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, 1998
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>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of June 30, 1998 and
December 31, 1997 ..................................... 3
Statements of Operations for the three and six
months ended June 30, 1998 and 1997...................... 4
Statement of Partners' Capital for the six months
ended June 30, 1998...................................... 5
Statements of Cash Flows for the six months ended
June 30, 1998 and 1997................................... 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
27.1 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
June 30, December 31,
1998 1997
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $41,690 at June 30
and $74,658 at December 31 $ 41,914 $ 74,883
Accounts receivable - affiliate 64,970 115,661
---------- ----------
Total current assets 106,884 190,544
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 4,833,148 4,827,151
Accumulated depletion (3,870,543) (3,818,776)
---------- ----------
Net oil and gas properties 962,605 1,008,375
---------- ----------
$ 1,069,489 $ 1,198,919
========== ==========
PARTNERS' CAPITAL
Partners' capital:
Managing general partner $ 10,906 $ 11,934
Limited partners (12,191 interests) 1,058,583 1,186,985
---------- ----------
$ 1,069,489 $ 1,198,919
========== ==========
The financial information included as of June 30, 1998 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 Six months ended
June 30, June 30,
--------------------- ---------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Revenues:
Oil and gas $ 149,730 $ 199,079 $ 286,777 $ 450,785
Interest 1,068 1,798 2,283 3,045
Gain (loss) on disposition
of assets - (529) 2,161 (529)
-------- --------- -------- ---------
150,798 200,348 291,221 453,301
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 115,069 102,834 207,645 214,446
General and administrative 4,492 6,023 8,603 13,523
Depletion 24,952 35,597 51,767 67,582
Abandoned property 1,781 23,129 2,023 30,230
-------- -------- -------- --------
146,294 167,583 270,038 325,781
-------- -------- -------- --------
Net income $ 4,504 $ 32,765 $ 21,183 $ 127,520
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 45 $ 328 $ 212 $ 1,275
======== ======== ======== ========
Limited partners $ 4,459 $ 32,437 $ 20,971 $ 126,245
======== ======== ======== ========
Net income per limited
partnership interest $ .37 $ 2.67 $ 1.72 $ 10.36
======== ======== ======== ========
Distributions per limited
partnership interest $ 4.50 $ 10.25 $ 12.25 $ 22.75
======== ======== ======== ========
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, 1998 $ 11,934 $1,186,985 $1,198,919
Distributions (1,240) (149,373) (150,613)
Net income 212 20,971 21,183
-------- --------- ---------
Balance at June 30, 1998 $ 10,906 $1,058,583 $1,069,489
======== ========= =========
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)
Six months ended
June 30,
------------------------
1998 1997
---------- ----------
Cash flows from operating activities:
Net income $ 21,183 $ 127,520
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 51,767 67,582
(Gain) loss on disposition of assets (2,161) 529
Changes in assets:
Accounts receivable 50,691 61,175
--------- ---------
Net cash provided by operating activities 121,480 256,806
--------- ---------
Cash flows from investing activities:
Additions to oil and gas equipment (5,997) -
Proceeds from asset dispositions 2,161 44,070
--------- ---------
Net cash provided by (used in) investing
activities (3,836) 44,070
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (150,613) (280,041)
--------- ---------
Net increase (decrease) in cash and cash equivalents (32,969) 20,835
Cash and cash equivalents at beginning of period 74,883 63,834
--------- ---------
Cash and cash equivalents at end of period $ 41,914 $ 84,669
========= =========
The financial information included herein has been prepared by
management without audit by ndependent 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
June 30, 1998
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley Producing Properties 87-B, Ltd. (the "Partnership") is a
limited partnership organized in 1987 under the laws of the State of Texas.
The Partnership engages primarily in oil and gas production in Texas and is not
involved in any industry segment other than oil and gas.
Note 2. Basis of presentation
In the opinion of management, the unaudited financial statements of the
Partnership as of June 30, 1998 and for the three and six months ended June 30,
1998 and 1997 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 Partnership's Report on Form 10-K for the year ended
December 31, 1997, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square
West, Irving, Texas 75039-3746.
Certain reclassifications have been made to the 1997 financial statements to
conform to the 1998 financial statement presentation.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Six months ended June 30, 1998 compared with six months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 36% to $286,777 from $450,785
for the six months ended June 30, 1998 and 1997, respectively. The decrease in
revenues resulted from lower average prices received, offset by an increase in
7
<PAGE>
production. For the six months ended June 30, 1998, 15,550 barrels of oil, 5,243
barrels of natural gas liquids ("NGLs") and 23,042 mcf of gas were sold, or
24,633 barrel of oil equivalents ("BOEs"). For the six months ended June 30,
1997, 14,686 barrels of oil and 54,483 mcf of gas were sold, or 23,767 BOEs.
As of September 30, 1997, the Partnership began accounting for processed natural
gas production as processed natural gas liquids and dry residue gas.
Consequently, separate product volumes will not be comparable to periods prior
to September 30, 1997. Also, prices for gas products will not be comparable as
the price per mcf for natural gas for the three and six months ended June 30,
1998 is the price received for dry residue gas and the price per mcf for natural
gas for the three and six months ended June 30, 1997 is a price for wet gas
(i.e., natural gas liquids combined with dry residue gas).
The average price received per barrel of oil decreased $5.94, or 30%, from
$19.92 for the six months ended June 30, 1997 to $13.98 for the same period in
1998. The average price received per barrel of NGLs during the six months ended
June 30, 1998 was $6.83. The average price received per mcf of gas decreased 50%
to $1.46 for the six months ended June 30, 1998 compared to $2.90 for the same
period 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 six months ended June 30, 1998.
During most of 1997, the Partnership benefitted from higher oil prices as
compared to previous years. However, during the fourth quarter of 1997, oil
prices began a downward trend that has continued into 1998. On July 29, 1998,
the market price for West Texas intermediate crude was $11.58 per barrel. A
continuation of the oil price environment experienced during the first half of
1998 will have an adverse effect on the Partnership's revenues and operating
cash flow and could result in additional decreases in the carrying value of the
Partnership's oil and gas properties.
Costs and Expenses:
Total costs and expenses decreased to $270,038 for the six months ended June 30,
1998 as compared to $325,781 for the same period in 1997, a decrease of $55,743,
or 17%. This decrease was due to reductions in abandoned property costs,
depletion, production costs and general and administrative expenses ("G&A").
Production costs were $207,645 for the six months ended June 30, 1998 and
$214,446 for the same period in 1997, resulting in a $6,801 decrease, or 3%. The
decrease was primarily attributable to declines in production taxes, offset by
an increase in ad valorem 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, 36% from $13,523 for the six months ended June 30,
1997, to $8,603 for the same period in 1998.
8
<PAGE>
Depletion was $51,767 for the six months ended June 30, 1998 compared to $67,582
for the same period in 1997. This represented a decrease in depletion of
$15,815, or 23%. This decrease was primarily attributable to a reduction in the
Partnership'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"
("SFAS 121") during the fourth quarter of 1997, offset by a decrease in oil
reserves during the six months ended June 30, 1998 as a result of lower
commodity prices and an increase in oil production of 864 barrels for the period
ended June 30, 1998 as compared to the same period in 1997.
Abandoned property costs of $2,023 and $30,230 incurred during the six months
ended June 30, 1998 and 1997, respectively, were related to one well plugged and
abandoned during each period.
Three months ended June 30, 1998 compared with three months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 25% to $149,730 from $199,079
for the three months ended June 30, 1998 and 1997, respectively. The decrease in
revenues resulted from lower average prices received, offset by an increase in
production. For the three months ended June 30, 1998, 7,555 barrels of oil,
3,585 barrels of NGLs and 14,053 mcf of gas were sold, or 13,482 BOEs. For the
three months ended June 30, 1997, 7,189 barrels of oil and 26,184 mcf of gas
were sold, or 11,553 BOEs.
The average price received per barrel of oil decreased $5.11, or 28%, from
$18.42 for the three months ended June 30, 1997 to $13.31 for the same period in
1998. The average price received per barrel of NGLs during the three months
ended June 30, 1998 was $7.68. The average price received per mcf of gas
decreased 40% from $2.55 during the three months ended June 30, 1997 to $1.54 in
1998.
Costs and Expenses:
Total costs and expenses decreased to $146,294 for the three months ended June
30, 1998 as compared to $167,583 for the same period in 1997, a decrease of
$21,289, or 13%. This decrease was due to decreases in abandoned property costs,
depletion and G&A, offset by an increase in production costs.
Production costs were $115,069 for the three months ended June 30, 1998 and
$102,834 for the same period in 1997, resulting in a $12,235 increase, or 12%.
The increase was the result of additional well maintenance costs and ad valorem
taxes, offset by decreases in production taxes and workover expenses.
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, 25% from $6,023 for the three months ended June 30,
1997 to $4,492 for the same period in 1998.
9
<PAGE>
Depletion was $24,952 for the three months ended June 30, 1998 compared to
$35,597 for the same period in 1997. This represented a decrease in depletion of
$10,645, or 30%. This decrease was primarily attributable to a reduction in the
Partnership's net depletable basis from charges taken in accordance with SFAS
121 during the fourth quarter of 1997, offset by a decrease in oil reserves
during the three months ended June 30, 1998 as a result of lower commodity
prices and an increase in oil production of 366 barrels for the three months
ended June 30, 1998 compared to the same period in 1997.
Abandoned property costs of $1,781 and $23,129 incurred during the three months
ended June 30, 1998 and 1997, respectively, were related to one well plugged and
abandoned during each period.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $135,326 during the six
months ended June 30, 1998 from the same period in 1997. This decrease was the
result of a decline in oil and gas sales receipts and an increase in production
costs paid, offset by decreases in abandoned property expenses and G&A expense
paid.
Net Cash Provided by (Used in) Investing Activities
The Partnership's principal investing activities during the six months ended
June 30, 1998 were related to the additions or disposal of oil and gas equipment
on active properties.
Proceeds from equipment salvage of $2,161 and $44,070 were received for the six
months ending June 30, 1998 and 1997, respectively.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1998 to cover
distributions to the partners of $150,613 of which $1,240 was distributed to the
managing general partner and $149,373 to the limited partners. For the same
period ended June 30, 1997, cash was sufficient for distributions to the
partners of $280,041 of which $2,694 was distributed to the managing general
partner and $277,347 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.
Information systems for the year 2000
The managing general partner will be required to modify its information systems
in order to accurately process Partnership data referencing the year 2000.
Because of the importance of occurrence dates in the oil and gas industry, the
10
<PAGE>
consequences of not pursuing these modifications could be very significant to
the Partnership's ability to manage and report operating activities. Currently,
the managing general partner plans to contract with third parties to perform the
software programming changes necessary to correct any existing deficiencies.
Such programming changes are anticipated to be completed and tested by June
1999. The managing general partner will allocate a portion of the costs of the
year 2000 programming charges to the Partnership when they are incurred, along
with recurring general and administrative expenses. Although the costs are not
estimable at this time, they should not be significant to the Partnership.
- ---------------
(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
27.1 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: August 6, 1998 By: /s/ Rich Dealy
--------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000809017
<NAME> 87BPP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 41,914
<SECURITIES> 0
<RECEIVABLES> 64,970
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 106,884
<PP&E> 4,833,148
<DEPRECIATION> 3,870,543
<TOTAL-ASSETS> 1,069,489
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,069,489
<TOTAL-LIABILITY-AND-EQUITY> 1,069,489
<SALES> 286,777
<TOTAL-REVENUES> 291,221
<CGS> 0
<TOTAL-COSTS> 270,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,183
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,183
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,183
<EPS-PRIMARY> 1.72
<EPS-DILUTED> 0
</TABLE>
