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, 1996, 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
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including
interest bearing deposits of
$70,964 at June 30 and $135,981
at December 31 $ 71,264 $ 135,981
Accounts receivable - affiliate 84,710 43,366
----------- -----------
Total current assets 155,974 179,347
Oil and gas properties - at cost,
based on the successful efforts
accounting method 4,893,593 4,897,763
Accumulated depletion (3,164,675) (3,118,603)
----------- -----------
Net oil and gas properties 1,728,918 1,779,160
----------- -----------
$ 1,884,892 $ 1,958,507
=========== ===========
PARTNERS' CAPITAL
Partners' capital:
Limited partners (12,191 interests) $ 1,866,461 $ 1,939,382
Managing general partner 18,431 19,125
----------- -----------
$ 1,884,892 $ 1,958,507
=========== ===========
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.
2
<PAGE>
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,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Oil and gas sales $ 229,700 $ 213,847 $ 448,800 $ 451,131
Interest income 380 1,687 1,790 2,562
Salvage income from
equipment disposal 39 - 987 569
--------- --------- --------- ---------
Total revenues 230,119 215,534 451,577 454,262
Costs and expenses:
Production costs 108,515 119,097 257,209 243,915
General and adminis-
trative expenses 6,912 6,416 13,464 13,534
Depletion 26,139 36,210 56,768 78,046
Abandoned property costs 1,376 82 1,376 3,126
(Gain) loss on abandoned
property 2,579 (340) 2,579 4,805
--------- --------- --------- ---------
Total costs and
expenses 145,521 161,465 331,396 343,426
--------- --------- --------- ---------
Net income $ 84,598 $ 54,069 $ 120,181 $ 110,836
========= ========= ========= =========
Allocation of net income:
Managing general
partner $ 846 $ 540 $ 1,202 $ 1,108
========= ========= ========= =========
Limited partners $ 83,752 $ 53,529 $ 118,979 $ 109,728
========= ========= ========= =========
Net income per limited
partnership interest $ 6.87 $ 4.39 $ 9.76 $ 9.00
========= ========= ========= =========
Distributions per limited
partnership interest $ 7.24 $ 7.50 $ 15.74 $ 12.00
========= ========= ========= =========
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.
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, 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
========== ========== ==========
Balance at January 1, 1996 $ 19,125 $ 1,939,382 $ 1,958,507
Distributions (1,896) (191,900) (193,796)
Net income 1,202 118,979 120,181
---------- ---------- ----------
Balance at June 30, 1996 $ 18,431 $ 1,866,461 $ 1,884,892
========== ========== ==========
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-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 120,181 $ 110,836
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 56,768 78,046
Salvage income from equipment disposal (987) (569)
Loss on abandoned property 2,579 4,805
Changes in assets:
(Increase) decrease in accounts
receivable (38,769) 57,788
--------- ---------
Net cash provided by operating
activities 139,772 250,906
Cash flows from investing activities:
Additions to oil and gas equipment (12,785) (24,258)
Proceeds from salvage income on
equipment disposal 2,092 5,713
Proceeds from equipment salvage on
abandoned property - 1,129
--------- ---------
Net cash used in investing activities (10,693) (17,416)
Cash flows from financing activities:
Cash distributions to partners (193,796) (148,421)
--------- ---------
Net increase (decrease) in cash and
cash equivalents (64,717) 85,069
Cash and cash equivalents at beginning
of period 135,981 36,910
--------- ---------
Cash and cash equivalents at end
of period $ 71,264 $ 121,979
========= =========
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-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1.
Parker & Parsley Producing Properties 87-B, Ltd. (the "Registrant") is a limited
partnership organized in 1987 under the laws of the State of Texas.
The Registrant engages primarily in oil and gas production in Texas and is not
involved in any industry segment other than oil and gas.
NOTE 2.
In the opinion of management, the Registrant's unaudited financial statements as
of June 30, 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. However, these interim results are not
necessarily indicative of results for a full year.
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, 1995, 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 (1)
Results of Operations
Six months ended June 30, 1996 compared with six months ended June 30, 1995
Revenues:
The Registrant's oil and gas revenues decreased to $448,800 from $451,131 for
the six months ended June 30, 1996 and 1995, respectively. The decrease in
revenues was the result of a 17% decline in barrels of oil produced and sold and
6
<PAGE>
and a 13% decline in mcf of gas produced and sold, offset by higher average
prices received per barrel of oil and mcf of gas. For the six months ended June
30, 1996, 17,243 barrels of oil were sold compared to 20,802 for the same period
in 1995, a decrease of 3,559 barrels. For the six months ended June 30, 1996,
45,843 mcf of gas were sold compared to 52,442 for the same period in 1995, a
decrease of 6,599 mcf. The decreases in production volumes 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 $2.87, or 16%, from
$17.58 for the six months ended June 30, 1995 to $20.45 for the same period in
1996. The average price received per mcf of gas increased 29% to $2.10 for the
six months ended June 30, 1996 compared to $1.63 for the same period 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 six
months ended June 30, 1996.
Salvage income received from equipment disposals of $987 and $569 for the six
months ended June 30, 1996 and 1995, respectively, was derived from equipment
credits received on wells that were plugged and abandoned in prior years.
Costs and Expenses:
Total costs and expenses decreased to $331,396 for the six months ended June 30,
1996 as compared to $343,426 for the same period in 1995, a decrease of $12,030,
or 4%. This decrease was due to reductions in general and administrative
expenses ("G&A"), depletion, abandoned property costs and loss on abandonments,
offset by an increase in production costs.
Production costs were $257,209 for the six months ended June 30, 1996 and
$243,915 for the same period in 1995, resulting in a $13,294 increase, or 5%.
The increase was primarily attributable to an increase in workover expenses
incurred in an effort to stimulate well production, offset by 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 decreased, in aggregate, from $13,534 for the six months ended June
30, 1995 to $13,464 for the same period in 1996.
7
<PAGE>
During the six months ended June 30, 1996, a loss on abandoned properties of
$2,579 was attributable to the write-off of remaining capitalized well costs on
the abandonment of one saltwater disposal well. For the same period in 1995, a
loss of $4,805 resulted from the write-off of remaining capitalized well costs
of $5,934 on two oil and gas wells, less $1,129 in proceeds received from
equipment salvage. Expenses of $1,376 were incurred during the six months ended
June 30, 1996 to plug and abandon one uneconomical saltwater disposal well,
compared to $3,126 to plug and abandon three oil and gas wells for the same
period in 1995.
Depletion was $56,768 for the six months ended June 30, 1996 compared to $78,046
for the same period in 1995. This represented a decline in depletion of $21,278,
or 27%, primarily attributable to the adoption of the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121")
effective the fourth quarter of 1995 and the reduction of net depletable basis
resulting from the charge taken upon such adoption. 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 3,559 barrels for the
six months ended June 30, 1996 from the same period in 1995, while oil reserves
were revised upward by 83,282 barrels, or 19%.
Three months ended June 30, 1996 compared with three months ended June 30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $229,700 from $213,847 for
the three months ended June 30, 1996 and 1995, respectively, an increase of 7%.
The increase in revenues resulted from higher average prices received per barrel
of oil and mcf of gas, offset by an 11% decrease in barrels of oil produced and
sold and a 26% decrease in mcf of gas produced and sold. For the three months
ended June 30, 1996, 8,562 barrels of oil were sold compared to 9,614 for the
same period in 1995, a decrease of 1,052 barrels. For the three months ended
June 30, 1996, 19,757 mcf of gas were sold compared to 26,715 for the same
period in 1995, a decrease of 6,958 mcf. The decreases in production volumes
were due to the decline characteristics of the Registrant's oil and gas
properties.
8
<PAGE>
The average price received per barrel of oil increased $3.79, or 21%, from
$18.09 for the three months ended June 30, 1995 to $21.88 for the same period in
1996 while the average price received per mcf of gas increased 44% from $1.49
during the three months ended June 30, 1995 to $2.15 in 1996.
Costs and Expenses:
Total costs and expenses decreased to $145,521 for the three months ended June
30, 1996 as compared to $161,465 for the same period in 1995, a decrease of
$15,944, or 10%. This decrease was due to declines in production costs,
depletion and gain on abandoned property, offset by increases in G&A and
abandoned property costs.
Production costs were $108,515 for the three months ended June 30, 1996 and
$119,097 for the same period in 1995, resulting in a $10,582 decrease, or 9%.
The decrease was the result of reductions 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, 8% from $6,416 for the three months ended
June 30, 1995 to $6,912 for the same period in 1996.
Depletion was $26,139 for the three months ended June 30, 1996 compared to
$36,210 for the same period in 1995. This represented a decrease in depletion of
$10,071, or 28%, primarily attributable to the adoption of FAS 121 the fourth
quarter of 1995, as discussed previously. Oil production decreased 1,052 barrels
for the three months ended June 30, 1996 from the same period in 1995.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased during the six months ended
June 30, 1996 $111,134 from the same period in 1995. This decrease was the
result of additional production costs paid and a decline in oil and gas sales.
Net Cash Used in Investing Activities
The Registrant's investing activities during the six months ended June 30, 1996
and 1995 were primarily for expenditures related to equipment replacement on
various oil and gas properties.
Proceeds from salvage income of $2,092 and $5,713, from the sale of oil and gas
equipment on properties abandoned in prior years, were received during the six
9
<PAGE>
months ended June 30, 1996 and 1995, respectively. Proceeds of $1,129 were
received from the salvage of equipment on several properties abandoned during
the six months ended June 30, 1995.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1996 to cover
distributions to the partners of $193,796 of which $191,900 was distributed to
the limited partners and $1,896 to the managing general partner. For the same
period ended June 30, 1995, cash was sufficient for 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.
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 - 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: August 12, 1996 By: /s/ Steven L. Beal
---------------------------------------
Steven L. Beal, Senior Vice
President and Chief Financial
Officer of PPUSA
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000809017
<NAME> 87BP.TXT
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 71,264
<SECURITIES> 0
<RECEIVABLES> 84,710
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 155,974
<PP&E> 4,893,593
<DEPRECIATION> 3,164,675
<TOTAL-ASSETS> 1,884,892
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,884,892
<TOTAL-LIABILITY-AND-EQUITY> 1,884,892
<SALES> 448,800
<TOTAL-REVENUES> 451,577
<CGS> 0
<TOTAL-COSTS> 331,396
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 120,181
<INCOME-TAX> 0
<INCOME-CONTINUING> 120,181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 120,181
<EPS-PRIMARY> 9.76
<EPS-DILUTED> 0
</TABLE>
