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, 1996, or
/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File No. 33-12244-1
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 16 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
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including
interest bearing deposits of $894,916
at June 30 and $340,340 at December 31 $ 904,675 $ 353,019
Accounts receivable - oil and gas sales 258,177 261,155
----------- -----------
Total current assets 1,162,852 614,174
Oil and gas properties - at cost, based
on the successful efforts accounting
method 20,106,840 22,340,532
Accumulated depletion (14,199,700) (15,981,095)
----------- -----------
Net oil and gas properties 5,907,140 6,359,437
----------- -----------
$ 7,069,992 $ 6,973,611
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 168,468 $ 138,353
Accounts payable - other 12,943 -
----------- -----------
Total current liabilities 181,411 138,353
Partners' capital:
Limited partners (28,811 interests) 6,811,316 6,766,910
Managing general partner 77,265 68,348
----------- -----------
6,888,581 6,835,258
----------- -----------
$ 7,069,992 $ 6,973,611
=========== ===========
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.
2
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PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues:
Oil and gas sales $ 626,733 $ 628,516 $1,228,136 $1,227,819
Interest income 5,566 3,540 10,105 6,453
Litigation settlement 848,304 - 848,304 -
Gain on sale of assets 317,615 35,068 317,615 35,068
Salvage income from
equipment disposal 257 - 47,017 -
Gain (loss) on abandoned
properties (3,455) - 2,552 -
--------- --------- --------- ---------
Total revenues 1,795,020 667,124 2,453,729 1,269,340
Costs and expenses:
Production costs 285,189 311,662 603,558 644,386
General and adminis-
trative expenses 21,864 18,856 39,906 36,835
Depletion 123,608 263,430 255,813 546,212
Abandoned property costs 4,444 11,093 26,008 11,093
--------- --------- --------- ---------
Total costs and
expenses 435,105 605,041 925,285 1,238,526
--------- --------- --------- ---------
Net income $1,359,915 $ 62,083 $1,528,444 $ 30,814
========= ========= ========= =========
Allocation of net income:
Managing general
partner $ 13,598 $ 620 $ 15,284 $ 308
========= ========= ========= ========
Limited partners $1,346,317 $ 61,463 $1,513,160 $ 30,506
========= ========= ========= ========
Net income per limited
partnership interest $ 46.73 $ 2.13 $ 52.52 $ 1.06
========= ========= ========= ========
Distributions per limited
partnership interest $ 42.01 $ 8.51 $ 50.98 $ 17.93
========= ========= ========= ========
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.
3
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PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
----------- ----------- -----------
Balance at January 1, 1995 $ 88,065 $ 8,718,846 $ 8,806,911
Distributions (5,216) (516,473) (521,689)
Net income 308 30,506 30,814
---------- ---------- ----------
Balance at June 30, 1995 $ 83,157 $ 8,232,879 $ 8,316,036
========== ========== ==========
Balance at January 1, 1996 $ 68,348 $ 6,766,910 $ 6,835,258
Distributions (6,367) (1,468,754) (1,475,121)
Net income 15,284 1,513,160 1,528,444
---------- ---------- ----------
Balance at June 30, 1996 $ 77,265 $ 6,811,316 $ 6,888,581
========== ========== ==========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
4
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PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $1,528,444 $ 30,814
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of assets (317,615) (35,068)
Depletion 255,813 546,212
Salvage income from equipment disposal (47,017) -
Gain on abandoned property (2,552) -
Changes in assets and liabilities:
Decrease in accounts receivable 2,978 2,113
Increase in accounts payable 48,934 30,729
--------- ---------
Net cash provided by operating
activities 1,468,985 574,800
Cash flows from investing activities:
(Additions) disposals of oil and gas
properties (6,133) 35,183
Proceeds from sale of assets 510,693 146,382
Proceeds from salvage income on
equipment disposal 47,017 -
Proceeds from equipment salvage on
abandoned property 6,215 -
--------- ---------
Net cash provided by investing
activities 557,792 181,565
Cash flows from financing activities:
Cash distributions to partners (1,475,121) (521,689)
--------- ---------
Net increase in cash and cash equivalents 551,656 234,676
Cash and cash equivalents at beginning
of period 353,019 142,638
--------- ---------
Cash and cash equivalents at end of period $ 904,675 $ 377,314
========= =========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
5
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PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1.
Parker & Parsley 87-A, Ltd. (the "Registrant") is a limited partnership
organized in 1987 under the laws of the State of Texas.
The Registrant engages primarily in oil and gas development and production in
the Spraberry Trend area of West Texas and Colorado and is not involved in any
industry segment other than oil and gas.
NOTE 2.
In the opinion of management, the Registrant's unaudited financial statements as
of June 30, 1996 include all adjustments and accruals consisting only of normal
recurring accrual adjustments which are necessary for a fair presentation of the
results for the interim period. However, these interim results are not
necessarily indicative of results for a full year.
The financial statements should be read in conjunction with the financial
statements and the notes thereto contained in the Registrant's Report on Form
10-K for the year ended December 31, 1995, as filed with the Securities and
Exchange Commission, a copy of which is available upon request by writing to
Steven L. Beal, Senior Vice President, 303 West Wall, Suite 101, Midland, Texas
79701.
NOTE 3.
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 Parker & Parsley
Development L.P. ("PPDLP"). The May 25, 1993 settlement agreement called for a
payment of $115 million in cash by the defendants, and Southmark, the
6
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Registrant, and the other plaintiffs indemnified the defendants against the
claims of Jack N. Price. 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.
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 was without merit and has vigorously defended it,
PPDLP has held in reserve approximately 12.5% of the total settlement (the
"Reserve") pending final resolution of the litigation.
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. The allocation of the lawsuit settlement amount was based on the
original verdict entered on October 26, 1990. The allocation to the working
interest owners in each well (including the Registrant) was based on a ratio of
the relative amount of damages due to overcharges for services and materials
("Materials") and damages for loss of past and future production ("Production"),
each as determined in that initial judgment. Within the Registrant, damages for
Materials were allocated between the partners based on their original sharing
percentages for costs of acquiring and/or drilling of wells. Similarly, damages
related to Production were allocated to the partners in the Registrant based on
their respective share of revenues from the subject wells.
As a condition of the purchase by Parker & Parsley Petroleum Company of Parker &
Parsley Development Company ("PPDC"), which was merged into PPDLP on January 1,
1995, from its former parent in May 1989, PPDC's interest in the lawsuit and
subsequent settlement was retained by the former parent. Consequently, all of
PPDC's share of the settlement related to its separately held interests in the
wells and its partnership interests in the sponsored partnerships (except that
portion allocable to interests acquired by PPDC after May 1989) was paid to the
former parent.
On September 20, 1995, the Beaumont trial judge entered a summary judgment
against Southmark for the $13,790,000 contingent fee sought by Price, together
with prejudgment interest, and also awarded Price an additional $5,498,525 in
attorneys' fees. On January 22, 1996, the trial judge entered an interlocutory
7
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summary judgment against Dresser Industries and Baker Hughes for an amount to be
determined. Pursuant to their indemnity obligations, the Registrant, Southmark,
PPDLP and other original plaintiffs vigorously protected the rights of both
Dresser and Baker Hughes. Southmark vigorously pursued its appeal of the
judgment, and posted a supersedeas bond using the Reserve as collateral. On
April 29, 1996, all of the parties, including the Registrant and Southmark,
entered into a $7.4 million settlement with Price which fully and finally
resolves all of the litigation and disputes between the parties, including the
Registrant's indemnity obligations to Dresser and Baker Hughes.
Pursuant to the settlement agreement, all of the pending lawsuits and judgments
have been dismissed, the supersedeas bond released, and the Reserve released as
collateral. The managing general partner conducted an accounting of income and
expenses among the parties, and, on June 28, 1996, made a final $9.3 million
distribution to the working interest owners, including the Registrant and its
partners, resulting in a distribution of $839,821 to the limited partners, or
$29.15 per limited partnership interest. The distribution was allocated to the
limited partners using the same methodology as the original $91 million
distribution in 1993.
NOTE 4.
A gain of $317,615 on the sale of nine oil and gas wells and four saltwater
disposal wells to Costilla Energy, L.L.C. was recognized during the six months
ended June 30, 1996, resulting from proceeds received of $510,693 less the
write-off of remaining capitalized well costs of $193,078. During the same
period in 1995, a gain of $35,068 on the sale of six wells to the same company
was recognized resulting from proceeds received of $146,382 less the write-off
of remaining capitalized well costs of $111,314.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (1)
Results of Operations
Six months ended June 30, 1996 compared with six months ended June 30, 1995
Revenues:
The Registrant's oil and gas revenues remained constant at $1,228,136 compared
to $1,227,819 for the six months ended June 30, 1996 and 1995, respectively.
Revenues were constant as a result of higher average prices received per barrel
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of oil and mcf of gas, offset by an 18% decline in barrels of oil produced and
sold and a 9% decline in mcf of gas produced and sold. For the six months ended
June 30, 1996, 43,296 barrels of oil were sold compared to 52,819 for the same
period in 1995, a decrease of 9,523 barrels. Of the decrease, 1,355 barrels, or
3%, was attributable to the sale of nine oil and gas wells during the six months
ended June 30, 1996, while the remaining decrease of 8,168 barrels, or 15%, was
due to the decline characteristics of the Registrant's oil and gas properties.
For the six months ended June 30, 1996, 164,461 mcf of gas were sold compared to
181,587 for the same period in 1995, a decrease of 17,126 mcf. The sale of nine
oil and gas wells during the six months ended June 30, 1996 had no material
effect on the decrease in gas production. 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 $2.70, or 15%, from
$17.55 for the six months ended June 30, 1995 to $20.25 for the same period in
1996 while the average price received per mcf of gas increased 29% from $1.66
during the six months ended June 30, 1995 to $2.14 in 1996. The market price for
oil and gas has been extremely volatile in the past decade, and management
expects a certain amount of volatility to continue in the foreseeable future.
The Registrant may therefore sell its future oil and gas production at average
prices lower or higher than that received during the six months ended June 30,
1996.
A gain of $317,615 on the sale of nine oil and gas wells and four saltwater
disposal wells was recognized during the six months ended June 30, 1996,
resulting from proceeds received of $510,693 less the write-off of remaining
capitalized well costs of $193,078. During the same period in 1995, a gain of
$35,068 on the sale of six wells was recognized, resulting from proceeds
received of $146,382 less the write-off of remaining capitalized well costs of
$111,314.
Salvage income of $47,017 received during the six months ended June 30, 1996 was
derived from equipment credits received on one well abandoned in a prior year
and two fully depleted wells.
A gain of $2,552 on the abandonment of one oil and gas well and one saltwater
disposal well during the six months ended June 30, 1996 resulted from proceeds
received of $6,215 from salvage of equipment, less the write-off of remaining
capitalized well costs of $3,663. Associated costs incurred to plug and abandon
these properties totaled $26,008 during this period. During the six months ended
June 30, 1995, abandoned property costs of $11,093 were incurred from the
plugging and abandonment of one uneconomical oil and gas well.
9
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Costs and Expenses:
Total costs and expenses decreased to $925,285 for the six months ended June 30,
1996 as compared to $1,238,526 for the same period ended June 30, 1995, a
decrease of $313,241, or 25%. This decrease was due to declines in production
costs and depletion, offset by increases in general and administrative expenses
("G&A") and abandoned property costs.
Production costs were $603,558 for the six months ended June 30, 1996 and
$644,386 for the same period in 1995 resulting in a decrease of $40,828, or 6%.
The decrease was primarily the result of lower ad valorem taxes and less well
repair and maintenance costs, offset by a slight increase in production taxes.
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, 8% from $36,835 for the six months ended
June 30, 1995 to $39,906 for the same period in 1996.
Depletion was $255,813 for the six months ended June 30, 1996 compared to
$546,212 for the same period in 1995. This represented a decrease in depletion
of $290,399, or 53%, primarily attributable to the adoption of the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("FAS 121") effective the fourth quarter of 1995 and the reduction of net
depletable basis resulting from the charge taken upon such adoption. In
addition, $51,927 or 10% of the decrease was attributable to the sale of nine
oil and gas wells during the six months ended June 30, 1996. Depletion was
calculated on a property-by-property basis utilizing the unit-of-production
method based upon the dominant mineral produced, generally oil. Oil production
decreased 9,523 barrels for the six months ended June 30, 1996 from the same
period in 1995, while oil reserves were revised upward by 42,523 barrels, or 4%.
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 PPDLP. The May 25, 1993
settlement agreement called for a payment of $115 million in cash by the
10
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defendants, and Southmark, the Registrant, and the other plaintiffs indemnified
the defendants against the claims of Jack N. Price. 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.
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 was without merit and has vigorously defended it,
PPDLP has held in reserve approximately 12.5% of the total settlement (the
"Reserve") pending final resolution of the litigation.
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. The allocation of the lawsuit settlement amount was based on the
original verdict entered on October 26, 1990. The allocation to the working
interest owners in each well (including the Registrant) was based on a ratio of
the relative amount of damages due to overcharges for services and materials
("Materials") and damages for loss of past and future production ("Production"),
each as determined in that initial judgment. Within the Registrant, damages for
Materials were allocated between the partners based on their original sharing
percentages for costs of acquiring and/or drilling of wells. Similarly, damages
related to Production were allocated to the partners in the Registrant based on
their respective share of revenues from the subject wells.
As a condition of the purchase by Parker & Parsley Petroleum Company of PPDC,
which was merged into PPDLP on January 1, 1995, from its former parent in May
1989, PPDC's interest in the lawsuit and subsequent settlement was retained by
the former parent. Consequently, all of PPDC's share of the settlement related
to its separately held interests in the wells and its partnership interests in
the sponsored partnerships (except that portion allocable to interests acquired
by PPDC after May 1989) was paid to the former parent.
On September 20, 1995, the Beaumont trial judge entered a summary judgment
against Southmark for the $13,790,000 contingent fee sought by Price, together
with prejudgment interest, and also awarded Price an additional $5,498,525 in
11
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attorneys' fees. On January 22, 1996, the trial judge entered an interlocutory
summary judgment against Dresser Industries and Baker Hughes for an amount to be
determined. Pursuant to their indemnity obligations, the Registrant, Southmark,
PPDLP and other original plaintiffs vigorously protected the rights of both
Dresser and Baker Hughes. Southmark vigorously pursued its appeal of the
judgment, and posted a supersedeas bond using the Reserve as collateral. On
April 29, 1996, all of the parties, including the Registrant and Southmark,
entered into a $7.4 million settlement with Price which fully and finally
resolves all of the litigation and disputes between the parties, including the
Registrant's indemnity obligations to Dresser and Baker Hughes.
Pursuant to the settlement agreement, all of the pending lawsuits and judgments
have been dismissed, the supersedeas bond released, and the Reserve released as
collateral. The managing general partner conducted an accounting of income and
expenses among the parties, and, on June 28, 1996, made a final $9.3 million
distribution to the working interest owners, including the Registrant and its
partners, resulting in a distribution of $839,821 to the limited partners, or
$29.15 per limited partnership interest. The distribution was allocated to the
limited partners using the same methodology as the original $91 million
distribution in 1993.
Three months ended June 30, 1996 compared with three months ended June 30, 1995
Revenues:
The Registrant's oil and gas revenues decreased to $626,733 from $628,516 for
the three months ended June 30, 1996 and 1995, respectively, a decrease of
$1,783. The decrease in revenues resulted from a 20% decline in barrels of oil
produced and sold and a 22% decline in mcf of gas produced and sold, offset by
higher average prices received per barrel of oil and mcf of gas. For the three
months ended June 30, 1996, 21,075 barrels of oil were sold compared to 26,488
for the same period in 1995, a decrease of 5,413 barrels. The sale of nine oil
and gas wells during the three months ended June 30, 1996 had no material effect
on the decrease in oil production. For the three months ended June 30, 1996,
78,386 mcf of gas were sold compared to 99,999 for the same period in 1995, a
decrease of 21,613 mcf. Of the decrease, 1,714 mcf, or 2%, was attributable to
the sale of nine oil and gas wells during the three months ended June 30, 1996,
with the remaining decrease of 19,899 mcf, or 20%, due to the decline
characteristics of the Registrant's oil and gas properties.
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The average price received per barrel of oil increased $3.69, or 21%, from
$17.97 for the three months ended June 30, 1995 to $21.66 for the same period in
1996 while the average price received per mcf of gas increased 43% from $1.52
during the three months ended June 30, 1995 to $2.17 for the same period in
1996.
A gain of $317,615 on the sale of nine oil and gas wells and four saltwater
disposal wells was recognized during the three months ended June 30, 1996,
resulting from proceeds received of $510,693 less the write-off of remaining
capitalized well costs of $193,078. During the same period in 1995, a gain of
$35,068 on the sale of six wells was recognized, resulting from proceeds
received of $146,382 less the write-off of remaining capitalized well costs of
$111,314.
Salvage income of $257 received during the three months ended June 30, 1996 was
derived from equipment credits received on one well abandoned in a prior year.
A loss of $3,455 during the three months ended June 30, 1996 resulted from the
plugging and abandonment of one uneconomical saltwater disposal well. Abandoned
property costs of $4,444 were incurred during the same period from the
abandonment of one oil and gas well and one saltwater disposal well. During the
same period in 1995, abandoned property costs of $11,093 were incurred from the
plugging and abandonment of one uneconomical oil and gas well.
Costs and Expenses:
Total costs and expenses decreased to $435,105 for the three months ended June
30, 1996 as compared to $605,041 for the same period in 1995, a decrease of
$169,936, or 28%. This decrease was due to declines in production costs,
depletion and abandoned property costs, offset by an increase in G&A.
Production costs were $285,189 for the three months ended June 30, 1996 and
$311,662 for the same period in 1995 resulting in a $26,473 decrease, or 8%.
This decrease was primarily the result of lower ad valorem taxes and less well
repair and maintenance costs, offset by a slight increase in production taxes.
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, 16% from $18,856 for the three months ended
June 30, 1995 to $21,864 for the same period in 1996.
13
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Depletion was $123,608 for the three months ended June 30, 1996 compared to
$263,430 for the same period in 1995. This represented a decrease in depletion
of $139,822, or 53%, primarily attributable to the adoption of the provisions of
FAS 121 the fourth quarter of 1995, as discussed previously. In addition,
$28,384 or 11% of the decrease was attributable to the sale of nine oil and gas
wells during the three months ended June 30, 1996. Oil production decreased
5,413 barrels for the three months ended June 30, 1996 from the same period in
1995.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased during the six months ended
June 30, 1996 $894,185 from the same period ended June 30, 1995. This increase
was primarily due to the receipt of litigation proceeds and a decrease in
production costs paid, offset by an increase in abandoned property costs.
Net Cash Provided by Investing Activities
During the six months ended June 30, 1996, the Registrant invested $6,133 for
equipment replacement on various oil and gas properties. During the six months
ended June 30, 1995, proceeds received of $35,183 were derived from equipment
credits received on active properties.
Proceeds of $510,693 were received during the six months ended June 30, 1996
from the sale of nine oil and gas wells and four saltwater disposal wells.
During the same period in 1995, proceeds of $146,382 were received from the sale
of six oil and gas wells.
Proceeds of $47,017 received during the six months ended June 30, 1996 were
attributable to credits received from the disposal of oil and gas equipment on
one well abandoned in a prior year and two fully depleted wells.
Proceeds of $6,215 from equipment salvage resulted from the abandonment of one
oil and gas well and one saltwater disposal well during the six months ended
June 30, 1996.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1996 to cover
distributions to the partners of $1,475,121 of which $1,468,754 was distributed
to the limited partners and $6,367 to the managing general partner. For the same
14
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period ended June 30, 1995, cash was sufficient for distributions to the
partners of $521,689 of which $516,473 was distributed to the limited partners
and $5,216 to the managing general partner.
Cash distributions to the partners of $1,475,121 for the six months ended June
30, 1996 included $839,821 to the limited partners and $8,483 to the managing
general partner, resulting from proceeds received in the litigation settlement
as discussed in Note 3.
It is expected that future net cash provided by operating activities will be
sufficient for any capital expenditures and any distributions. As the production
from the properties declines, distributions are also expected to decrease.
- ---------------
(1) "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward looking statements that involve
risks and uncertainties. Accordingly, no assurances can be given that the
actual events and results will not be materially different than the
anticipated results described in the forward looking statements.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is party to material litigation which is described in Note 3 of
Notes to Financial Statements above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
15
<PAGE>
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: August 12, 1996 By: /s/ Steven L. Beal
---------------------------------------
Steven L. Beal, Senior Vice
President and Chief Financial
Officer of PPUSA
16
<PAGE>
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