<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/x/ Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995, 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. 33-12244-1
PARKER & PARSLEY 87-A, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2185148
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
303 West Wall, Suite 101,
Midland, Texas 79701
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code: (915)683-4768
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /x/ No / /
Page 1 of 12 pages.
There are no exhibits.
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PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including
interest bearing deposits of
$152,065 at March 31 and $142,195
at December 31 $ 152,508 $ 142,638
Accounts receivable - oil and gas sales 267,042 271,715
----------- -----------
Total current assets 419,550 414,353
Oil and gas properties - at cost, based
on the successful efforts accounting
method 23,467,731 23,456,669
Accumulated depletion (15,187,037) (14,904,255)
----------- ----------
Net oil and gas properties 8,280,694 8,552,414
----------- ----------
$ 8,700,244 $ 8,966,767
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 198,804 $ 159,856
Partners' capital:
Limited partners (28,811 interests) 8,416,429 8,718,846
Managing general partner 85,011 88,065
----------- ----------
8,501,440 8,806,911
----------- ----------
$ 8,700,244 $ 8,966,767
=========== ==========
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 statements.
2
<PAGE> 3
PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
1995 1994
---------- ----------
Revenues:
Oil and gas sales $ 599,303 $ 549,523
Interest income 2,913 1,078
--------- ---------
Total revenues 602,216 550,601
Costs and expenses:
Production costs 332,724 318,476
General and administrative expenses 17,979 16,426
Depletion 282,782 260,971
--------- ---------
Total costs and expenses 633,485 595,873
--------- ---------
Net loss $ (31,269) $ (45,272)
========= =========
Allocation of net loss:
Managing general partner $ (312) $ (453)
========= =========
Limited partners $ (30,957) $ (44,819)
========= =========
Net loss per limited
partnership interest $ (1.07) $ (1.56)
========= =========
Distributions per limited
partnership interest $ 9.42 $ 6.90
========= =========
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 statements.
3
<PAGE> 4
PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ----------- -----------
Balance at January 1, 1994 $ 98,267 $ 9,728,729 $ 9,826,996
Distributions (2,008) (198,796) (200,804)
Net loss (453) (44,819) (45,272)
---------- ---------- ----------
Balance at March 31, 1994 $ 95,806 $ 9,485,114 $ 9,580,920
========== ========== ==========
Balance at January 1, 1995 $ 88,065 $ 8,718,846 $ 8,806,911
Distributions (2,742) (271,460) (274,202)
Net loss (312) (30,957) (31,269)
---------- ---------- ----------
Balance at March 31, 1995 $ 85,011 $ 8,416,429 $ 8,501,440
========== ========== ==========
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 statements.
4
<PAGE> 5
PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
1995 1994
---------- ----------
Cash flows from operating activities:
Net loss $ (31,269) $ (45,272)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depletion 282,782 260,971
Changes in assets and liabilities:
Decrease in accounts receivable 4,673 18,158
Increase (decrease) in accounts payable 38,948 (46,878)
--------- ---------
Net cash provided by operating
activities 295,134 186,979
Cash flows from investing activities:
Additions to oil and gas properties (11,062) (1,267)
Cash flows from financing activities:
Cash distributions to partners (274,202) (200,804)
--------- ---------
Net increase (decrease) in cash and
cash equivalents 9,870 (15,092)
Cash and cash equivalents at beginning
of period 142,638 242,119
--------- ---------
Cash and cash equivalents at end of period $ 152,508 $ 227,027
========= =========
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 statements.
5
<PAGE> 6
PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
(Unaudited)
NOTE 1.
In the opinion of management, the unaudited financial statements as of
March 31, 1995 of Parker & Parsley 87-A, Ltd. (the "Registrant") include
all adjustments and accruals consisting only of normal recurring accrual
adjustments which are necessary for a fair presentation of the results
for the interim period. However, the results of operations for the
three months ended March 31, 1995 are not necessarily indicative of the
results for the full year ending December 31, 1995.
The financial statements should be read in conjunction with the
financial statements and the notes thereto contained in the Registrant's
Report on Form 10-K for the year ended December 31, 1994, as filed with
the Securities and Exchange Commission, a copy of which is available
upon request by writing to Steven L. Beal, Senior Vice President, 303
West Wall, Suite 101, Midland, Texas 79701.
NOTE 2.
On May 25, 1993, a final settlement agreement was negotiated, drafted
and finally executed, ending litigation which had begun on September 5,
1989, when the Registrant filed suit along with other parties against
Dresser Industries, Inc.; Titan Services, Inc.; BJ-Titan Services
Company; BJ-Hughes Holding Company; Hughes Tool Company; Baker Hughes
Production Tools, Inc.; and Baker Hughes Incorporated alleging that the
defendants had intentionally failed to provide the materials and
services ordered and paid for by the Registrant and other parties in
connection with the fracturing and acidizing of 523 wells, and then
fraudulently concealed the shorting practice from the managing general
partner, Parker & Parsley Development L.P. ("PPDLP") (see Item 2). The
May 25, 1993 settlement agreement called for a payment of $115 million
in cash by the defendants. The managing general partner received the
funds, deducted incurred legal expenses, accrued interest, determined
the general partner's portion of the funds and calculated any inter-
partnership allocations. A distribution of $91,000,000 was made to the
6
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working interest owners, including the Registrant, on July 30, 1993.
The limited partners received their distribution of $8,257,794, or
$286.62 per limited partnership interest, in September 1993.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G.
"Zeke" Lancaster in the Federal Court lawsuit, filed suit in State Court
in Beaumont against all of the plaintiff partnerships, including the
Registrant and others, alleging his entitlement to 12% of the settlement
proceeds. Price's lawsuit claim for approximately $13.8 million is
predicated on a purported contract entered into with Southmark
Corporation in August 1988, in which he allegedly binds the Registrant
and the other defendants, as well as Southmark. Although PPDLP believes
the lawsuit is without merit and intends to vigorously defend it, PPDLP
is holding in reserve approximately 12.5% of the total settlement
pending final resolution of the litigation by the court. Upon payment
of the costs associated with the Price litigation, and assuming a
successful defense, a second distribution will be made consisting of the
balance of the settlement funds, including any accrued interest.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Registrant was formed August 15, 1987. The managing general partner
of the Registrant at December 31, 1994 was Parker & Parsley Development
Company ("PPDC"). On January 1, 1995, PPDLP, a Texas limited
partnership, became the sole managing general partner of the Registrant,
by acquiring the rights and assuming the obligations of PPDC. PPDC was
merged into PPDLP on January 1, 1995. PPDLP acquired PPDC's rights and
obligations as managing general partner of the Registrant in connection
with the merger of PPDC, P&P Producing, Inc. and Spraberry Development
Corporation into MidPar L.P., which survived the merger with a change of
name to PPDLP. PPDLP has the power and authority to manage, control and
administer all Program and Registrant affairs. The limited partners
contributed $28,811,000 representing 28,811 interests ($1,000 per
interest) sold to a total of 2,264 limited partners.
Since its formation, the Registrant invested $23,726,922 in various
prospects that were drilled in Texas and Colorado. At March 31, 1995,
the Registrant had 93 producing oil and gas wells with two wells
determined to be dry holes and one well abandoned due to collapsed
casing from previous periods.
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<PAGE> 8
Results of Operations
Revenues:
The Registrant's oil and gas revenues increased to $599,303 from
$549,523 for the three months ended March 31, 1995 and 1994,
respectively, an increase of 9%. The increase in revenues resulted from
increases in the average prices received per barrel of oil and mcf of
gas, offset by a 13% decline in barrels of oil produced and sold and a
2% decline in mcf of gas produced and sold. For the three months ended
March 31, 1995, 26,331 barrels of oil were sold compared to 30,171 for
the same period in 1994, a decrease of 3,840 barrels. For the three
months ended March 31, 1995, 81,588 mcf of gas were sold compared to
83,488 for the same period in 1994, a decrease of 1,900 mcf. Due to the
decline characteristics of the Registrant's oil and gas properties,
management expects a certain amount of decline in production to continue
in the future until the Registrant's economically recoverable reserves
are fully depleted.
The average price received per barrel of oil increased 28% from $13.37
for the three months ended March 31, 1994 to $17.12 for the same period
in 1995 while the average price received per mcf of gas increased 4%
from $1.75 during the three months ended March 31, 1994 to $1.82 in
1995. The market price for oil and gas has been extremely volatile in
the past decade, and management expects a certain amount of volatility
to continue in the foreseeable future. The Registrant may therefore
sell its future oil and gas production at average prices lower or higher
than that received during the three months ended March 31, 1995.
Costs and Expenses:
Total costs and expenses increased to $633,485 for the three months
ended March 31, 1995 as compared to $595,873 for the same period ended
March 31, 1994, an increase of $37,612, or 6%. This increase was due to
increases in production costs, general and administrative expenses
("G&A") and depletion.
Production costs were $332,724 for the three months ended March 31, 1995
and $318,476 for the same period in 1994 resulting in an increase of
$14,248, or 4%. The increase was due to an increase in well repair and
maintenance costs incurred in an effort to stimulate well production and
an increase in production taxes due to the increase in oil and gas revenues,
offset by declines in workover expense and ad valorem taxes.
8
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G&A's components are independent accounting and engineering fees,
computer services, postage and managing general partner personnel costs.
During this period, G&A increased, in aggregate, 9% from $16,426 for the
three months ended March 31, 1994 to $17,979 for the same period in
1995. The Partnership agreement limits G&A to 3% of gross oil and gas
revenues.
Depletion was $282,782 for the three months ended March 31, 1995
compared to $260,971 for the same period in 1994. This represented an
increase in depletion of $21,811, or 8%. Depletion was computed
property-by-property utilizing the unit-of-production method based upon
the dominant mineral produced, generally oil. Oil production decreased
3,840 barrels for the three months ended March 31, 1995 from the same
period in 1994, while oil reserves of barrels were revised downward by
58,830 barrels, or 4%, resulting in a higher unit cost per barrel of
production.
On May 25, 1993, a final settlement agreement was negotiated, drafted
and finally executed, ending litigation which had begun on September 5,
1989, when the Registrant filed suit along with other parties against
Dresser Industries, Inc.; Titan Services, Inc.; BJ-Titan Services
Company; BJ-Hughes Holding Company; Hughes Tool Company; Baker Hughes
Production Tools, Inc.; and Baker Hughes Incorporated alleging that the
defendants had intentionally failed to provide the materials and
services ordered and paid for by the Registrant and other parties in
connection with the fracturing and acidizing of 523 wells, and then
fraudulently concealed the shorting practice from the managing general
partner. The May 25, 1993 settlement agreement called for a payment of
$115 million in cash by the defendants. The managing general partner
received the funds, deducted incurred legal expenses, accrued interest,
determined the general partner's portion of the funds and calculated any
inter-partnership allocations. A distribution of $91,000,000 was made
to the working interest owners, including the Registrant, on July 30,
1993. The limited partners received their distribution of $8,257,794,
or $286.62 per limited partnership interest, in September 1993.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G.
"Zeke" Lancaster in the Federal Court lawsuit, filed suit in State Court
in Beaumont against all of the plaintiff partnerships, including the
Registrant and others, alleging his entitlement to 12% of the settlement
proceeds. Price's lawsuit claim for approximately $13.8 million is
predicated on a purported contract entered into with Southmark
Corporation in August 1988, in which he allegedly binds the Registrant
and the other defendants, as well as Southmark. Although PPDLP believes
9
<PAGE> 10
the lawsuit is without merit and intends to vigorously defend it, PPDLP
is holding in reserve approximately 12.5% of the total settlement
pending final resolution of the ligitation by the court. Upon payment
of the costs associated with the Price litigation, and assuming a
successful defense, a second distribution will be made consisting of the
balance of the settlement funds, including any accrued interest.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities:
Net cash provided by operating activities increased to $295,134 during
the three months ended March 31, 1995, a 58% increase from the same
period ended March 31, 1994. This increase was due to an increase in
oil and gas sales and decreases in production costs and G&A. The
increase in oil and gas sales was due to an increase in the average
prices received for both oil and gas. The decrease in production costs
was due to declines in well repair, maintenance and workover costs and
production taxes. The decrease in G&A was due to less expense allocated
by the managing general partner.
Net Cash Used in Investing Activities:
The Registrant's principal investing activities during the three months
ended March 31, 1995 were for repair and maintenance activity on various
oil and gas properties.
Net Cash Used in Financing Activities:
Cash was sufficient for the three months ended March 31, 1995 to cover
distributions to the partners of $274,202 of which $271,460 was
distributed to the limited partners and $2,742 to the managing general
partner. For the same period ended March 31, 1994, cash was sufficient
for distributions to the partners of $200,804 of which $198,796 was
distributed to the limited partners and $2,008 to the managing general
partner.
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.
10
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 25, 1993, a final settlement agreement was negotiated, drafted
and finally executed, ending litigation which had begun on September 5,
1989, when the Registrant filed suit along with other parties against
Dresser Industries, Inc.; Titan Services, Inc.; BJ-Titan Services
Company; BJ-Hughes Holding Company; Hughes Tool Company; Baker Hughes
Production Tools, Inc.; and Baker Hughes Incorporated alleging that the
defendants had intentionally failed to provide the materials and
services ordered and paid for by the Registrant and other parties in
connection with the fracturing and acidizing of 523 wells, and then
fraudulently concealed the shorting practice from the managing general
partner. The May 25, 1993 settlement agreement called for a payment of
$115 million in cash by the defendants. The managing general partner
received the funds, deducted incurred legal expenses, accrued interest,
determined the general partner's portion of the funds and calculated any
inter-partnership allocations. A distribution of $91,000,000 was made
to the working interest owners, including the Registrant, on July 30,
1993. The limited partners received their distribution of $8,257,794,
or $286.62 per limited partnership interest, in September 1993.
On May 3, 1993, Jack N. Price, the attorney who represented Gary G.
"Zeke" Lancaster in the Federal Court lawsuit, filed suit in State Court
in Beaumont against all of the plaintiff partnerships, including the
Registrant and others, alleging his entitlement to 12% of the settlement
proceeds. Price's lawsuit claim for approximately $13.8 million is
predicated on a purported contract entered into with Southmark
Corporation in August 1988, in which he allegedly binds the Registrant
and the other defendants, as well as Southmark. Although PPDLP believes
the lawsuit is without merit and intends to vigorously defend it, PPDLP
is holding in reserve approximately 12.5% of the total settlement
pending final resolution of the litigation by the court. Upon payment
of the costs associated with the Price litigation, and assuming a
successful defense, a second distribution will be made consisting of the
balance of the settlement funds, including any accrued interest.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
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PARKER & PARSLEY 87-A, 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 87-A, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: May 12, 1995 By: /s/ Steven L. Beal
----------------------------------------
Steven L. Beal, Senior Vice
President - Finance and
Chief Financial Officer
of PPUSA
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000810999
<NAME> 87AL
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 152,508
<SECURITIES> 0
<RECEIVABLES> 267,042
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 419,550
<PP&E> 23,467,731
<DEPRECIATION> 15,187,037
<TOTAL-ASSETS> 8,700,244
<CURRENT-LIABILITIES> 198,804
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 8,501,440
<TOTAL-LIABILITY-AND-EQUITY> 8,700,244
<SALES> 599,303
<TOTAL-REVENUES> 602,216
<CGS> 0
<TOTAL-COSTS> 633,485
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (31,269)
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,269)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,269)
<EPS-PRIMARY> (1.07)
<EPS-DILUTED> 0
</TABLE>
