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, 1997
or
/ / Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File No. 33-12244-01
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 10 pages.
-There are no exhibits-
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PARKER & PARSLEY 87-A, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 1997 and
December 31, 1996........................................ 3
Statements of Operations for the three months
ended March 31, 1997 and 1996............................ 4
Statement of Partners' Capital for the three months
ended March 31, 1997..................................... 5
Statements of Cash Flows for the three months
ended March 31, 1997 and 1996............................ 6
Notes to Financial Statements.............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................... 9
27. Financial Data Schedule
Signatures................................................. 10
2
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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,
1997 1996
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $311,153 at March 31
and $481,457 at December 31 $ 311,353 $ 481,657
Accounts receivable:
Oil and gas sales 280,192 382,030
Affiliate 130,346 -
----------- -----------
Total current assets 721,891 863,687
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 20,114,210 20,111,127
Accumulated depletion (14,940,861) (14,802,983)
----------- -----------
Net oil and gas properties 5,173,349 5,308,144
----------- -----------
$ 5,895,240 $ 6,171,831
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 48,097 $ 148,584
Partners' capital:
Managing general partner 58,468 60,229
Limited partners (28,811 interests) 5,788,675 5,963,018
----------- -----------
5,847,143 6,023,247
----------- -----------
$ 5,895,240 $ 6,171,831
=========== ===========
The financial information included as of March 31, 1997 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 OPERATIONS
(Unaudited)
Three months ended
March 31,
---------------------------
1997 1996
---------- ----------
Revenues:
Oil and gas $ 659,978 $ 601,403
Interest 6,352 4,539
Salvage income from equipment disposal - 46,760
Gain on abandoned property - 6,007
--------- ---------
666,330 658,709
--------- ---------
Costs and expenses:
Oil and gas production 231,887 318,369
General and administrative 20,132 18,042
Depletion 137,878 132,205
Abandoned property - 21,564
--------- ---------
389,897 490,180
--------- ---------
Net income $ 276,433 $ 168,529
========= =========
Allocation of net income:
Managing general partner $ 2,764 $ 1,686
========= =========
Limited partners $ 273,669 $ 166,843
========= =========
Net income per limited partnership interest $ 9.50 $ 5.79
========= =========
Distributions per limited partnership interest $ 15.55 $ 8.97
========= =========
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)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 1997 $ 60,229 $5,963,018 $6,023,247
Distributions (4,525) (448,012) (452,537)
Net income 2,764 273,669 276,433
-------- --------- ---------
Balance at March 31, 1997 $ 58,468 $5,788,675 $5,847,143
======== ========= =========
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)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
------------------------
1997 1996
---------- ----------
Cash flows from operating activities:
Net income $ 276,433 $ 168,529
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion 137,878 132,205
Salvage income from equipment disposal - (46,760)
Gain on abandoned property - (6,007)
Changes in assets and liabilities:
Increase in accounts receivable (28,508) (23,339)
Increase (decrease) in accounts payable (99,216) 31,145
--------- ---------
Net cash provided by operating activities 286,587 255,773
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (4,354) (24,640)
Proceeds from salvage income on equipment disposal - 46,760
Proceeds from equipment salvage on abandoned
property - 6,007
--------- ---------
Net cash provided by (used in) investing
activities (4,354) 28,127
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (452,537) (261,132)
---------- ---------
Net increase (decrease) in cash and cash equivalents (170,304) 22,768
Cash and cash equivalents at beginning of period 481,657 353,019
--------- ---------
Cash and cash equivalents at end of period $ 311,353 $ 375,787
========= =========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
6
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PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 87-A, Ltd. (the "Partnership") is a limited partnership
organized in 1987 under the laws of the State of Texas.
The Partnership engages primarily in oil and gas development and production in
the Spraberry Trend area of West Texas and is not involved in any industry
segment other than oil and gas.
Note 2. Basis of presentation
In the opinion of management, the unaudited financial statements as of March 31,
1997 of the Partnership 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 Partnership's Report on Form
10-K for the year ended December 31, 1996, as filed with the Securities and
Exchange Commission, a copy of which is available upon request by writing to
Steven L. Beal, Senior Vice President, 303 West Wall, Suite 101, Midland, Texas
79701.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Revenues:
The Partnership's oil and gas revenues increased to $659,978 from $601,403 for
the three months ended March 31, 1997 and 1996, respectively, an increase of
10%. The increase in revenues resulted from higher 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 14% decline in mcf of gas produced and sold. For the three
months ended March 31, 1997, 19,422 barrels of oil were sold compared to 22,221
for the same period in 1996, a decrease of 2,799 barrels. Of the decrease, 2,257
barrels, or 10%, was attributable to the sale of nine oil and gas wells during
1996. The remaining decrease of 3%, or 542 barrels, was due to the decline
characteristics of the Partnership's oil and gas properties. For the three
months ended March 31, 1997, 73,613 mcf of gas were sold compared to 86,075 for
the same period in 1996, a decrease of 12,462 mcf. Of the decrease, 3,013 mcf,
or 3%, was attributable to the sale of nine oil and gas wells during 1996. The
remaining decrease of 9,449 mcf, or 11%, was due to the decline characteristics
of the Partnership's oil and gas properties.
7
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Because of these characteristics, management expects a certain amount of decline
in production to continue in the future until the Partnership's economically
recoverable reserves are fully depleted.
The average price received per barrel of oil increased $3.13, or 17%, from
$18.92 for the three months ended March 31, 1996 to $22.05 for the same period
in 1997, while the average price received per mcf of gas increased 50%, from
$2.10 during the three months ended March 31, 1996 to $3.15 for the same period
in 1997. The market price for oil and gas has been extremely volatile in the
past decade, and management expects a certain amount of volatility to continue
in the foreseeable future. The Partnership may therefore sell its future oil and
gas production at average prices lower or higher than that received during the
three months ended March 31, 1997.
Salvage income of $46,760 received during the three months ended March 31, 1996
was derived from equipment credits received on one well abandoned in a prior
year and on two fully depleted wells.
A gain of $6,007 was recognized during the three months ended March 31, 1996,
resulting from the disposal of oil and gas equipment on the abandonment of one
fully depleted well.
Costs and Expenses:
Total costs and expenses decreased to $389,897 for the three months ended March
31, 1997 as compared to $490,180 for the same period ended March 31, 1996, a
decrease of $100,283, or 20%. This decrease was due to declines in production
costs and abandoned property costs, offset by increases in general and
administrative expenses ("G&A") and depletion.
Production costs were $231,887 for the three months ended March 31, 1997 and
$318,369 for the same period in 1996, resulting in a decrease of $86,482, or
27%. Of the decrease, $29,859, or 9%, was attributable to the sale of nine oil
and gas wells and four saltwater disposal wells during 1996. The remaining
decrease of 18%, or $56,623, was due to a decline in well repair and maintenance
costs.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
increased, in aggregate, 12% from $18,042 for the three months ended March 31,
1996 to $20,132 for the same period in 1997.
Depletion was $137,878 for the three months ended March 31, 1997 compared to
$132,205 for the same period in 1996. This represented an increase in depletion
of $5,673, or 4%. The increase was primarily attributable to a downward revision
of oil and gas reserves, offset by a decline in oil production of 2,799 barrels
for the three months ended March 31, 1997 compared to the same period in 1996,
and the sale of nine oil and gas wells during 1996.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities:
Net cash provided by operating activities increased $30,814 during the three
months ended March 31, 1997 from the same period in 1996. This increase resulted
8
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from an increase in oil and gas sales receipts and a decline in abandoned
property costs, offset by an increase in expenditures for production costs.
Net Cash Provided by (Used in) Investing Activities:
The Partnership's principal investing activities during the three months ended
March 31, 1997 and 1996 were related to the addition of oil and gas equipment on
active properties.
Proceeds from salvage income of $46,760 from the sale of oil and gas equipment
on properties fully depleted or abandoned in prior years were received during
the three months ended March 31, 1996.
Proceeds from equipment salvage of $6,007 were received from one well plugged
and abandoned during the three months ended March 31, 1996.
Net Cash Used in Financing Activities:
Cash was sufficient for the three months ended March 31, 1997 to cover
distributions to the partners of $452,537 of which $448,012 was distributed to
the limited partners and $4,525 to the managing general partner. For the same
period ended March 31, 1996, cash was sufficient for distributions to the
partners of $261,132 of which $258,423 was distributed to the limited partners
and $2,709 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.
- ---------------
(1) "Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations" contains forward looking statements that
involve risks and uncertainties. Accordingly, no assurances can be
given that the actual events and results will not be materially
different than the anticipated results described in the forward
looking statements.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K - none
9
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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, 1997 By: /s/ Steven L. Beal
--------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
10
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<PERIOD-END> MAR-31-1997
<CASH> 311,353
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<RECEIVABLES> 410,538
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