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, 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 12 pages.
-There are no exhibits-
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 1996 and
December 31, 1995 ................................... 3
Statements of Operations for the three and nine
months ended September 30, 1996 and 1995................ 4
Statement of Partners' Capital for the nine months
ended September 30, 1996................................ 5
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995............................. 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......................................... 11
Signatures............................................ 12
2
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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
September 30, December 31,
1996 1995
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $57,442 at September 30
and $135,981 at December 31 $ 57,726 $ 135,981
Accounts receivable - affiliate 97,895 43,366
---------- ----------
Total current assets 155,621 179,347
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 4,891,813 4,897,763
Accumulated depletion (3,188,899) (3,118,603)
---------- ----------
Net oil and gas properties 1,702,914 1,779,160
---------- ----------
$ 1,858,535 $ 1,958,507
========== ==========
PARTNERS' CAPITAL
Partners' capital:
Limited partners (12,191 interests) $ 1,840,350 $ 1,939,382
Managing general partner 18,185 19,125
---------- ----------
$ 1,858,535 $ 1,958,507
========== ==========
The financial information included as of September 30, 1996 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 OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
Revenues:
Oil and gas $ 222,385 $ 222,884 $ 671,185 $ 674,015
Interest 1,209 1,935 2,999 4,497
Salvage income from equipment
disposal 104 - 1,091 569
-------- -------- -------- --------
223,698 224,819 675,275 679,081
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 100,824 131,272 358,033 375,187
General and administrative 6,672 6,686 20,136 20,220
Depletion 24,328 35,806 81,096 113,852
(Gain) loss on abandoned
properties (324) (26) 2,255 4,779
Abandoned property 424 5,947 1,800 9,073
-------- -------- -------- --------
131,924 179,685 463,320 523,111
-------- -------- -------- --------
Net income $ 91,774 $ 45,134 $ 211,955 $ 155,970
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 918 $ 452 $ 2,120 $ 1,560
======== ======== ======== ========
Limited partners $ 90,856 $ 44,682 $ 209,835 $ 154,410
======== ======== ======== ========
Net income per limited
partnership interest $ 7.45 $ 3.67 $ 17.21 $ 12.67
======== ======== ======== ========
Distributions per limited
partnership interest $ 9.60 $ 8.76 $ 25.34 $ 20.76
======== ======== ======== ========
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-B, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ----------- -----------
Balance at January 1, 1996 $ 19,125 $ 1,939,382 $ 1,958,507
Distributions (3,060) (308,867) (311,927)
Net income 2,120 209,835 211,955
-------- --------- ----------
Balance at September 30, 1996 $ 18,185 $ 1,840,350 $ 1,858,535
======== ========== ==========
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-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
------------------------
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 211,955 $ 155,970
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 81,096 113,852
Salvage income from equipment disposal (1,091) (569)
Loss on abandoned property 2,255 4,779
Changes in assets:
(Increase) decrease in accounts receivable (52,295) 95,748
--------- ---------
Net cash provided by operating activities 241,920 369,780
--------- ---------
Cash flows from investing activities:
Additions to oil and gas equipment (10,658) (24,169)
Proceeds from salvage income from equipment
disposal 2,087 5,713
Proceeds from equipment salvage on abandoned
property 323 1,155
--------- ---------
Net cash used in investing activities (8,248) (17,301)
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (311,927) (256,291)
--------- ---------
Net increase (decrease) in cash and cash equivalents (78,255) 96,188
Cash and cash equivalents at beginning of period 135,981 36,910
--------- ---------
Cash and cash equivalents at end of period $ 57,726 $ 133,098
========= =========
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-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 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 September 30, 1996 and for the three and nine months ended September 30, 1996
and 1995 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 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
Nine months ended September 30, 1996 compared with nine months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues decreased to $671,185 from $674,015 for
the nine months ended September 30, 1996 and 1995, respectively. The decrease in
revenues was attributable to a 19% decline in barrels of oil produced and sold
and an 18% decline in mcf of gas produced and sold, offset by higher average
prices received per barrel of oil and mcf of gas. For the nine months ended
September 30, 1996, 25,500 barrels of oil were sold compared to 31,468 for the
7
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same period in 1995, a decrease of 5,968 barrels. For the nine months ended
September 30, 1996, 66,850 mcf of gas were sold compared to 81,172 for the same
period in 1995, a decrease of 14,322 mcf. These 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 $3.57, or 21%, from
$17.19 for the nine months ended September 30, 1995 to $20.76 for the same
period in 1996. The average price received per mcf of gas increased 29% from
$1.64 during the nine months ended September 30, 1995 to $2.12 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. 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, 1996.
Salvage income from equipment disposals of $1,091 and $569 for the nine months
ended September 30, 1996 and 1995, respectively, was derived from proceeds
received from the sale of equipment on wells that were plugged and abandoned in
prior years.
Costs and Expenses:
Total costs and expenses decreased to $463,320 for the nine months ended
September 30, 1996 as compared to $523,111 for the same period in 1995, a
decrease of $59,791, or 11%. This decrease was due to declines in production
costs, general and administrative expenses ("G&A"), depletion, loss on abandoned
properties and abandoned property costs.
Production costs were $358,033 for the nine months ended September 30, 1996 and
$375,187 for the same period in 1995, resulting in a $17,154 decrease, or 5%.
The decrease was the net result of a reduction in well repair and maintenance
costs, offset by an increase in workover expense incurred in an effort to
stimulate production.
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 $20,220 for the nine months ended
September 30, 1995 to $20,136 for the same period in 1996. The Partnership
agreement limits G&A to 3% of gross oil and gas income.
A loss of $2,255 on abandoned properties was recognized during the nine months
ended September 30, 1996, resulting from the write-off of remaining capitalized
well costs of $2,578 on one oil and gas well and one saltwater disposal well,
offset by proceeds of $323 received from equipment credits. A loss on abandoned
property of $4,779 was recognized during the nine months ended September 30,
1995, resulting from the write-off of remaining capitalized costs of $5,934,
less $1,155 in proceeds received from equipment credits on two abandoned wells.
Expenses of $1,800 were incurred during 1996 to plug and abandon two
uneconomical wells, compared to $9,073 for the same period in 1995.
8
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Depletion was $81,096 for the nine months ended September 30, 1996 compared to
$113,852 for the same period in 1995. This represented a decrease in depletion
of $32,756, or 29%. This decrease was primarily attributable to the following
factors: (i) a reduction in the Registrant'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" ("FAS 121"), (ii) a reduction in oil production of 5,968 barrels
for the nine months ended September 30, 1996 as compared to the same period in
1995, and (iii) an increase in oil and gas reserves during the third quarter of
1996 as a result of higher commodity prices.
Three months ended September 30, 1996 compared with three months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues decreased to $222,385 from $222,884 for
the three months ended September 30, 1996 and 1995, respectively. The decrease
in revenues resulted from a 23% decline in barrels of oil produced and sold and
a 27% decline in mcf of gas produced and sold, offset by higher average prices
received per barrel of oil and mcf of gas. For the three months ended September
30, 1996, 8,257 barrels of oil were sold compared to 10,666 for the same period
in 1995, a decrease of 2,409 barrels. For the three months ended September 30,
1996, 21,007 mcf of gas were sold compared to 28,730 for the same period in
1995, a decrease of 7,723 mcf.
The average price received per barrel of oil increased $4.97, or 30% from $16.43
for the three months ended September 30, 1995 to $21.40 for the same period in
1996 while the average price received per mcf of gas increased 31% from $1.66
during the three months ended September 30, 1995 to $2.18 in 1996.
Costs and Expenses:
Total costs and expenses decreased to $131,924 for the three months ended
September 30, 1996 as compared to $179,685 for the same period in 1995, a
decrease of $47,761, or 27%. This decrease was due to declines in production
costs, G&A and depletion, offset by an increase in abandoned property costs.
Production costs were $100,824 for the three months ended September 30, 1996 and
$131,272 for the same period in 1995, resulting in a $30,448 decrease, or 23%.
The decrease was the result of a reduction in well repair and maintenance
expense.
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 $6,686 for the three months ended
September 30, 1995 to $6,672 for the same period in 1996.
9
<PAGE>
Salvage income of $104 for the three months ended September 30, 1996 consisted
of proceeds received from the sale of equipment on wells that were plugged and
abandoned in prior years. A gain on abandoned property of $324 was recognized
during the three months ended September 30, 1996, resulting from proceeds
received from equipment salvage on one abandoned well. Expenses of $424 and
$5,947 were incurred during the three months ended September 30, 1996 and 1995,
respectively, to plug and abandon uneconomical wells.
Depletion was $24,328 for the three months ended September 30, 1996 compared to
$35,806 for the same period in 1995. This represented a decrease in depletion of
$11,478, or 32%, primarily attributable to the following factors: (i) a
reduction in the Registrant's net depletable basis from charges taken in
accordance with FAS 121, (ii) a reduction in oil production of 2,409 barrels for
the three months ended September 30, 1996 from the same period in 1995, and
(iii) an increase in oil and gas reserves during the third quarter of 1996 as a
result of higher commodity prices..
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $127,860 during the nine
months ended September 30, 1996 from the same period ended September 30, 1995,
resulting from 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 nine months ended September 30,
1996 and 1995 were primarily for expenditures related to equipment replacement
on various oil and gas properties.
Proceeds from salvage income of $2,087 from the disposal of oil and gas
equipment on properties abandoned in prior years were received during the nine
months ended September 30, 1996, compared to $5,713 received during the same
period in 1995. Proceeds of $1,155 were received from the sale of equipment on
several properties abandoned during the nine months ended September 30, 1995.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1996 to cover
distributions to the partners of $311,927 of which $308,867 was distributed to
the limited partners and $3,060 to the managing general partner. For the same
period ended September 30, 1995, cash was sufficient for 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.
10
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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
None.
11
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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: November 11, 1996 By: /s/ Steven L. Beal
-----------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
12
<PAGE>
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<ARTICLE> 5
<CIK> 0000809017
<NAME> 87BP.TXT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 57,726
<SECURITIES> 0
<RECEIVABLES> 97,895
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 155,621
<PP&E> 4,891,813
<DEPRECIATION> 3,188,899
<TOTAL-ASSETS> 1,858,535
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,858,535
<TOTAL-LIABILITY-AND-EQUITY> 1,858,535
<SALES> 671,185
<TOTAL-REVENUES> 675,275
<CGS> 0
<TOTAL-COSTS> 463,320
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 211,955
<INCOME-TAX> 0
<INCOME-CONTINUING> 211,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211,955
<EPS-PRIMARY> 17.21
<EPS-DILUTED> 0
</TABLE>
