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, 1997
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.
Exhibit index on page 11.
<PAGE>
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, 1997 and
December 31, 1996 ...................................... 3
Statements of Operations for the three and nine
months ended September 30, 1997 and 1996................... 4
Statement of Partners' Capital for the nine months
ended September 30, 1997................................... 5
Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996................................ 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
Item 6. Exhibits and Reports on Form 8-K............................. 11
27. Financial Data Schedule
Signatures................................................... 12
2
<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,
1997 1996
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $79,631 at September 30
and $63,551 at December 31 $ 79,855 $ 63,834
Accounts receivable - affiliate 97,144 159,893
----------- ----------
Total current assets 176,999 223,727
----------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 4,826,030 4,896,213
Accumulated depletion (3,365,537) (3,296,326)
----------- ----------
Net oil and gas properties 1,460,493 1,599,887
----------- ----------
$ 1,637,492 $ 1,823,614
=========== ==========
PARTNERS' CAPITAL
Partners' capital:
Managing general partner $ 16,056 $ 17,711
Limited partners (12,191 interests) 1,621,436 1,805,903
----------- ----------
$ 1,637,492 $ 1,823,614
=========== ==========
The financial information included as of September 30, 1997 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 OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues:
Oil and gas $ 174,528 $ 222,385 $ 625,313 $ 671,185
Interest 1,213 1,209 4,258 2,999
Gain (loss) on disposition
of assets 43,856 428 13,626 (1,164)
-------- -------- -------- --------
219,597 224,022 643,197 673,020
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 97,415 100,824 311,861 358,033
General and administrative 5,320 6,672 18,843 20,136
Depletion 27,173 24,328 94,755 81,096
Abandoned property 23,784 424 24,313 1,800
-------- -------- -------- --------
153,692 132,248 449,772 461,065
-------- -------- -------- --------
Net income $ 65,905 $ 91,774 $ 193,425 $ 211,955
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 659 $ 918 $ 1,934 $ 2,120
======== ======== ======== ========
Limited partners $ 65,246 $ 90,856 $ 191,491 $ 209,835
======== ======== ======== ========
Net income per limited
partnership interest $ 5.35 $ 7.45 $ 15.71 $ 17.21
======== ======== ======== ========
Distributions per limited
partnership interest $ 8.09 $ 9.60 $ 30.84 $ 25.34
======== ======== ======== ========
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)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 1997 $ 17,711 $1,805,903 $1,823,614
Distributions (3,589) (375,958) (379,547)
Net income 1,934 191,491 193,425
-------- --------- ---------
Balance at September 30, 1997 $ 16,056 $1,621,436 $1,637,492
======== ========= =========
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)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
----------------------
1997 1996
--------- ---------
Cash flows from operating activities:
Net income $ 193,425 $ 211,955
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 94,755 81,096
(Gain) loss on disposition of assets (13,626) 1,164
Changes in assets:
(Increase) decrease in accounts receivable 62,749 (52,295)
-------- --------
Net cash provided by operating activities 337,303 241,920
-------- --------
Cash flows from investing activities:
Additions to oil and gas equipment - (10,658)
Proceeds from disposition of assets 58,265 2,410
-------- --------
Net cash provided by (used in) investing
activities 58,265 (8,248)
-------- --------
Cash flows from financing activities:
Cash distributions to partners (379,547) (311,927)
-------- --------
Net increase (decrease) in cash and cash equivalents 16,021 (78,255)
Cash and cash equivalents at beginning of period 63,834 135,981
-------- --------
Cash and cash equivalents at end of period $ 79,855 $ 57,726
======== ========
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
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
Note 1. Basis of presentation
In the opinion of management, the unaudited financial statements for Parker &
Parsley Producing Properties 87-B, Ltd. (the "Partnership") as of September 30,
1997 and for the three and nine months ended September 30, 1997 and 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. These interim results are not necessarily indicative of results
for a full year. Certain reclassifications have been made to prior period
financial statements to conform to the 1997 presentations.
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 Partnership's Report on Form 10-K for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Controller, 303 West Wall, Suite 101, Midland, Texas 79701.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
As of August 8, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA") became
the general partner of the Partnership. Prior to August 8, 1997, the
Partnership's general partner was Parker & Parsley Development L.P. ("PPDLP"), a
wholly-owned subsidiary of Parker & Parsley Petroleum Company ("Parker &
Parsley"). On August 7, 1997, Parker & Parsley and Mesa Inc. received
shareholder approval to merge and create Pioneer Natural Resources Company
("Pioneer"). On August 8, 1997, PPDLP was merged with and into Pioneer USA, a
wholly-owned subsidiary of Pioneer, resulting in Pioneer USA becoming the
general partner of the Partnership as PPDLP's successor by merger. For a more
complete description of the Parker & Parsley and Mesa Inc. merger, see Pioneer's
Registration Statement on Form S-4 as filed with the Securities and Exchange
Commission.
Results of Operations
Nine months ended September 30, 1997 compared with nine months ended
September 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 7% to $625,313 from $671,185
for the nine months ended September 30, 1997 as compared to the nine months
ended September 30, 1996. The decrease in revenues was attributable to a decline
7
<PAGE>
in barrels of oil produced and sold and a lower average price received per
barrel of oil, offset by a higher average price received per mcf of gas and an
increase in mcf of gas produced and sold. For the nine months ended September
30, 1997, 20,991 barrels of oil were sold compared to 25,500 for the same period
in 1996, a decrease of 4,509 barrels, or 18%. For the nine months ended
September 30, 1997, 80,581 mcf of gas were sold compared to 66,850 for the same
period in 1996, an increase of 13,731 mcf, or 21%. The increase in gas
production resulted from operational changes on several wells. The oil
production decrease was due to the decline characteristics of the Partnership's
oil and gas properties. Because of these characteristics, management expects a
certain amount of decline in production in the future until the Partnership's
economically recoverable reserves are fully depleted.
The average price received per barrel of oil decreased $1.35, or 7%, from $20.76
for the nine months ended September 30, 1996 to $19.41 for the same period in
1997. The average price received per mcf of gas increased 27% from $2.12 during
the nine months ended September 30, 1996 to $2.70 in 1997. 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 Partnership 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, 1997.
Gain on disposition of assets of $13,626, for the nine months ended September
30, 1997, resulted from a $13,604 gain on the abandonment of one oil and gas
well and $22 in salvage income derived from equipment credits received on a
fully depleted property. The loss on disposition of assets of $1,164, for the
nine months ended September 30, 1996, resulted from a $2,255 loss on the
abandonment of one oil and gas well and one saltwater disposal well, offset by
$1,091 in salvage income derived from the sale of equipment on wells that were
plugged and abandoned in prior years.
Costs and Expenses:
Total costs and expenses decreased to $449,772 for the nine months ended
September 30, 1997 as compared to $461,065 for the same period in 1996, a
decrease of $11,293. This decrease was due to declines in production costs and
general and administrative expenses ("G&A"), offset by increases in abandoned
property costs and depletion.
Production costs were $311,861 for the nine months ended September 30, 1997 and
$358,033 for the same period in 1996, resulting in a $46,172 decrease, or 13%.
The decrease was the result of reductions in workover and well maintenance
costs.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 6%, from $20,136 for the nine months ended September
30, 1996 to $18,843 for the same period in 1997.
Depletion was $94,755 for the nine months ended September 30, 1997 compared to
$81,096 for the same period in 1996. This represented an increase in depletion
of $13,659, or 17%. This increase was primarily attributable to a reduction in
oil reserves during 1997 due to lower commodity prices, offset by a decline in
oil production of 4,509 barrels for the nine months ended September 30, 1997.
Abandoned property costs of $24,313 and $1,800 were incurred to plug and abandon
properties for the nine months ended September 30, 1997 and 1996, respectively.
8
<PAGE>
Three months ended September 30, 1997 compared with three months ended September
30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 22% to $174,528 from $222,385
for the three months ended September 30, 1997 as compared to the three months
ended September 30, 1996. The decrease in revenues resulted from a decline in
barrels of oil produced and sold and a lower average price received per barrel
of oil, offset by an increase in mcf of gas produced and sold and a higher
average price received per mcf of gas. For the three months ended September 30,
1997, 6,305 barrels of oil were sold compared to 8,257 for the same period in
1996, a decrease of 1,952 barrels, or 24%. For the three months ended September
30, 1997, 26,098 mcf of gas were sold compared to 21,007 for the same period in
1996, an increase of 5,091 mcf, or 24%. The increase in gas production volumes
was due to operational changes on several wells. The decrease in oil production
volumes was due to the decline characteristics of the Partnership's oil
properties.
The average price received per barrel of oil decreased $3.19, or 15% from $21.40
for the three months ended September 30, 1996 to $18.21 for the same period in
1997, while the average price received per mcf of gas increased 5% from $2.18
during the three months ended September 30, 1996 to $2.29 in 1997.
Costs and Expenses:
Total costs and expenses increased to $153,692 for the three months ended
September 30, 1997 as compared to $132,248 for the same period in 1996, an
increase of $21,444, or 16%. This increase was due to increases in abandoned
property costs and depletion, offset by reductions in production costs and G&A.
Production costs were $97,415 for the three months ended September 30, 1997 and
$100,824 for the same period in 1996, resulting in a 3,409 decrease, or 3%. The
decrease was the result of reductions in well maintenance expense and production
taxes.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 20% from $6,672 for the three months ended September
30, 1996 to $5,320 for the same period in 1997.
Depletion was $27,173 for the three months ended September 30, 1997 compared to
$24,328 for the same period in 1996. This represented an increase in depletion
of $2,845, or 12%, primarily attributable to a reduction in oil reserves during
1997 due to lower commodity prices, offset by a decline in oil production of
1,952 barrels for the three months ended September 30, 1997 as compared to the
same period in 1996.
Gain on disposition of assets of $43,856, for the three months ended September
30, 1997, resulted from a $43,834 gain on the abandonment of one oil and gas
well and $22 in salvage income derived from equipment credits received on a
fully deleted property. The gain on disposition of assets of $428, for the three
months ended September 30, 1996, resulted from a $324 gain on the abandonment of
one oil and gas well and $104 in salvage income received from the sale of
equipment on wells that were plugged and abandoned in prior years.
9
<PAGE>
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $95,383 during the nine
months ended September 30, 1997 from the same period ended September 30, 1996,
resulting from a reduction in production costs paid, offset by a decline in oil
and gas sales receipts and an increase in abandoned property costs paid.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during the nine months ended September
30, 1997 and 1996 were related to the replacement or disposal of equipment on
various active oil and gas properties.
Proceeds from disposition of assets for the nine months ended September 30, 1997
primarily resulted from $43,510 received from the sale of equipment on a
property abandoned during 1997 and salvage income of $22 received on a fully
depleted well. For the nine months ended September 30, 1996, $2,410 in proceeds
from disposition of assets resulted from $323 received from the sale of
equipment on a property abandoned during 1996 and salvage income of $2,087
received on the disposal of oil and gas equipment on properties abandoned in
prior years.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1997 to cover
distributions to the partners of $379,547 of which $3,589 was distributed to the
managing general partner and $375,958 to the limited partners. For the same
period ended September 30, 1996, cash was sufficient for distributions to the
partners of $311,927 of which $3,060 was distributed to the managing general
partner and $308,867 to the limited partners.
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.
10
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K - none
11
<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: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 12, 1996 By: /s/ Rich Dealy
--------------------------------------
Rich Dealy, Vice President and
Controller
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000809017
<NAME> 87BP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 79,855
<SECURITIES> 0
<RECEIVABLES> 97,144
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 176,999
<PP&E> 4,826,030
<DEPRECIATION> 3,365,537
<TOTAL-ASSETS> 1,637,492
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,637,492
<TOTAL-LIABILITY-AND-EQUITY> 1,637,492
<SALES> 625,313
<TOTAL-REVENUES> 643,197
<CGS> 0
<TOTAL-COSTS> 449,772
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 193,425
<INCOME-TAX> 0
<INCOME-CONTINUING> 193,425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 193,425
<EPS-PRIMARY> 15.71
<EPS-DILUTED> 0
</TABLE>
