UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
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)
1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas 75039
- ---------------------------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (972) 444-9001
303 West Wall, Suite 101, Midland, Texas 79701
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited partnership interests ($500 per unit)
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / x /
No market currently exists for the limited partnership interests of the
Registrant. Based on original purchase price the aggregate market value of
limited partnership interests owned by non-affiliates of the Registrant is
$5,997,500.
As of March 8, 2000, the number of outstanding limited partnership interests was
12,191.
The following documents are incorporated by reference into the indicated parts
of this Annual Report on Form 10-K: None
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Parts I and II of this Report contain 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. See "Item 1. Business" for a
description of various factors that could materially affect the ability of the
Partnership to achieve the anticipated results described in the forward looking
statements.
PART I
ITEM 1. Business
Parker & Parsley Producing Properties 87-B, Ltd. (the "Partnership") is a
limited partnership organized in 1987 under the laws of the state of Texas. As
of August 8, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA") became
the managing general partner of the Partnership. Prior to August 8, 1997, the
Partnership's managing 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. ("Mesa")
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
managing general partner of the Partnership as PPDLP's successor by merger.
A Registration Statement, as amended, filed pursuant to the Securities Act of
1933, registering limited partnership interests aggregating $30,000,000 in a
series of Texas limited partnerships formed under the Parker & Parsley Producing
Properties Program-I, was declared effective by the Securities and Exchange
Commission on February 20, 1987. On December 28, 1987, the offering of limited
partnership interests in the Partnership, the second partnership formed under
such statement, was closed, with interests aggregating $6,095,500 being sold to
573 subscribers.
The Partnership's primary business plan and objectives are to purchase producing
oil and gas properties and distribute the cash flow from operations to its
partners. The Partnership is not involved in any industry segment other than oil
and gas. See "Item 6. Selected Financial Data" for a summary of the
Partnership's oil and gas sales, net income and identifiable assets.
The principal markets during 1999 for the oil produced by the Partnership were
refineries and oil transmission companies that have facilities near the
Partnership's oil producing properties. During 1999, Pioneer USA marketed the
Partnership's gas to a variety of purchasers, none of which accounted for 10% or
more of the Partnership's oil and gas revenues. Of the Partnership's total oil
and gas revenues for 1999, approximately 37%, 23% and 10% were attributable to
sales made to Plains All American Inc., TEPPCO Crude Oil LLC and Phillips
Petroleum Company, respectively. Pioneer USA is of the opinion that the loss of
any one purchaser would not have an adverse effect on its ability to sell its
oil and gas production or natural gas products.
The Partnership's revenues, profitability, cash flow and future rate of growth
are highly dependent on the prevailing prices of oil and gas, which are affected
by numerous factors beyond the Partnership's control. Oil and gas prices
historically have been very volatile. A substantial or extended decline in the
prices of oil or gas could have a material adverse effect on the Partnership's
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revenues, profitability and cash flow and could, under certain circumstances,
result in a reduction in the carrying value of the Partnership's oil and gas
properties.
Federal and state regulation of oil and gas operations generally includes the
fixing of maximum prices for regulated categories of natural gas, the imposition
of maximum allowable production rates, the taxation of income and other items
and the protection of the environment. Although the Partnership believes that
its business operations do not impair environmental quality and that its costs
of complying with any applicable environmental regulations are not currently
significant, the Partnership cannot predict what, if any, effect these
environmental regulations may have on its current or future operations.
The Partnership does not have any employees of its own. Pioneer USA employs 687
persons, many of whom dedicated a part of their time to the conduct of the
Partnership's business during the period for which this report is filed. Pioneer
USA supplies all management functions.
Numerous uncertainties exist in estimating quantities of proved reserves and
future net revenues therefrom. The estimates of proved reserves and related
future net revenues set forth in this report are based on various assumptions,
which may ultimately prove to be inaccurate. Therefore, such estimates should
not be construed as estimates of the current market value of the Partnership's
proved reserves.
No material part of the Partnership's business is seasonal and the Partnership
conducts no foreign operations.
ITEM 2. Properties
The Partnership's properties consist of leasehold interests in properties on
which oil and gas wells are located. Such property interests are often subject
to landowner royalties, overriding royalties and other oil and gas leasehold
interests.
The Partnership completed seven purchases of producing properties. These
acquisitions involved the purchase of working interests in 54 properties of
which all are operated by the managing general partner. The Partnership also
participated in the drilling of two oil and gas wells during 1988 which were
completed as producers. Additionally, the Partnership purchased 15 overriding
royalty interests effective January 1, 1990 and two additional overriding
royalty interests during 1991. Twenty-one uneconomical wells have been
abandoned. At December 31, 1999, the Partnership had 35 producing oil and gas
wells.
For information relating to the Partnership's estimated proved oil and gas
reserves at December 31, 1999, 1998 and 1997 and changes in such quantities for
the years then ended, see Note 7 of Notes to Financial Statements included in
"Item 8. Financial Statements and Supplementary Data" below. Such reserves have
been estimated by the engineering staff of Pioneer USA with a review by
Williamson Petroleum Consultants, Inc., an independent petroleum consultant.
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ITEM 3. Legal Proceedings
The Partnership from time to time is a party to various legal proceedings
incidental to its business involving claims in oil and gas leases or interests,
other claims for damages in amounts not in excess of 10% of its current assets
and other matters, none of which Pioneer USA believes to be material to the
Partnership.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth
quarter of 1999.
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PART II
ITEM 5. Market for Partnership's Common Equity and Related Stockholder
Matters
At March 8, 2000, the Partnership had 12,191 outstanding limited partnership
interests held of record by 554 subscribers. There is no established public
trading market for the limited partnership interests. Under the limited
partnership agreement, Pioneer USA has made certain commitments to purchase
partnership interests at a computed value.
Revenues which, in the sole judgement of the managing general partner, are not
required to meet the Partnership's obligations are distributed to the partners
at least quarterly in accordance with the limited partnership agreement. During
the years ended December 31, 1999 and 1998, $170,405 and $200,016, respectively,
of such revenue-related distributions were made to the limited partners.
ITEM 6. Selected Financial Data
The following table sets forth selected financial data for the years ended
December 31:
<TABLE>
1999 1998 1997 1996 1995
---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating results:
Oil and gas sales $ 625,861 $ 532,606 $ 846,163 $ 980,232 $ 921,034
========= ======== ========= ========= =========
Impairment of oil and
gas properties $ - $ 35,017 $ 317,255 $ 42,277 $ 104,960
========= ======== ========= ========= =========
Net income (loss) $ 163,148 $(118,738) $ (142,439) $ 303,380 $ 157,736
========= ======== ========= ========= =========
Allocation of net
income (loss):
Managing general
partner $ 1,631 $ (1,187) $ (1,424) $ 3,034 $ 1,578
========= ======== ========= ========= =========
Limited partners $ 161,517 $(117,551) $ (141,015) $ 300,346 $ 156,158
========= ======== ========= ========= =========
Limited partners' net
income (loss) per
limited partnership
interest $ 13.25 $ (9.64) $ (11.57) $ 24.64 $ 12.81
========= ======== ========= ========= =========
Limited partners'
cash distributions
per limited partner-
ship interest $ 13.98 $ 16.41 $ 39.20 $ 35.59 $ 29.01
========= ======== ========= ========= =========
At year end:
Identifiable assets $ 892,550 $ 878,401 $1,241,161 $1,823,614 $1,958,507
========= ======== ========= ========= =========
</TABLE>
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ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of operations
1999 compared to 1998
The Partnership's 1999 oil and gas revenues increased 18% to $625,861 from
$532,606 in 1998. The increase in revenues resulted from higher average prices
received, offset by a decline in production. In 1999, 24,976 barrels of oil,
10,794 barrels of natural gas liquids ("NGLs") and 48,774 mcf of gas were sold,
or 43,899 barrel of oil equivalents ("BOEs"). In 1998, 29,481 barrels of oil,
11,315 barrels of NGLs and 50,220 mcf of gas were sold, or 49,166 BOEs. Due to
the decline characteristics of the Partnership's oil and gas properties,
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 increased $4.39, or 34%, from
$13.05 in 1998 to $17.44 in 1999. The average price received per barrel of NGLs
increased $3.74, or 57%, from $6.58 in 1998 to $10.32 in 1999. The average price
received per mcf of gas increased 11% from $1.46 in 1998 to $1.62 in 1999. 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 in 1999.
The volatility of commodity prices has had, and continues to have, a significant
impact on the Partnership's revenues and operating cash flow and could result in
additional decreases to the carrying value of the Partnership's oil and gas
properties.
Gain on disposition of assets of $11,482 was recognized in 1999 from equipment
salvage of $12,955 on one well plugged and abandoned in a prior year, offset by
a $1,473 loss on the write-off of basis on one well plugged and abandoned during
1999. In 1998, $4,248 gain on disposition of assets was recognized from proceeds
received from equipment salvage on wells plugged in prior years.
Total costs and expenses decreased in 1999 to $477,552 as compared to $659,670
in 1998, a decrease of $182,118, or 28%. The decrease was primarily attributable
to declines in depletion, the impairment of oil and gas properties, production
costs and abandoned property costs, offset by an increase in general and
administrative expenses ("G&A").
Production costs were $364,187 in 1999 and $385,648 in 1998, resulting in a
$21,461 decrease, or 6%. The decrease was the result of declines in well
maintenance costs, ad valorem 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
increased, in aggregate, 18%, from $15,978 in 1998 to $18,776 in 1999. The
Partnership paid the managing general partner $8,400 in 1999 and $9,662 in 1998
for G&A incurred on behalf of the Partnership. G&A is allocated, in part, to the
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Partnership by the managing general partner. Allocated expenses are determined
by the managing general partner based upon the level of activity of the
Partnership relative to the non-partnership activities of the managing general
partner. The method of allocation has been consistent over the past several
years with certain modifications incorporated to reflect changes in Pioneer
USA's overall business activities.
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"), the managing general partner reviews the
Partnership's oil and gas properties for impairment whenever events or
circumstances indicate a decline in the recoverability of the carrying value of
the Partnership's assets may have occurred. As a result of the review and
evaluation of its long-lived assets for impairment, the Partnership recognized a
non-cash charge of $35,017 related to its oil and gas properties during 1998.
Depletion was $79,975 in 1999 compared to $206,289 in 1998, a decrease of
$126,314, or 61%. This decrease was the result of a combination of factors that
included an increase in proved reserves during 1999 due to higher commodity
prices and a reduction in the Partnership's net depletable basis from charges
taken in accordance with SFAS 121 during the fourth quarter of 1998 and a
decline in oil production of 4,505 barrels for the period ended December 31,
1999 compared to the same period in 1998.
Abandoned property costs of $14,614 incurred in 1999 were related to the
temporary abandonment of one well during the current year and two wells plugged
and abandoned in prior years. Expenses of $16,738 were incurred in 1998 to plug
and abandon one oil and gas well which was temporarily abandoned in a prior
year.
1998 compared to 1997
The Partnership's 1998 oil and gas revenues decreased 37% to $532,606 from
$846,163 in 1997. The decrease in revenues resulted from lower average prices
received. In 1998, 29,481 barrels of oil, 11,315 barrels of NGLs and 50,220 mcf
of gas were sold, or 49,166 BOEs. In 1997, 28,091 barrels of oil, 7,221 barrels
of NGLs and 90,629 mcf of gas were sold, or 50,417 BOEs.
Consistent with the managing general partner, the Partnership has historically
accounted for processed natural gas production as wellhead production on a wet
gas basis. Effective September 30, 1997, as a result of the merger with Mesa,
the managing general partner accounts for processed natural gas production in
two components: natural gas liquids and dry residue gas. As a result of the
change in the managing general partner's policy, the Partnership now accounts
for processed natural gas production as processed natural gas liquids and dry
residue gas. Consequently, separate product volumes will not be comparable for
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 year ended December 31,
1998 is the price received for dry residue gas and the price per mcf for natural
gas produced prior to October 1997 was presented as a price for wet gas (i.e.,
natural gas liquids combined with dry residue gas).
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The average price received per barrel of oil decreased $6.07, or 32%, from
$19.12 in 1997 to $13.05 in 1998. The average price received per barrel of NGLs
decreased $4.07, or 38%, from $10.65 in 1997 to $6.58 in 1998. The average price
received per mcf of gas decreased 43% from $2.56 in 1997 to $1.46 in 1998.
In 1998, $4,248 gain on disposition of assets was recognized from proceeds
received from equipment salvage on wells plugged in prior years. In 1997, a
$13,626 gain on disposition of assets was recognized from proceeds of $43,532
received from equipment salvage, offset by the write-off of remaining
capitalized well costs of $29,906 on one plugged and abandoned well.
Total costs and expenses decreased in 1998 to $659,670 as compared to $1,008,245
in 1997, a decrease of $348,575, or 35%. The decrease was primarily attributable
to declines in the impairment of oil and gas properties, depletion, G&A,
production costs and abandoned property costs.
Production costs were $385,648 in 1998 and $407,313 in 1997, resulting in a
$21,665 decrease, or 5%. The decrease was the result of reductions in production
taxes and ad valorem taxes, offset by increases in well maintenance costs and
workover expenses incurred to stimulate well production.
During this period, G&A decreased, in aggregate, 43%, from $27,969 in 1997 to
$15,978 in 1998. The Partnership paid the managing general partner $9,662 in
1998 and $19,944 in 1997 for G&A incurred on behalf of the Partnership.
The Partnership recognized non-cash SFAS 121 charges of $35,017 and $317,255
related to its oil and gas properties during 1998 and 1997, respectively.
Depletion was $206,289 in 1998 compared to $230,739 in 1997, a decrease of
$24,450, or 11%. This decrease was the result of 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 combination of factors that
included a decline in proved reserves during 1998 due to lower commodity prices
and an increase in oil production of 1,390 barrels for the period ended December
31, 1998 compared to the same period in 1997.
Abandoned property costs of $16,738 were incurred in 1998 to plug and abandon
one oil and gas well which was temporarily abandoned in a prior year. Expenses
of $24,969 were incurred during 1997 to plug and abandon one oil and gas well.
Impact of inflation and changing prices on sales and net income
Inflation generally does not impact revenues in the oil and gas industry.
However, inflation generally does impact expenses, the most significant for the
Partnership is lease operating expenses.
The petroleum industry has been characterized by volatile oil, NGL and natural
gas commodity prices and relatively stable supplier costs during the three years
ended December 31, 1999. During 1997 and 1998, weather patterns, regional
economic recessions and political matters combined to cause worldwide crude oil
supplies to exceed demand. As a result, crude oil prices declined substantially
from the price levels of 1996. Also during 1997 and 1998, but to a lesser
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extent, market prices for natural gas declined. During 1999, the price per
barrel for oil production similar to the Partnership's ranged from approximately
$11.00 to $24.00. The decrease in crude oil exports during 1999 by members of
the Organization of Petroleum Exporting Countries ("OPEC") and other crude oil
exporting nations has resulted in higher Partnership revenues and operating cash
flow as compared to 1998.
Prices for natural gas are subject to ordinary seasonal fluctuations, and this
volatility of natural gas prices may result in production being curtailed and,
in some cases, wells being completely shut-in.
Liquidity and capital resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $41,861 during the year
ended December 31, 1999 from 1998. The increase was primarily attributable to
reductions in operating costs of $80,537 that have resulted from the managing
general partner's cost containment measures, a decrease in G&A expenses paid of
$10,008 and a reduction of $2,124 in abandoned property costs, offset by a
decline of $50,808 in oil and gas revenues.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during 1999 and 1998 were primarily for
expenditures related to the addition of equipment on various oil and gas
properties.
Proceeds of $12,956 and $4,248 were recognized during 1999 and 1998,
respectively, from equipment salvage on wells abandoned in prior years.
Net Cash Used in Financing Activities
In 1999, cash distributions to the partners were $172,065, of which $1,660 was
distributed to the managing general partner and $170,405 to the limited
partners. In 1998, cash distributions to the partners were $201,780, of which
$1,764 was distributed to the managing general partner and $200,016 to the
limited partners.
Since the first quarter of 1999, world crude oil prices have increased,
primarily as a result of decreases in crude oil supplies made available by OPEC
and other crude oil exporting nations. During the period from the third quarter
of 1997 through the first quarter of 1999, there was a significant declining
trend in world oil prices and, to a lesser extent, natural gas prices. During
the first quarter of 1999, OPEC and certain other crude oil exporting nations
announced reductions in their planned export volumes. These announcements,
together with the enactment of announced reductions in export volumes, have had
a positive impact on world crude oil prices. No assurances can be given that the
reductions in export volumes or the positive trend in oil and gas commodity
prices can be sustained for an extended period of time.
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Proposal to acquire partnerships
On September 8, 1999, Pioneer USA filed a preliminary proxy statement with the
SEC proposing an agreement and plan of merger to the limited partners of 25
publicly-held Parker & Parsley limited partnerships. The preliminary proxy
statement is non-binding and is subject to, among other things, consideration of
offers from third parties to purchase any partnership or its assets, the
majority approval of the limited partners in each partnership and the resolution
of SEC review comments. Pioneer is continuing to evaluate the feasibility of the
proposed agreement and plan of merger; however, the current commodity price
outlook has diminished the likelihood that the proposed agreement and plan of
merger will be consummated.
Year 2000 project readiness
As the year 2000 was approaching, the inability of some computer programs and
embedded technologies to distinguish between "1900" and "2000" gave rise to the
"Year 2000" problem. Such computer programs and related technology were at risk
to fail outright or communicate inaccurate data, if not remediated or replaced.
With the proliferation of electronic data interchange, the Year 2000 problem
represented a significant exposure to the entire global community, the full
extent of which could not be accurately assessed prior to the year 2000.
In proactive response to the Year 2000 problem, the managing general partner
established a "Year 2000" project that assessed, to the extent possible, the
Partnership's and the managing general partner's internal Year 2000 problem;
took remedial actions necessary to minimize the Year 2000 risk exposure to the
managing general partner and significant third parties with whom it has data
interchange; and, tested the managing general partner's systems and processes
once remedial actions were taken. The managing general partner contracted with
IBM Global Services to perform the assessment and remedial phases of its Year
2000 project. The managing general partner's total costs related to the Year
2000 problem were $2.5 million.
The managing general partner has closely monitored its information and
non-information technology systems since the beginning of 2000 and has
identified no significant Year 2000 failures or problems. The managing general
partner will continue to monitor Year 2000 risks and issues. There can be no
assurances that unforeseen problems will not be encountered in the future.
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ITEM 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
Financial Statements of Parker & Parsley Producing Properties 87-B, Ltd.:
Independent Auditors' Report - Ernst & Young LLP...................... 12
Independent Auditors' Report - KPMG LLP............................... 13
Balance Sheets as of December 31, 1999 and 1998....................... 14
Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997................................................. 15
Statements of Partners' Capital for the Years Ended
December 31, 1999, 1998 and 1997.................................... 16
Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997................................................. 17
Notes to Financial Statements......................................... 18
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INDEPENDENT AUDITORS' REPORT
The Partners
Parker & Parsley Producing Properties 87-B, Ltd.
(A Texas Limited Partnership):
We have audited the balance sheets of Parker & Parsley Producing Properties
87-B, Ltd. as of December 31, 1999 and 1998, and the related statements of
operations, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parker & Parsley Producing
Properties 87-B, Ltd. as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
Dallas, Texas
March 10, 2000
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INDEPENDENT AUDITORS' REPORT
The Partners
Parker & Parsley Producing Properties 87-B, Ltd.
(A Texas Limited Partnership):
We have audited the statement of operations, partners' capital and cash flows of
Parker & Parsley Producing Properties 87-B, Ltd. for the year ended December 31,
1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the results of operations and cash flows of Parker &
Parsley Producing Properties 87-B, Ltd. for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG LLP
Midland, Texas
March 20, 1998
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
BALANCE SHEETS
December 31
1999 1998
----------- -----------
ASSETS
Current assets:
Cash $ 21,724 $ 9,859
Accounts receivable - oil and gas sales 164,577 89,569
Accounts receivable - affiliate - 3,287
---------- ----------
Total current assets 186,301 102,715
---------- ----------
Oil and gas properties - at cost, based on
the successful efforts accounting method 4,837,591 4,835,768
Accumulated depletion (4,131,342) (4,060,082)
---------- ----------
Net oil and gas properties 706,249 775,686
---------- ----------
$ 892,550 $ 878,401
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 23,066 $ -
Partners' capital:
Managing general partner 8,954 8,983
Limited partners (12,191 interests) 860,530 869,418
----------- ----------
869,484 878,401
----------- ----------
$ 892,550 $ 878,401
=========== ==========
The accompanying notes are an integral part of these financial statements.
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31
1999 1998 1997
--------- --------- ----------
Revenues:
Oil and gas $ 625,861 $ 532,606 $ 846,163
Interest 3,357 4,078 6,017
Gain on disposition of assets 11,482 4,248 13,626
-------- -------- ---------
640,700 540,932 865,806
-------- -------- ---------
Costs and expenses:
Oil and gas production 364,187 385,648 407,313
General and administrative 18,776 15,978 27,969
Impairment of oil and gas properties - 35,017 317,255
Depletion 79,975 206,289 230,739
Abandoned property 14,614 16,738 24,969
-------- -------- ---------
477,552 659,670 1,008,245
-------- -------- ---------
Net income (loss) $ 163,148 $(118,738) $ (142,439)
======== ======== =========
Allocation of net income (loss):
Managing general partner $ 1,631 $ (1,187) $ (1,424)
======== ======== =========
Limited partners $ 161,517 $(117,551) $ (141,015)
======== ======== =========
Net income (loss) per limited
partnership interest $ 13.25 $ (9.64) $ (11.57)
======== ======== =========
The accompanying notes are an integral part of these financial statements.
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PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Managing
general Limited
partner partners Total
---------- ---------- ----------
Partners' capital at January 1, 1997 $ 17,711 $1,805,903 $1,823,614
Distributions (4,353) (477,903) (482,256)
Net loss (1,424) (141,015) (142,439)
--------- --------- ---------
Partners' capital at December 31, 1997 11,934 1,186,985 1,198,919
Distributions (1,764) (200,016) (201,780)
Net loss (1,187) (117,551) (118,738)
--------- --------- ---------
Partners' capital at December 31, 1998 8,983 869,418 878,401
Distributions (1,660) (170,405) (172,065)
Net income 1,631 161,517 163,148
--------- --------- ---------
Partners' capital at December 31, 1999 $ 8,954 $ 860,530 $ 869,484
========= ========= =========
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
For the years ended December 31
1999 1998 1997
---------- ---------- ----------
Cash flows from operating activities:
Net income (loss) $ 163,148 $ (118,738) $ (142,439)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Gain on disposition of assets (11,482) (4,248) (13,626)
Impairment of oil and gas properties - 35,017 317,255
Depletion 79,975 206,289 230,739
Changes in assets and liabilities
Accounts receivable (75,008) 65,047 31,537
Accounts payable 26,353 (42,242) 12,695
--------- --------- ---------
Net cash provided by operating
activities 182,986 141,125 436,161
--------- --------- ---------
Cash flows from investing activities:
Additions to oil and gas equipment (12,012) (8,617) -
Proceeds from disposition of assets 12,956 4,248 57,144
--------- --------- ---------
Net cash provided by (used in)
investing activities 944 (4,369) 57,144
--------- --------- ---------
Cash flows used in financing activities:
Cash distributions to partners (172,065) (201,780) (482,256)
--------- --------- ---------
Net increase (decrease) in cash 11,865 (65,024) 11,049
Cash at beginning of year 9,859 74,883 63,834
--------- --------- ---------
Cash at end of year $ 21,724 $ 9,859 $ 74,883
========= ========= =========
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
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. As
of August 8, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA") became
the managing general partner of the Partnership. Prior to August 8, 1997, the
Partnership's managing 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
managing general partner of the Partnership as PPDLP's successor by merger.
The Partnership engages in oil and gas production in Texas and is not
involved in any industry segment other than oil and gas.
Note 2. Summary of significant accounting policies
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
Oil and gas properties - The Partnership utilizes the successful efforts
method of accounting for its oil and gas properties and equipment. Under this
method, all costs associated with productive wells and nonproductive development
wells are capitalized while nonproductive exploration costs are expensed.
Capitalized costs relating to proved properties are depleted using the unit-of-
production method on a property-by-property basis based on proved oil (dominant
mineral) reserves as determined by the engineering staff of Pioneer USA, the
Partnership's managing general partner, and reviewed by independent petroleum
consultants. The carrying amounts of properties sold or otherwise disposed of
and the related allowances for depletion are eliminated from the accounts and
any gain or loss is included in operations.
Impairment of long-lived assets - 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"), the
Partnership reviews its long-lived assets to be held and used on an individual
property basis, including oil and gas properties accounted for under the
successful efforts method of accounting, whenever events or circumstances
indicate that the carrying value of those assets may not be recoverable. An
impairment loss is indicated if the sum of the expected future cash flows is
less than the carrying amount of the assets. In this circumstance, the
Partnership recognizes an impairment loss for the amount by which the carrying
amount of the asset exceeds the estimated fair value of the asset.
18
<PAGE>
Use of estimates in the preparation of financial statements - Preparation
of the accompanying financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reporting amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Net income (loss) per limited partnership interest - The net income
(loss) per limited partnership interest is calculated by using the number of
outstanding limited partnership interests.
Income taxes - A Federal income tax provision has not been included in
the financial statements as the income of the Partnership is included in the
individual Federal income tax returns of the respective partners.
Statements of cash flows - For purposes of reporting cash flows, cash
includes depository accounts held by banks.
General and administrative expenses - General and administrative expenses
are allocated in part to the Partnership by the managing general partner or its
affiliates. Allocated expenses are determined by the managing general partner
based upon the level of activity of the Partnership relative to the
non-partnership activities of the managing general partner. The method of
allocation has been consistent over the past several years with certain
modifications incorporated to reflect changes in Pioneer USA's overall business
activities.
Reclassifications - Certain reclassifications may have been made to the
1998 and 1997 financial statements to conform to the 1999 financial statement
presentations.
Environmental - The Partnership is subject to extensive federal, state
and local environmental laws and regulations. These laws, which are constantly
changing, regulate the discharge of materials into the environment and may
require the Partnership to remove or mitigate the environmental effects of the
disposal or release of petroleum or chemical substances at various sites.
Environmental expenditures are expensed or capitalized depending on their future
economic benefit. Expenditures that relate to an existing condition caused by
past operations and that have no future economic benefits are expensed.
Liabilities for expenditures of a noncapital nature are recorded when
environmental assessment and/or remediation is probable, and the costs can be
reasonably estimated. Such liabilities are generally undiscounted unless the
timing of cash payments for the liability or component are fixed or reliably
determinable. No such liabilities have been accrued as of December 31, 1999.
Revenue recognition - The Partnership uses the entitlements method of
accounting for crude oil and natural gas revenues.
Note 3. Impairment of long-lived assets
In accordance with SFAS 121, the Partnership reviews its proved oil and
gas properties for impairment whenever events and circumstances indicate a
decline in the recoverability of the carrying value of the Partnership's oil and
19
<PAGE>
gas properties. The Partnership has estimated the expected future cash flows of
its oil and gas properties as of December 31, 1999, 1998 and 1997, based on
proved reserves, and compared such estimated future cash flows to the respective
carrying amount of the oil and gas properties to determine if the carrying
amounts were likely to be recoverable. For those proved oil and gas properties
for which the carrying amount exceeded the estimated future cash flows, an
impairment was determined to exist; therefore, the Partnership adjusted the
carrying amount of those oil and gas properties to their fair value as
determined by discounting their expected future cash flows at a discount rate
commensurate with the risks involved in the industry. As a result, the
Partnership recognized non-cash impairment provisions of $35,017 and $317,255
related to its proved oil and gas properties during 1998 and 1997, respectively.
Note 4. Income taxes
The financial statement basis of the Partnership's net assets and
liabilities was $873,383 less than the tax basis at December 31, 1999.
The following is a reconciliation of net income (loss) per statements of
operations with the net income (loss) per Federal income tax returns for the
years ended December 31:
1999 1998 1997
--------- --------- ---------
Net income (loss) per statements of
operations $ 163,148 $(118,738) $(142,439)
Depletion and depreciation provisions for
tax reporting purposes (greater than)
less than amounts for financial reporting
purposes 7,412 (59,976) 122,566
Impairment of oil and gas properties for
financial reporting purposes - 35,017 317,255
Abandoned property dispositions for tax
reporting greater than (less than)
amounts for financial reporting purposes - (218,079) 22,895
Other, net (7,638) 3,376 (4,454)
-------- -------- ---------
Net income (loss) per Federal
income tax returns $ 162,922 $(358,400) $ 315,823
======== ======== ========
Note 5. Oil and gas producing activities
The following is a summary of the costs incurred, whether capitalized or
expensed, related to the Partnership's oil and gas producing activities for the
years ended December 31:
1999 1998 1997
--------- --------- ---------
Property acquisition costs $ (2,313) $ 6,754 $ 32,175
======== ======== ========
Development costs $ 4,136 $ 1,863 $ -
======== ======== ========
20
<PAGE>
Capitalized oil and gas properties consist of the following:
1999 1998
----------- -----------
Proved properties:
Property acquisition costs $ 3,289,170 $ 3,291,483
Completed wells and equipment 1,548,421 1,544,285
---------- ----------
4,837,591 4,835,768
Accumulated depletion (4,131,342) (4,060,082)
---------- ----------
Net capitalized costs $ 706,249 $ 775,686
========== ==========
Note 6. Related party transactions
Pursuant to the limited partnership agreement, the Partnership had the
following related party transactions with the managing general partner or its
affiliates during the years ended December 31:
1999 1998 1997
--------- --------- ---------
Payment of lease operating and
supervision charges in accordance
with standard industry operating
agreements $ 137,769 $ 144,149 $ 166,265
Reimbursement of general and
administrative expenses $ 8,400 $ 9,662 $ 19,944
The Partnership participates in oil and gas activities through an income
tax partnership (the "Program") pursuant to the Program agreement. Pioneer USA,
P&P Producing Properties 87-B Employees ("EMPL") and the Partnership are parties
to the Program agreement. EMPL is a general partnership organized for the
benefit of certain employees of Pioneer USA.
The costs and revenues of the Program are allocated to Pioneer USA, EMPL
and the Partnership as follows:
Pioneer USA(1)
and EMPL Partnership
-------------- -----------
Revenues:
Revenues from oil and gas production,
proceeds from sales of producing
properties and all other revenues:
Before payout 4.040405% 95.959595%
After payout 19.191920% 80.808080%
Costs and expenses:
Property acquisition costs, operating
costs, general and administrative
expenses and other costs:
Before payout 4.040405% 95.959595%
After payout 19.191920% 80.808080%
(1) Excludes Pioneer USA's 1% general partner ownership which is allocated
at the Partnership level and 196 limited partner interests owned by
Pioneer USA.
21
<PAGE>
Note 7. Oil and gas information (unaudited)
The following table presents information relating to the Partnership's
estimated proved oil and gas reserves at December 31, 1999, 1998 and 1997 and
changes in such quantities during the years then ended. Due to a change in the
accounting policy of the managing general partner in 1997, the Partnership began
accounting for processed natural gas production in two components: processed
natural gas liquids ("NGLs") and dry residue gas. NGLs are reflected in "Oil and
NGLs" in the table below. All of the Partnership's reserves are proved developed
and located within the United States. The Partnership's reserves are based on an
evaluation prepared by the engineering staff of Pioneer USA and reviewed by
Williamson Petroleum Consultants, Inc., an independent petroleum consultant,
using criteria established by the Securities and Exchange Commission. Reserve
value information is available to limited partners pursuant to the Partnership
agreement and, therefore, is not presented.
Oil and NGLs Gas
(bbls) (mcf)
------------- ----------
Net proved reserves at January 1, 1997 408,101 1,575,369
Revisions 46,800 (820,651)
Production (35,312) (90,629)
------------ ----------
Net proved reserves at December 31, 1997 419,589 664,089
Revisions (95,538) (99,794)
Production (40,796) (50,220)
------------ ----------
Net proved reserves at December 31, 1998 283,255 514,075
Revisions 292,082 490,347
Production (35,770) (48,774)
------------ ----------
Net proved reserves at December 31, 1999 539,567 955,648
============ ==========
As of December 31, 1999, the estimated present value of future net revenues
of proved reserves, calculated using December 31, 1999 prices of $25.34 per
barrel of oil, $15.84 per barrel of NGLs and $1.71 per mcf of gas, discounted at
10% was approximately $3,078,000 and undiscounted was $6,102,000.
Numerous uncertainties exist in estimating quantities of proved reserves
and future net revenues therefrom. The estimates of proved reserves and related
future net revenues set forth in this report are based on various assumptions,
which may ultimately prove to be inaccurate. Therefore, such estimates should
not be construed as estimates of the current market value of the Partnership's
proved reserves. The Partnership emphasizes that reserve estimates are
inherently imprecise and, accordingly, the estimates are expected to change as
future information becomes available.
Note 8. Major customers
The following table reflects the major customers of the Partnership's oil
and gas sales (a major customer is defined as a customer whose sales exceed 10%
of total sales) during the years ended December 31:
22
<PAGE>
1999 1998 1997
--------- -------- --------
Plains All American Inc. 37% - -
TEPPCO Crude Oil LLC 23% - -
Phillips Petroleum Company 10% 9% 9%
Genesis Crude Oil, L.P. - 58% 49%
Western Gas Resources, Inc. 7% 23% 35%
At December 31, 1999, the amounts receivable from Plains All American
Inc., TEPPCO Crude Oil LLC and Phillips Petroleum Company were $25,878, $34,683
and $21,233, respectively, which are included in the caption "Accounts
receivable - oil and gas sales" in the accompanying Balance Sheet.
Pioneer USA is of the opinion that the loss of any one purchaser would
not have an adverse effect on the ability of the Partnership to sell its oil and
gas production or natural gas products.
Note 9. Organization and operations
The Partnership was organized December 28, 1987 as a limited partnership
under the Texas Uniform Limited Partnership Act for the purpose of acquiring
producing properties. The following is a brief summary of the more significant
provisions of the limited partnership agreement:
Managing general partner - The managing general partner of the
Partnership is Pioneer USA. Pioneer USA has the power and authority to
manage, control and administer all Partnership affairs. As managing
general partner and operator of the Partnership's properties, all
production expenses are incurred by Pioneer USA and billed to the
Partnership and a portion of revenue is initially received by Pioneer USA
prior to being paid to the Partnership. Under the limited partnership
agreement, the managing general partner pays 1% of the Partnership's
acquisition, drilling and completion costs and 1% of its operating and
general and administrative expenses. In return, it is allocated 1% of the
Partnership's revenues.
Limited partner liability - The maximum amount of liability of any
limited partner is the total contributions of such partner plus his share
of any undistributed profits.
Initial capital contributions - The limited partners entered into
subscription agreements for aggregate capital contributions of
$6,095,500. Pioneer USA is required to contribute amounts equal to 1% of
initial Partnership capital less commission and offering expenses
allocated to the limited partners and to contribute amounts necessary to
pay costs and expenses allocated to it under the Partnership agreement to
the extent its share of revenues does not cover such costs.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
23
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of the Partnership
The Partnership does not have any officers or directors. Under the limited
partnership agreement, the Partnership's managing general partner, Pioneer USA,
is granted the exclusive right and full authority to manage, control and
administer the Partnership's business.
Set forth below are the names, ages and positions of the directors and executive
officers of Pioneer USA. Directors of Pioneer USA are elected to serve until the
next annual meeting of stockholders or until their successors are elected and
qualified. During June 1999, Mr. Lon C. Kile resigned as an officer of Pioneer
USA. During January 2000, Mr. M. Garrett Smith also resigned his position as
Director and Chief Financial Officer of Pioneer USA. Mr. Timothy L. Dove assumed
the responsibility of Chief Financial Officer of Pioneer USA after Mr. Smith's
resignation.
Age at
December 31,
Name 1999 Position
- --------------------- ------------ ------------------------------------
Scott D. Sheffield 47 President
Timothy L. Dove 43 Executive Vice President, Chief
Financial Officer and Director
Dennis E. Fagerstone 50 Executive Vice President and Director
Mark L. Withrow 52 Executive Vice President, General
Counsel and Director
Rich Dealy 33 Vice President and Chief Accounting
Officer
Scott D. Sheffield. Mr. Sheffield is a graduate of The University of
Texas with a B.S. in Petroleum Engineering. Since August 1997, he has served as
President, Chief Executive Officer and a director of Pioneer and President of
Pioneer USA. Mr. Sheffield assumed the position of Chairman of the Board of
Pioneer in August 1999. He served as a director of Pioneer USA from August 1997
until his resignation from the board in June 1999. Mr. Sheffield was the
President and a director of Parker & Parsley from May 1990 until August 1997 and
was the Chairman of the Board and Chief Executive Officer of Parker & Parsley
from October 1990 until August 1997. He was the sole director of Parker &
Parsley from May 1990 until October 1990. Mr. Sheffield joined Parker & Parsley
Development Company ("PPDC"), a predecessor of Parker & Parsley, as a petroleum
engineer in 1979. He served as Vice President - Engineering of PPDC from
September 1981 until April 1985 when he was elected President and a director. In
March 1989, Mr. Sheffield was elected Chairman of the Board and Chief Executive
Officer of PPDC. Before joining PPDC's predecessor, Mr. Sheffield was employed
as a production and reservoir engineer for Amoco Production Company.
24
<PAGE>
Timothy L. Dove. Mr. Dove earned a B.S. in Mechanical Engineering from
Massachusetts Institute of Technology in 1979 and received his M.B.A. in 1981
from the University of Chicago. He became Executive Vice President - Business
Development of Pioneer and Pioneer USA in August 1997 and was also appointed a
director of Pioneer USA in August 1997. Mr. Dove assumed the position of Chief
Financial Officer of Pioneer and Pioneer USA effective February 1, 2000. Mr.
Dove joined Parker & Parsley in May 1994 as Vice President - International and
was promoted to Senior Vice President - Business Development in October 1996, in
which position he served until August 1997. Prior to joining Parker & Parsley,
Mr. Dove was employed with Diamond Shamrock Corp., and its successor, Maxus
Energy Corp, in various capacities in international exploration and production,
marketing, refining and marketing and planning and development.
Dennis E. Fagerstone. Mr. Fagerstone, a graduate of the Colorado School
of Mines with a B.S. in Petroleum Engineering, became an Executive Vice
President of Pioneer and Pioneer USA in August 1997. He was also appointed a
director of Pioneer USA in August 1997. He served as Executive Vice President
and Chief Operating Officer of Mesa from March 1, 1997 until August 1997. From
October 1996 to February 1997, Mr. Fagerstone served as Senior Vice President
and Chief Operating Officer of Mesa and from May 1991 to October 1996, he served
as Vice President - Exploration and Production of Mesa. From June 1988 to May
1991, Mr. Fagerstone served as Vice President - Operations of Mesa.
Mark L. Withrow. Mr. Withrow, a graduate of Abilene Christian University
with a B. S. in Accounting and Texas Tech University with a Juris Doctorate
degree, became Executive Vice President, General Counsel and Secretary of
Pioneer and Pioneer USA in August 1997. He was also appointed a director of
Pioneer USA in August 1997. Mr. Withrow was Vice President - General Counsel of
Parker & Parsley from January 1991, when he joined Parker & Parsley, to January
1995, when he was appointed Senior Vice President - General Counsel. He was
Parker & Parsley's Secretary from August 1992 until August 1997. Prior to
joining Parker & Parsley, Mr. Withrow was the managing partner of the law firm
of Turpin, Smith, Dyer, Saxe & MacDonald, Midland, Texas.
Rich Dealy. Mr. Dealy is a graduate of Eastern New Mexico University with
a B.B.A. in Accounting and Finance and is a Certified Public Accountant. He
became Vice President and Chief Accounting Officer of Pioneer and Pioneer USA in
February 1998. Mr. Dealy served as Controller of Pioneer USA from August 1997 to
February 1998. He served as Controller of Parker & Parsley from August 1995 to
August 1997. Mr. Dealy joined Parker & Parsley as an Accounting Manager in July,
1992. He was previously employed with KPMG Peat Marwick as an Audit Senior, in
charge of Parker & Parsley's audit.
ITEM 11. Executive Compensation
The Partnership does not have any directors or officers. Management of the
Partnership is vested in Pioneer USA, the managing general partner. The
Partnership participates in oil and gas activities through an income tax
partnership (the "Program") pursuant to the Program agreement. Under the limited
partnership agreement, Pioneer USA pays 1% of the Program's acquisition,
drilling and completion costs and 1% of its operating and general and
administrative expenses. In return, Pioneer USA is allocated 1% of the Program's
revenues. See Notes 6 and 9 of Notes to Financial Statements included in "Item
25
<PAGE>
8. Financial Statements and Supplementary Data" for information regarding fees
and reimbursements paid to the managing general partner or its affiliates by the
Partnership.
The Partnership does not directly pay any salaries of the executive officers of
Pioneer USA, but does pay a portion of Pioneer USA's general and administrative
expenses of which these salaries are a part. See Note 6 of Notes to Financial
Statements included in "Item 8. Financial Statements and Supplementary Data".
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) Beneficial owners of more than five percent
The Partnership is not aware of any person who beneficially owns 5% or more of
the outstanding limited partnership interests of the Partnership. Pioneer USA
owned 196 limited partner interests at January 1, 2000.
(b) Security ownership of management
The Partnership does not have any officers or directors. The managing general
partner of the Partnership, Pioneer USA, has the exclusive right and full
authority to manage, control and administer the Partnership's business. Under
the limited partnership agreement, limited partners holding a majority of the
outstanding limited partnership interests have the right to take certain
actions, including the removal of the managing general partner or any other
general partner. The Partnership is not aware of any current arrangement or
activity which may lead to such removal. The Partnership is not aware of any
officer or director of Pioneer USA who beneficially owns limited partnership
interests in the Partnership.
ITEM 13. Certain Relationships and Related Transactions
Transactions with the managing general partner or its affiliates
Pursuant to the limited partnership agreement, the Partnership had the following
related party transactions with the managing general partner or its affiliates
during the years ended December 31:
1999 1998 1997
--------- --------- ---------
Payment of lease operating and supervision
charges in accordance with standard
industry operating agreements $ 137,769 $ 144,149 $ 166,265
Reimbursement of general and
administrative expenses $ 8,400 $ 9,662 $ 19,944
Under the limited partnership agreement, the managing general partner pays 1% of
the Partnership's acquisition, drilling and completion costs and 1% of its
operating and general and administrative expenses. In return, it is allocated 1%
of the Partnership's revenues. Also, see Notes 6 and 9 of Notes to Financial
Statements included in "Item 8. Financial Statements and Supplementary Data"
regarding the Partnership's participation with the managing general partner in
oil and gas activities of the Program.
26
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial statements
The following are filed as part of this annual report:
Independent Auditors' Report - Ernst & Young LLP
Independent Auditors' Report - KPMG LLP
Balance sheets as of December 31, 1999 and 1998
Statements of operations for the years ended December 31, 1999,
1998 and 1997
Statements of partners' capital for the years ended December 31,
1999, 1998 and 1997
Statements of cash flows for the years ended December 31, 1999,
1998 and 1997
Notes to financial statements
2. Financial statement schedules
All financial statement schedules have been omitted since the
required information is in the financial statements or notes
thereto, or is not applicable nor required.
(b) Reports on Form 8-K
None.
(c) Exhibits
The exhibits listed on the accompanying index to exhibits are filed or
incorporated by reference as part of this annual report.
27
<PAGE>
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.
Dated: March 27, 2000 By: Pioneer Natural Resources USA, Inc.
Managing General Partner
By: /s/ Scott D. Sheffield
-----------------------------
Scott D. Sheffield, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
/s/ Scott D. Sheffield President of Pioneer USA March 27, 2000
- ------------------------
Scott D. Sheffield
/s/ Timothy L. Dove Executive Vice President, Chief March 27, 2000
- ------------------------ Financial Officer and Director of
Timothy L. Dove Pioneer USA
/s/ Dennis E. Fagerstone Executive Vice President and March 27, 2000
- ------------------------ Director of Pioneer USA
Dennis E. Fagerstone
/s/ Mark L. Withrow Executive Vice President, General March 27, 2000
- ------------------------ Counsel and Director of Pioneer USA
Mark L. Withrow
/s/ Rich Dealy Vice President and Chief Accounting March 27, 2000
- ------------------------ Officer of Pioneer USA
Rich Dealy
28
<PAGE>
PARKER & PARSLEY PRODUCING PROPERTIES 87-B, LTD.
INDEX TO EXHIBITS
The following documents are incorporated by reference in response to Item
14(c):
Exhibit No. Description Page
3(a) Amended and Restated Certificate of Limited -
Partnership of Parker & Parsley Producing
Properties 87-B, Ltd. incorporated by reference
to Exhibit 3a of Amendment No. 1 of the
Partnership's Registration Statement on Form
S-1 (Registration No. 33-11193)
4(a) Agreement of Limited Partnership of Parker & -
Parsley Producing Properties 87-B, Ltd. incorporated
by reference to Exhibit A of Amendment No. 1
of the Partnership's Registration Statement on
Form S-1 (Registration No. 33-11193)
4(b) Subscription Agreement incorporated by -
reference to Exhibit C of Amendment No. 1
of the Partnership's Registration Statement
on Form S-1 (Registration No. 33-11193)
4(b) Power of Attorney incorporated by reference -
to Exhibit B of Amendment No. 1 of the
Partnership's Registration Statement on
Form S-1 (Registration No. 33-11193)
4(c) Specimen Certificate of Limited Partnership -
Interest incorporated by reference to Exhibit
4c of the Partnership's Registration Statement
on Form S-1 (Registration No. 33-11193)
10(b) Program Agreement incorporated by reference -
to Exhibit B of Amendment No. 1 of the
Partnership's Registration Statement on
Form S-1 (Registration No. 33-11193)
27.1* Financial Data Schedule
99.1 Mutual Release and Indemnity Agreement -
dated May 25, 1993 incorporated by reference to
Exhibit 99.1 of the Partnership's Annual Report
on Form 10-K for the year ended
December 31, 1993
*Filed herewith
29
<PAGE>
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<CIK> 0000809017
<NAME> 87BP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 21,724
<SECURITIES> 0
<RECEIVABLES> 164,577
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 4,837,591
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0
0
<COMMON> 0
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<TOTAL-LIABILITY-AND-EQUITY> 892,550
<SALES> 625,861
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