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 September 30, 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. 33-12244-1
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.
Exhibit index on page 11.
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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 September 30, 1997 and
December 31, 1996 .................................... 3
Statements of Operations for the three and nine
months ended September 30, 1997 and 1996................. 4
Statement of Partners' Capital for the nine months
ended September 30, 1997................................. 5
Statements of Cash Flows for the nine months ended
September 30, 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........................... 11
27. Financial Data Schedule
Signatures................................................. 12
2
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PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1997 1996
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $376,576 at September
30 and $481,457 at December 31 $ 376,939 $ 481,657
Accounts receivable - oil and gas sales 239,004 382,030
----------- -----------
Total current assets 615,943 863,687
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 20,129,537 20,111,127
Accumulated depletion (15,179,474) (14,802,983)
----------- -----------
Net oil and gas properties 4,950,063 5,308,144
----------- -----------
$ 5,566,006 $ 6,171,831
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 76,032 $ 148,584
Partners' capital:
Managing general partner 54,875 60,229
Limited partners (28,811 interests) 5,435,099 5,963,018
----------- -----------
5,489,974 6,023,247
----------- -----------
$ 5,566,006 $ 6,171,831
=========== ===========
The financial information included as of September 30, 1997 has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- -----------------------
1997 1996 1997 1996
--------- --------- ---------- ----------
Revenues:
Oil and gas $ 470,111 $ 598,984 $1,636,128 $1,827,120
Interest 6,319 11,058 19,335 21,163
Litigation settlement - - - 848,304
Gain on disposition of assets 16 5,493 16 372,677
-------- -------- --------- ---------
476,446 615,535 1,655,479 3,069,264
-------- -------- --------- ---------
Costs and expenses:
Oil and gas production 270,678 237,860 758,776 841,418
General and administrative 14,103 17,607 49,084 57,513
Depletion 114,111 123,917 376,491 379,730
Abandoned property - 114 - 26,122
-------- -------- --------- ---------
398,892 379,498 1,184,351 1,304,783
-------- -------- --------- ---------
Net income $ 77,554 $ 236,037 $ 471,128 $1,764,481
======== ======== ========= =========
Allocation of net income:
Managing general partner $ 775 $ 2,361 $ 4,711 $ 17,645
======== ======== ========= =========
Limited partners $ 76,779 $ 233,676 $ 466,417 $1,746,836
======== ======== ========= =========
Net income per limited
partnership interest $ 2.67 $ 8.11 $ 16.19 $ 60.63
======== ======== ========= =========
Distributions per limited
partnership interest $ 8.79 $ 10.91 $ 34.51 $ 61.89
======== ======== ========= =========
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 (10,065) (994,336) (1,004,401)
Net income 4,711 466,417 471,128
-------- --------- ----------
Balance at September 30, 1997 $ 54,875 $5,435,099 $ 5,489,974
======== ========= ==========
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)
Nine months ended
September 30,
--------------------------
1997 1996
----------- -----------
Cash flows from operating activities:
Net income $ 471,128 $ 1,764,481
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 376,491 379,730
Gain on disposition of assets (16) (372,677)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 143,026 (147)
Decrease in accounts payable (71,281) (16,433)
---------- ----------
Net cash provided by operating activities 919,348 1,754,954
---------- ----------
Cash flows from investing activities:
Additions to oil and gas properties (19,681) (7,262)
Proceeds from disposition of assets 16 569,418
---------- ----------
Net cash provided by (used in) investing
activities (19,665) 562,156
---------- ----------
Cash flows from financing activities:
Cash distributions to partners (1,004,401) (1,801,126)
---------- ----------
Net increase (decrease) in cash and cash equivalents (104,718) 515,984
Cash and cash equivalents at beginning of period 481,657 353,019
---------- ----------
Cash and cash equivalents at end of period $ 376,939 $ 869,003
========== ==========
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.
6
<PAGE>
PARKER & PARSLEY 87-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
Note 1. Basis of presentation
In the opinion of management, the unaudited financial statements of Parker &
Parsley 87-A, Ltd. (the "Partnership") as of September 30, 1997 and for the
three and nine months ended September 30, 1997 and 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. These
interim results are not necessarily indicative of results for a full year.
Certain reclassifications have been made to prior period statements in order to
conform to 1997 financial presentations.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted in this Form 10-Q pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
should be read in conjunction with the financial statements and the notes
thereto contained in the Partnership's Report on Form 10-K for the year ended
December 31, 1996, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Controller, 303 West Wall, Suite 101, Midland, Texas 79701.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
As of August 8, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA") became
the general partner of the Partnership. Prior to August 8, 1997, the
Partnership's 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
general partner of the Partnership as PPDLP's successor by merger. For a more
complete description of the Parker & Parsley and Mesa Inc. merger, see Pioneer's
Registration Statement on Form S-4 as filed with the Securities and Exchange
Commission.
Results of Operations
Nine months ended September 30, 1997 compared with nine months ended
September 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 10% to $1,636,128 from
$1,827,120 for the nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996. The decrease in revenues resulted from declines
in barrels of oil and mcf of gas produced and sold and a lower average price
7
<PAGE>
received per barrel of oil, offset by a higher average price received per mcf of
gas. For the nine months ended September 30, 1997, 54,494 barrels of oil were
sold compared to 62,490 for the same period in 1996, a decrease of 7,996 barrels
or 13%. Of the decrease, 2,809 barrels, or 5%, was attributable to the sale of
nine oil and gas wells during the nine months ended September 30, 1996, while
the remaining decrease of 5,187, or 8%, was due to the decline characteristics
of the Partnership's oil and gas properties. For the nine months ended September
30, 1997, 226,881 mcf of gas were sold compared to 252,449 for the same period
in 1996, a decrease of 25,568 mcf, or 10%. The sale of nine oil and gas wells
during the nine months ended September 30, 1996 had no material effect on the
decrease in gas production. Because of the decline characteristics of the
Partnership's oil and gas properties, 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 decreased $1.05, or 5%, from $20.76
for the nine months ended September 30, 1996 to $19.71 for the same period in
1997, while the average price received per mcf of gas increased 18% from $2.10
during the nine months ended September 30, 1996 to $2.48 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 nine
months ended September 30, 1997.
On April 29, 1996, Southmark Corporation, the managing general partner and the
Partnership entered into a final $7.4 million settlement agreement with Jack N.
Price resolving all outstanding litigation between the parties. As a result, all
of the pending lawsuits and judgments have been dismissed, the supersedeas bond
released, and the Reserve released as collateral. On June 28, 1996, a final
distribution was made to the working interest owners of $848,304, which included
$839,821, or $29.15 per limited partnership interest, to the Partnership and its
partners.
A gain on disposition of assets of $372,677, received during the nine months
ended September 30, 1996, was comprised of sales proceeds of $317,615 from the
sale of nine oil and gas wells and four saltwater disposal wells to Costilla
Energy, L.L.C. Salvage income of $52,510 was derived from equipment sales
proceeds received on one well abandoned in a prior year and two fully depleted
wells, along with a $2,552 gain on abandonment resulting from the abandonment of
one oil and gas well and one saltwater disposal well during the nine months
ended September 30, 1996.
Costs and Expenses:
Total costs and expenses decreased to $1,184,351 for the nine months ended
September 30, 1997 as compared to $1,304,783 for the same period in 1996, a
decrease of $120,432, or 9%. This decrease was due to declines in production
costs, abandoned property costs, general and administrative expenses ("G&A") and
depletion.
Production costs were $758,776 for the nine months ended September 30, 1997 and
$841,418 for the same period in 1996, resulting in an $82,642 decrease, or 10%.
Of the decrease, $42,780, or 5%, was attributable to the sale of nine oil and
gas wells and four saltwater disposal wells during 1996. The remaining decrease
of 5% was due to lower well maintenance costs.
8
<PAGE>
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 15%, from $57,513 for the nine months ended September
30, 1996 to $49,084 for the same period in 1997.
Depletion was $376,491 for the nine months ended September 30, 1997 compared to
$379,730 for the same period in 1996, representing a decrease of $3,239. This
decrease was primarily attributable to a decline in oil production of 7,996
barrels for the nine months ended September 30, 1997 as compared to the same
period in 1996, offset by a decline in oil reserves during 1997 as a result of
lower commodity prices.
Abandoned property costs of $26,122 were incurred during the nine months ended
September 30, 1996 from the abandonment of one oil and gas well and one
saltwater disposal well.
Three months ended September 30, 1997 compared with three months ended September
30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 22% to $470,111 from $598,984
for the three months ended September 30, 1997 as compared to the three months
ended September 30, 1996. The decrease in revenues resulted from a lower average
price received per barrel of oil and declines in barrels of oil and mcf of gas
produced and sold , offset by a higher average price received per mcf of gas.
For the three months ended September 30, 1997, 16,877 barrels of oil were sold
compared to 19,194 for the same period in 1996, a decrease of 2,317 barrels or
12%. For the three months ended September 30, 1997, 74,869 mcf of gas were sold
compared to 87,988 for the same period in 1996, a decrease of 13,119 mcf, or
15%. The decreases in production were due to the decline characteristics of the
Partnership's oil and gas properties.
The average price received per barrel of oil decreased $3.71, or 17%, from
$21.91 for the three months ended September 30, 1996 to $18.20 for the same
period in 1997, while the average price received per mcf of gas increased 7%
from $2.03 during the three months ended September 30, 1996 to $2.18 in 1997.
A gain on disposition of assets of $5,493, received during the three months
ended September 30, 1996, was attributable to salvage income from equipment
credits received on one well abandoned in a prior year.
Costs and Expenses:
Total costs and expenses increased to $398,892 for the three months ended
September 30, 1997 as compared to $379,498 for the same period in 1996, an
increase of $19,394, or 5%. This increase was due to higher production costs,
offset by declines in depletion, G&A and abandoned property costs.
Production costs were $270,678 for the three months ended September 30, 1997 and
$237,860 for the same period in 1996, resulting in a $32,818 increase, or 14%,
due to additional well maintenance and workover costs incurred in an effort to
stimulate well production and higher ad valorem taxes.
9
<PAGE>
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
decreased, in aggregate, 20% from $17,607 for the three months ended September
30, 1996 to $14,103 for the same period in 1997.
Depletion was $114,111 for the three months ended September 30, 1997 compared to
$123,917 for the same period in 1996, representing a decrease of $9,806, or 8%.
Abandoned property costs of $114 were incurred during the three months ended
September 30, 1996 from the abandonment of one oil and gas well and one
saltwater disposal well.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $835,606 during the nine
months ended September 30, 1997 from the same period ended September 30, 1996.
This decrease was primarily due to the receipt of litigation proceeds during
1996 as discussed in Item 2 and a decline in oil and gas sales receipts, offset
by decreases in production costs paid and abandoned property costs paid.
Net Cash Provided by (Used in) Investing Activities
During the nine months ended September 30, 1997 and 1996, the Partnership
invested in expenditures related to equipment replacement on various oil and gas
properties.
Proceeds from sale of assets of $510,693 were received during the nine months
ended September 30, 1996 from the sale of nine oil and gas wells and four
saltwater disposal wells. Proceeds of $52,510 received during the nine months
ended September 30, 1996 were attributable to credits received from the sale of
oil and gas equipment on one well abandoned in a prior year and three fully
depleted wells. Proceeds of $6,215 were received from the salvage of equipment
on properties abandoned during the nine months ended September 30, 1996.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1997 to cover
distributions to the partners of $1,004,401 of which $10,065 was distributed to
the managing general partner and $994,336 to the limited partners. For the same
period ended September 30, 1996, cash was sufficient for distributions to the
partners of $1,801,126 of which $18,111 was distributed to the managing general
partner and $1,783,015 to the limited partners. Cash distributions to the
partners of $1,801,126 for the nine months ended September 30, 1996 included
$8,483 to the managing general partner and $839,821 to the limited partners
resulting from proceeds received in the litigation settlement as discussed in
Item 2.
10
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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.
11
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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: Pioneer Natural Resources USA, Inc.
Managing General Partner
Dated: November 10, 1997 By: /s/ Rich Dealy
--------------------------------
Rich Dealy, Vice President and
Controller
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000810999
<NAME> 87A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 376,939
<SECURITIES> 0
<RECEIVABLES> 239,004
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 615,943
<PP&E> 20,129,537
<DEPRECIATION> 15,179,474
<TOTAL-ASSETS> 5,566,006
<CURRENT-LIABILITIES> 76,032
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,489,974
<TOTAL-LIABILITY-AND-EQUITY> 5,566,006
<SALES> 1,636,128
<TOTAL-REVENUES> 1,655,479
<CGS> 0
<TOTAL-COSTS> 1,184,351
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 471,128
<INCOME-TAX> 0
<INCOME-CONTINUING> 471,128
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 471,128
<EPS-PRIMARY> 16.19
<EPS-DILUTED> 0
</TABLE>
