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 March 31, 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.
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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
March 31, December 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, all interest
bearing deposits $ 47,080 $ 135,981
Accounts receivable - affiliate 86,148 43,366
---------- ----------
Total current assets 133,228 179,347
Oil and gas properties - at cost, based
on the successful efforts accounting
method 4,905,695 4,897,763
Accumulated depletion (3,149,232) (3,118,603)
---------- ----------
Net oil and gas properties 1,756,463 1,779,160
---------- ----------
$ 1,889,691 $ 1,958,507
========== ==========
PARTNERS' CAPITAL
Partners' capital:
Limited partners (12,191 interests) $ 1,870,986 $ 1,939,382
Managing general partner 18,705 19,125
---------- ----------
$ 1,889,691 $ 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
March 31,
1996 1995
---------- ----------
Revenues:
Oil and gas sales $ 219,100 $ 237,284
Interest income 1,410 875
Salvage income from equipment disposals 948 569
--------- ---------
Total revenues 221,458 238,728
Costs and expenses:
Production costs 148,694 124,818
General and administrative expenses 6,552 7,118
Depletion 30,629 41,836
Abandoned property costs - 3,044
Loss on abandoned properties - 5,145
--------- ---------
Total costs and expenses 185,875 181,961
--------- ---------
Net income $ 35,583 $ 56,767
========= =========
Allocation of net income:
Managing general partner $ 356 $ 568
========= ==========
Limited partners $ 35,227 $ 56,199
========= ==========
Net income per limited partnership
interest $ 2.89 $ 4.61
========= ==========
Distributions per limited partnership
interest $ 8.50 $ 4.50
========= ==========
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
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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, 1995 $ 21,685 $ 2,136,837 $ 2,158,522
Distributions (973) (54,861) (55,834)
Net income 568 56,199 56,767
---------- ---------- ----------
Balance at March 31, 1995 $ 21,280 $ 2,138,175 $ 2,159,455
========== ========== ==========
Balance at January 1, 1996 $ 19,125 $ 1,939,382 $ 1,958,507
Distributions (776) (103,623) (104,399)
Net income 356 35,227 35,583
---------- ---------- ----------
Balance at March 31, 1996 $ 18,705 $ 1,870,986 $ 1,889,691
========== ========== ==========
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)
Three months ended
March 31,
1995 1995
---------- ----------
Cash flows from operating activities:
Net income $ 35,583 $ 56,767
Adjustments to reconcile net income
to net cash provided by operating
activities:
Salvage income from equipment disposals (948) (569)
Loss on abandoned properties - 5,145
Depletion 30,629 41,836
Changes in assets:
(Increase) decrease in accounts
receivable (40,087) 19,230
--------- ---------
Net cash provided by operating
activities 25,177 122,409
Cash flows from investing activities:
Additions to oil and gas properties (10,781) (24,033)
Proceeds from salvage income on
equipment disposals 1,102 -
--------- ---------
Net cash provided by investing
activities (9,679) (24,033)
Cash flows from financing activities:
Cash distributions to partners (104,399) (55,834)
--------- ---------
Net increase (decrease) in cash and
cash equivalents (88,901) 42,542
Cash and cash equivalents at beginning
of period 135,981 36,910
--------- ---------
Cash and cash equivalents at end of period $ 47,080 $ 79,452
========= =========
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
March 31, 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 unaudited financial statements as of March 31,
1996 of 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, 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)
The Registrant was formed December 28, 1987. On January 1, 1995, Parker &
Parsley Development L.P. ("PPDLP"), a Texas limited partnership, became the sole
managing general partner of the Registrant, by acquiring the rights and assuming
the obligations of Parker & Parsley Development Company ("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
6
<PAGE>
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.
Since its formation, the Registrant has invested $5,265,063 in various producing
oil and gas prospects purchased in Texas. At March 31, 1996, 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
Revenues:
The Registrant's oil and gas revenues decreased to $219,100 from $237,284 for
the three months ended March 31, 1996 and 1995, respectively, a decrease of 8%.
The decrease resulted from a 22% decline in barrels of oil produced and sold,
offset by a slight increase in mcf of gas produced and sold and increases in the
average prices received per barrel of oil and mcf of gas. For the three months
ended March 31, 1996, 8,682 barrels of oil were sold compared to 11,188 for the
same period in 1995, a decrease of 2,506 barrels. For the three months ended
March 31, 1996, 26,086 mcf of gas were sold compared to 25,727 for the same
period in 1995, an increase of 359 mcf. The decrease in barrels of oil produced
and sold was primarily due to the decline characteristics of the Registrant's
oil and gas properties. The increase in mcf of gas produced and sold was the
result of operational changes on several wells. Management expects a certain
amount of decline in production in the future until the Registrant's
economically recoverable reserves are fully depleted.
The average price received per barrel of oil increased $1.90, or 11%, from
$17.14 for the three months ended March 31, 1995 to $19.04 for the same period
in 1996. The average price received per mcf of gas increased 16% from $1.77
during the three months ended March 31, 1995 to $2.06 in 1996. 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.
7
<PAGE>
The Registrant may therefore sell its future oil and gas production at average
prices lower or higher than that received during the three months ended March
31, 1996.
Costs and Expenses:
Total costs and expenses increased to $185,875 for the three months ended March
31, 1996 as compared to $181,961 for the same period in 1995, an increase of
$3,914, or 2%. This increase was the result of an increase in production costs,
offset by declines in general and administrative expenses ("G&A"), depletion,
abandoned property costs and loss on abandoned properties.
Production costs were $148,694 for the three months ended March 31, 1996 and
$124,818 for the same period in 1995 resulting in a $23,876 increase, or 19%.
The increase was primarily attributable to workover expense incurred in an
effort to stimulate production, offset by a decrease 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, 8% from $7,118 for the three months ended
March 31, 1995 to $6,552 for the same period in 1996.
Salvage income received from equipment disposals of $948 and $569 during the
three months ended March 31, 1996 and 1995, respectively, was derived from
equipment credits received on wells that were plugged and abandoned in prior
years. A loss on abandoned property of $5,145 was recognized during the three
months ended March 31, 1995. This loss was the result of $789 in proceeds
received from equipment salvage on two abandoned wells, less the write-off of
remaining capitalized costs of $5,934. There were no abandonments for the same
period in 1996. Expenses of $3,044 were incurred to plug and abandon two
uneconomical properties during the three months ended March 31, 1995, compared
to an absence of abandonment activity for the same period in 1996.
Depletion was $30,629 for the three months ended March 31, 1996 compared to
$41,836 for the same period in 1995. This represented a decrease in depletion of
$11,207, 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"
effective for 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. Oil production decreased 2,506 barrels
8
<PAGE>
for the three months ended March 31, 1996 from the same period in 1995, while
oil reserves of barrels were revised upward by 83,282 barrels, or 19%.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased to $25,177 during the three
months ended March 31, 1996, a $97,232 decrease from the same period ended March
31, 1995. This decrease was primarily the result of an increase in expenditures
for production costs, offset by a decrease in oil and gas sales receipts and
abandoned property costs. The increase in production cost expenditures resulted
from workover costs incurred in an effort to stimulate production. The decrease
in oil and gas sales receipts was due to a decline in barrels of oil produced
and sold.
Net Cash Provided by (Used in) Investing Activities
The Registrant's principal investing activities during the three months ended
March 31, 1996 and 1995, respectively, included $10,781 and $24,033 for
expenditures related to repair and maintenance activity on various oil and gas
properties.
Proceeds from salvage income of $1,102 were received during the three months
ended March 31, 1996 from the disposal of oil and gas equipment on properties
abandoned in prior years.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1996 to cover
distributions to the partners of $104,399 of which $103,623 was distributed to
the limited partners and $776 to the managing general partner. For the same
period ended March 31, 1995, cash was sufficient for distributions to the
partners of $55,834 of which $54,861 was distributed to the limited partners and
$973 to the managing general partner.
9
<PAGE>
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: May 14, 1996 By: /s/ Steven L. Beal
--------------------------------------
Steven L. Beal, Senior Vice
President and Chief Financial
Officer of PPUSA
11
<PAGE>
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<CIK> 0000809017
<NAME> 87BP.TXT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 47,080
<SECURITIES> 0
<RECEIVABLES> 86,148
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 133,228
<PP&E> 4,905,695
<DEPRECIATION> 3,149,232
<TOTAL-ASSETS> 1,889,691
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0
0
<COMMON> 0
<OTHER-SE> 1,889,691
<TOTAL-LIABILITY-AND-EQUITY> 1,889,691
<SALES> 219,100
<TOTAL-REVENUES> 221,458
<CGS> 0
<TOTAL-COSTS> 185,875
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35,583
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,583
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,583
<EPS-PRIMARY> 2.89
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</TABLE>
