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, 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. 33-12244-02
PARKER & PARSLEY 87-B, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2185706
(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 __ pages.
-There are no exhibits-
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PARKER & PARSLEY 87-B, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 1996 and
December 31, 1995 .................................... 3
Statements of Operations for the three and nine
months ended September 30, 1996 and 1995................. 4
Statement of Partners' Capital for the nine months
ended September 30, 1996................................. 5
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995.............................. 6
Notes to Financial Statements.............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 9
Part II. Other Information
Item 1. Legal Proceedings.......................................... 14
Signatures................................................. 15
2
<PAGE>
PARKER & PARSLEY 87-B, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $523,365 at September 30
and $184,717 at December 31 $ 523,565 $ 186,643
Accounts receivable - oil and gas sales 169,530 164,219
---------- -----------
Total current assets 693,095 350,862
---------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 13,656,141 15,255,391
Accumulated depletion (9,182,445) (10,152,372)
---------- -----------
Net oil and gas properties 4,473,696 5,103,019
---------- -----------
$ 5,166,791 $ 5,453,881
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 63,668 $ 82,627
Accounts payable - other 29,895 -
---------- -----------
Total current liabilities 93,563 82,627
---------- -----------
Partners' capital:
Limited partners (20,089 interests) 5,022,777 5,317,608
Managing general partner 50,451 53,646
---------- -----------
5,073,228 5,371,254
---------- -----------
$ 5,166,791 $ 5,453,881
========== ===========
The financial information included as of September 30, 1996 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-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- -----------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
Revenues:
Oil and gas $ 384,281 $ 373,695 $1,225,845 $1,212,219
Interest 6,996 3,567 12,806 8,862
Litigation settlement - - 590,715 -
Salvage income from
equipment disposals - 5,575 13,523 5,575
-------- -------- --------- ---------
391,277 382,837 1,842,889 1,226,656
-------- -------- --------- ---------
Costs and expenses:
Oil and gas production 150,608 191,006 506,760 577,724
General and administrative 10,048 10,843 36,775 36,367
Depletion 79,325 145,249 276,161 461,481
Abandoned property 19 3,780 6,221 3,780
Loss on sale of assets - 16,377 55,993 16,728
-------- -------- --------- ---------
240,000 367,255 881,910 1,096,080
-------- -------- --------- ---------
Net income $ 151,277 $ 15,582 $ 960,979 $ 130,576
======== ======== ========= =========
Allocation of net income:
Managing general partner $ 1,513 $ 156 $ 9,610 $ 1,306
======== ======== ========= =========
Limited partners $ 149,764 $ 15,426 $ 951,369 $ 129,270
======== ======== ========= =========
Net income per limited
partnership interest $ 7.46 $ .76 $ 47.36 $ 6.43
======== ======== ========= =========
Distributions per limited
partnership interest $ 11.17 $ 9.95 $ 62.03 $ 29.23
======== ======== ========= =========
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-B, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ----------- -----------
Balance at January 1, 1996 $ 53,646 $ 5,317,608 $ 5,371,254
Distributions (12,805) (1,246,200) (1,259,005)
Net income 9,610 951,369 960,979
--------- ---------- ----------
Balance at September 30, 1996 $ 50,451 $ 5,022,777 $ 5,073,228
========= ========== ==========
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
<PAGE>
PARKER & PARSLEY 87-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
----------- ----------
1996 1995
----------- ----------
Cash flows from operating activities:
Net income $ 960,979 $ 130,576
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 276,161 461,481
Salvage income from equipment disposals (13,523) (5,575)
Loss on sale of assets 55,993 16,728
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (5,311) 12,852
Increase in accounts payable 20,379 49,806
---------- ---------
Net cash provided by operating activities 1,294,678 665,868
---------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (30,855) (10,026)
Proceeds from sale of assets 318,581 -
Proceeds from salvage income on equipment
disposals 13,523 5,575
---------- ---------
Net cash provided by (used in) investing
activities 301,249 (4,451)
---------- ---------
Cash flows from financing activities:
Cash distributions to partners (1,259,005) (593,161)
---------- ---------
Net increase in cash and cash equivalents 336,922 68,256
Cash and cash equivalents at beginning of period 186,643 131,056
---------- ---------
Cash and cash equivalents at end of period $ 523,565 $ 199,312
========== =========
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
<PAGE>
PARKER & PARSLEY 87-B, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
Note 1.
Parker & Parsley 87-B, 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
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 September 30, 1996 and for the three and nine months ended September 30, 1996
and 1995 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 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 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
Registrant,
7
<PAGE>
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 $5,741,955, or $285.83 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
summary judgment against Dresser Industries and Baker Hughes for an amount yet
to be determined. Pursuant to their indemnity obligations, the Registrant,
Southmark, PPDLP and other original plaintiffs have vigorously protected the
rights of both Dresser and Baker Hughes. Southmark has vigorously pursued its
appeal of the judgment, and has 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.
8
<PAGE>
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. On June 28, 1996, a final distribution was made to the working
interest owners, including $584,808, or $29.11 per limited partnership interest
to the Registrant and its partners.
Note 4.
A loss of $55,993 from the sale of six oil and gas wells and four saltwater
disposal wells to Costilla Energy, L.L.C. during the nine months ended September
30, 1996 resulted from the write-off of remaining capitalized well costs of
$374,574, less proceeds received of $318,581.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Nine months ended September 30, 1996 compared with nine months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $1,225,845 from $1,212,219
for the nine months ended September 30, 1996 and 1995, respectively, an increase
of 1%. The increase in revenues resulted from higher average prices received per
barrel of oil and mcf of gas, offset by a 17% decline in barrels of oil produced
and sold and a 24% decline in mcf of gas produced and sold. For the nine months
ended September 30, 1996, 43,482 barrels of oil were sold compared to 52,330 for
the same period in 1995, a decrease of 8,848 barrels. Of the decrease, 3,666
barrels, or 7%, was attributable to the sale of six oil and gas wells during the
nine months ended September 30, 1996, while the remaining decrease of 5,182
barrels, or 10%, was due to the decline characteristics of the Registrant's oil
and gas properties. For the nine months ended September 30, 1996, 149,584 mcf of
gas were sold compared to 196,725 for the same period in 1995, a decrease of
47,141 mcf. Of the decrease, 6,432 mcf, or 3%, was attributable to the sale of
six oil and gas wells during the nine months ended September 30, 1996, while the
remaining decrease of 40,709 mcf, or 21%, was due to the decline characteristics
of the Registrant's oil and gas properties. Because of these decline
characteristics, 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 $3.55, or 21%, from
$17.21 for the nine months ended September 30, 1995 to $20.76 for the same
period in 1996 while the average price received per mcf of gas increased 36%
from $1.59 during the nine months ended September 30, 1995 to $2.16 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 nine months ended
September 30, 1996.
9
<PAGE>
Salvage income from equipment disposals of $13,523 and $5,575 received during
the nine months ended September 30, 1996 and 1995, respectively, was derived
from equipment credits on wells plugged and abandoned in a prior year.
Costs and Expenses:
Total costs and expenses decreased to $881,910 for the nine months ended
September 30, 1996 as compared to $1,096,080 for the same period in 1995, a
decrease of $214,170, or 20%. This decrease was due to declines in production
costs and depletion, offset by increases in general and administrative expenses
("G&A"), abandoned property costs and loss on sale of assets.
Production costs were $507,760 for the nine months ended September 30, 1996 and
$577,724 for the same period in 1995 resulting in a $69,964 decrease, or 12%.
The decrease was due to a decline in well repair and maintenance costs and lower
ad valorem 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, from $36,367 for the nine months ended
September 30, 1995 to $36,775 for the same period in 1995. The Partnership
agreement limits G&A to 3% of gross oil and gas revenues.
Abandoned property costs totaled $6,221 during the nine months ended September
30, 1996. These costs were incurred on one well plugged and abandoned in 1995.
For the nine months ended September 30, 1995, the expense to plug and abandon
one uneconomical well totaled $3,780.
A loss of $55,993 from the sale of six oil and gas wells and four saltwater
disposal wells during the nine months ended September 30, 1996 resulted from the
write-off of remaining capitalized well costs of $374,574, less proceeds
received of $318,581. A loss of $16,728 on the sale of two wells was recognized
during the nine months ended September 30, 1995. The loss resulted from
reimbursement of net revenues received of $351 after the effective date of sale
on the sale of one fully depleted well, in addition to the write-off of
remaining capitalized basis of $16,377 on the second well sold.
Depletion was $276,161 for the nine months ended September 30, 1996 compared to
$461,481 for the same period in 1995, representing a decrease of $185,320, or
40%. This decrease was primarily attributable to the following factors: (i) a
reduction in the Registrant's net depletable basis from charges taken 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" ("FAS 121"), (ii) a reduction in oil production of 8,848 barrels for the
nine months ended September 30, 1996 as compared to the same period in 1995,
partially due to the sale of properties during 1996, and (iii) an increase in
oil and gas reserves during the third quarter of 1996 as a result of higher
commodity prices.
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,
10
<PAGE>
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
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 $5,741,966, or $285.83 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
attorneys' fees. On January 22, 1996, the trial judge entered an interlocutory
summary judgment against Dresser Industries and Baker Hughes for an amount yet
to be determined. Pursuant to their indemnity obligations, the Registrant,
Southmark, PPDLP and other original plaintiffs have vigorously protected the
11
<PAGE>
rights of both Dresser and Baker Hughes. Southmark has vigorously pursued its
appeal of the judgment, and has 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. On June 28, 1996, a final distribution was made to the working
interest owners, including $584,808, or $29.11 per limited partnership interest
to the Registrant and its partners.
Three months ended September 30, 1996 compared with three months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $384,281 from $373,695 for
the three months ended September 30, 1996 and 1995, respectively, an increase of
3%. The increase in revenues resulted from higher average prices received per
barrel of oil and mcf of gas, offset by a 20% decline in barrels of oil produced
and sold and a 32% decline in mcf of gas produced and sold. For the three months
ended September 30, 1996, 13,351 barrels of oil were sold compared to 16,610 for
the same period in 1995, a decrease of 3,259 barrels. Of the decrease, 2,009
barrels, or 12%, was attributable to the sale of six oil and gas wells during
the three months ended September 30, 1996, while the remaining decrease of 1,250
barrels, or 8%, was due to the decline characteristics of the Registrant's oil
and gas properties. For the three months ended September 30, 1996, 47,503 mcf of
gas were sold compared to 69,377 for the same period in 1995, a decrease of
21,874 mcf. Of the decrease, 4,569 mcf, or 7%, was due to the sale of six oil
and gas wells during the three months ended September 30, 1996, while the
remaining decrease of 17,305 mcf, or 25%, was due to the decline characteristics
of the Registrant's oil and gas properties.
The average price received per barrel of oil increased $5.00, or 30%, from
$16.50 for the three months ended September 30, 1995 to $21.50 for the same
period in 1996 while the average price received per mcf of gas increased 42%
from $1.44 during the three months ended September 30, 1995 to $2.05 in 1996.
Salvage income from equipment disposals of $5,575 for the three months ended
September 30, 1995 was derived from equipment credits received on a well plugged
and abandoned in a prior year.
Costs and Expenses:
Total costs and expenses decreased to $240,000 for the three months ended
September 30, 1996 as compared to $367,255 for the same period in 1995, a
decrease of $127,255, or 35%. This decrease was due to declines in production
costs, G&A, depletion, abandoned property costs and loss on sale of assets.
12
<PAGE>
Production costs were $150,608 for the three months ended September 30, 1996 and
$191,006 for the same period in 1995 resulting in a $40,398 decrease, or 21%.
The decrease was due to a decline in well repair and maintenance costs and lower
ad valorem 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 decreased, in aggregate, 7% from $10,843 for the three months ended
September 30, 1995 to $10,048 for the same period in 1996.
Depletion was $79,325 for the three months ended September 30, 1996 compared to
$145,249 for the same period in 1995, representing a decrease of $65,924, or
45%, primarily attributable to the following factors: (i) a reduction in the
Registrant's net depletable basis from charges taken in accordance with FAS 121,
(ii) a reduction in oil production of 3,259 barrels for the three months ended
September 30, 1996 as compared to the same period in 1995, partially due to the
sale of properties during 1996 and (iii) an increase in oil and gas reserves
during the third quarter of 1996 as a result of higher commodity prices.
A loss of $16,377 on the sale of one well was recognized during the three months
ended September 30, 1995, resulting from the write-off of remaining capitalized
basis. Abandoned property costs totaled $19 during the three months ended
September 30, 1996. These costs were incurred on one well plugged and abandoned
during 1995. Abandoned property costs of $3,780 were incurred during the three
months ended September 30, 1995 from the abandonment of one uneconomical well.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased to $628,810 during the nine
months ended September 30, 1996 from the same period ended September 30, 1995.
This increase was primarily due to the receipt of litigation proceeds, offset by
an increase in abandoned property costs.
Net Cash Provided by (Used in) Investing Activities
The Registrant's investing activities during the nine months ended September 30,
1996 and 1995, respectively, included $30,855 and $10,026 for expenditures
related to equipment replacement on several oil and gas properties
During the nine months ended September 30, 1996 and 1995, proceeds from salvage
income of $13,523 and $5,575, respectively, were received from the sale of
equipment on properties abandoned in a prior year.
Proceeds of $318,581 were received during the nine months ended September 30,
1996 from the sale of six oil and gas wells and four saltwater disposal wells.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1996 to cover
distributions to the partners of $1,259,005 of which $1,246,200 was distributed
13
<PAGE>
to the limited partners and $12,805 to the managing general partner. For the
same period ended September 30, 1995, cash was sufficient for distributions to
the partners of $593,161 of which $587,217 was distributed to the limited
partners and $5,944 to the managing general partner.
Cash distributions to the partners of $1,259,005 for the nine months ended
September 30, 1996 included $584,808 to the limited partners and $5,907 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
During April 1996, the Registrant completed the settlement of a material
litigation to which it was a party. This litigation and settlement thereof is
described in Note 3 of Notes to Financial Statements above.
14
<PAGE>
PARKER & PARSLEY 87-B, 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-B, LTD.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: November 13, 1996 By: /s/ Steven L. Beal
-----------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000811000
<NAME> 87B.TXT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 523,565
<SECURITIES> 0
<RECEIVABLES> 169,530
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0
0
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</TABLE>
