proceeds received from equipment
salvage on two abandoned wells, less the write-off of 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 $9,073 were incurred during 1995 to plug and abandon three
uneconomical wells, compared to $5,324 for the same period in 1994.
Depletion was $113,852 for the nine months ended September 30, 1995 compared to
$128,155 for the same period in 1994. This represented a decrease in depletion
of $14,303, or 11%. Depletion was computed quarterly on a property-by-property
basis utilizing the unit-of-production method based upon the dominant mineral
produced, generally oil. Oil production decreased 452 barrels for the nine
months ended September 30, 1995 from the same period in 1994. Depletion expense
for the nine months ended September 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 September 30, 1994 and 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 September 30, 1995 compared with three months ended
September 30, 1994
REVENUES:
The Registrant's oil and gas revenues decreased to $222,884 from $239,291 for
the three months ended September 30, 1995 and 1994, respectively, a decrease of
7%. The decrease in revenues resulted from a 7% decline in mcf of gas produced
and sold and decreases in the average prices received per barrel of oil and mcf
of gas. For the three months ended September 30, 1995, 10,666 barrels of oil
were sold compared to 10,685 for the same period in 1994, a decrease of 19
barrels. For the three months ended September 30, 1995, 28,730 mcf of gas were
sold compared to 31,006 for the same period in 1994, a decrease of 2,276 mcf.
The average price received per barrel of oil decreased 5% from $17.24 for the
three months ended September 30, 1994 to $16.43 for the same period in 1995
while the average price received per mcf of gas decreased 7% from $1.78 during
the three months ended September 30, 1994 to $1.66 in 1995.
COSTS AND EXPENSES:
Total costs and expenses decreased to $179,685 for the three months ended
September 30, 1995 as compared to $190,477 for the same period in 1994, a
decrease of $10,792, or 6%. This decrease was due to declines in production
costs, G&A and depletion, offset by an increase in abandoned property costs.
8
<PAGE>
Production costs were $131,272 for the three months ended September 30, 1995 and
$140,563 for the same period in 1994, resulting in a $9,291 decrease, or 7%. The
decrease was the result of a reduction in well repair and maintenance expense
and a decline in production taxes, offset by an increase in 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 decreased, in aggregate, 7% from $7,179 for the three months ended
September 30, 1994 to $6,686 for the same period in 1995.
Salvage income of $7,459 for the three months ended September 30, 1994 was
derived from equipment credits received on several wells that were plugged and
abandoned in prior years. A gain on abandoned property of $26 was recognized
during the three months ended September 30, 1995, resulting from proceeds
received from equipment salvage on two abandoned wells. Expenses of $5,947 and
$4,839 were incurred during the three months ended September 30, 1995 and 1994,
respectively, to plug and abandon uneconomical wells.
Depletion was $35,806 for the three months ended September 30, 1995 compared to
$37,896 for the same period in 1994. This represented a decrease in depletion of
$2,090, or 6%. Oil production decreased 19 barrels for the three months ended
September 30, 1995 from the same period in 1994. Depletion expense for the three
months ended September 30, 1995 was calculated based on reserves computed
utilizing an oil price of $16.35 per barrel while depletion expense for the
three months ended September 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 $369,780 during the nine
months ended September 30, 1995, a $214,241 increase from the same period ended
September 30, 1994, resulting from increased oil and gas sales, a decline in
production costs and more timely receipt of oil and gas revenues. The increase
in oil and gas sales was due to higher average prices received for oil.
Production costs decreased due to less well repair and maintenance costs.
NET CASH USED IN INVESTING ACTIVITIES
The Registrant's investing activities during the nine months ended September 30,
1995 and 1994, respectively, included $24,169 and $26,283 for expenditures
related to 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 nine months ended
September 30, 1995, compared to $14,421 received during the same period in 1994.
Proceeds of $1,155 and $674 were received from the salvage of equipment on
several properties abandoned during the nine months ended September 30, 1995 and
1994, respectively.
9
<PAGE>
NET CASH USED IN FINANCING ACTIVITIES
Cash was sufficient for the nine months ended September 30, 1995 to cover
distributions to the partners of $256,291 of which $253,037 was distributed to
the limited partners and $3,254 to the managing general partner. For the same
period ended September 30, 1994, cash was sufficient for distributions to the
partners of $207,359 of which $205,610 was distributed to the limited partners
and $1,749 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
10
<PAGE>
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: November 9, 1995 By: /s/ Steven L. Beal
----------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
11
<PAGE>
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<ARTICLE> 5
<CIK> 0000809017
<NAME> 87BPP.TXT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 133,098
<SECURITIES> 0
<RECEIVABLES> 5,542
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 138,640
<PP&E> 4,892,171
<DEPRECIATION> 2,972,610
<TOTAL-ASSETS> 2,058,201
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 2,058,201
<TOTAL-LIABILITY-AND-EQUITY> 2,058,201
<SALES> 674,015
<TOTAL-REVENUES> 679,081
<CGS> 0
<TOTAL-COSTS> 523,111
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 155,970
<INCOME-TAX> 0
<INCOME-CONTINUING> 155,970
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155,970
<EPS-PRIMARY> 12.67
<EPS-DILUTED> 0
</TABLE>
