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. 33-12244-02
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 12 pages.
Exhibit index on page 11.
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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, 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-B, 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 $245,571 at September 30
and $275,996 at December 31 $ 246,071 $ 276,197
Accounts receivable - oil and gas sales 150,700 234,487
----------- ----------
Total current assets 396,771 510,684
----------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 13,666,154 13,660,524
Accumulated depletion (9,493,073) (9,256,719)
----------- ----------
Net oil and gas properties 4,173,081 4,403,805
----------- ----------
$ 4,569,852 $ 4,914,489
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 52,659 $ 114,235
Partners' capital:
Managing general partner 45,100 47,937
Limited partners (20,089 interests) 4,472,093 4,752,317
----------- ----------
4,517,193 4,800,254
----------- ----------
$ 4,569,852 $ 4,914,489
=========== ==========
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-B, 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 $ 298,283 $ 384,281 $1,039,645 $1,225,845
Interest 3,867 6,996 11,264 12,806
Litigation settlement - - - 590,715
-------- -------- --------- ---------
302,150 391,277 1,050,909 1,829,366
-------- -------- --------- ---------
Costs and expenses:
Oil and gas production 156,614 150,608 484,000 506,760
General and administrative 8,948 10,048 31,189 36,775
Depletion 72,704 79,325 236,354 276,161
Loss on disposition of assets - - - 42,470
Abandoned property - 19 - 6,221
-------- -------- --------- ---------
238,266 240,000 751,543 868,387
-------- -------- --------- ---------
Net income $ 63,884 $ 151,277 $ 299,366 $ 960,979
======== ======== ========= =========
Allocation of net income:
Managing general partner $ 639 $ 1,513 $ 2,994 $ 9,610
======== ======== ========= =========
Limited partners $ 63,245 $ 149,764 $ 296,372 $ 951,369
======== ======== ========= =========
Net income per limited
partnership interest $ 3.15 $ 7.46 $ 14.75 $ 47.36
======== ======== ========= =========
Distributions per limited
partnership interest $ 8.30 $ 11.17 $ 28.70 $ 62.03
======== ======== ========= =========
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, 1997 $ 47,937 $4,752,317 $4,800,254
Distributions (5,831) (576,596) (582,427)
Net income 2,994 296,372 299,366
-------- --------- ---------
Balance at September 30, 1997 $ 45,100 $4,472,093 $4,517,193
======== ========= =========
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-B, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
-------------------------
1997 1996
---------- -----------
Cash flows from operating activities:
Net income $ 299,366 $ 960,979
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 236,354 276,161
Loss on disposition of assets - 42,470
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 83,787 (5,311)
Increase (decrease) in accounts payable (61,321) 20,379
--------- ----------
Net cash provided by operating activities 558,186 1,294,678
--------- ----------
Cash flows from investing activities:
Additions to oil and gas properties (5,885) (30,855)
Proceeds from disposition of assets - 332,104
--------- ----------
Net cash provided by (used in) investing
activities (5,885) 301,249
--------- ----------
Cash flows from financing activities:
Cash distributions to partners (582,427) (1,259,005)
--------- ----------
Net increase (decrease) in cash and cash equivalents (30,126) 336,922
Cash and cash equivalents at beginning of period 276,197 186,643
--------- ----------
Cash and cash equivalents at end of period $ 246,071 $ 523,565
========= ==========
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, 1997
(Unaudited)
Note 1. Basis of presentation
In the opinion of management, the unaudited financial statements of Parker &
Parsley 87-B 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 financial statements to
conform to the 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 15% to $1,039,645 from
$1,225,845 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
7
<PAGE>
in barrels of oil and mcf of gas produced and sold and a lower average price
received per barrel of oil, offset by a higher average price received per mcf of
gas. For the nine months ended September 30, 1997, 36,671 barrels of oil were
sold compared to 43,482 for the same period in 1996, a decrease of 6,811
barrels, or 16%. Of the decrease, 2,770 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 4,041 barrels, or 9%, was due to the decline
characteristics of the Partnership's oil and gas properties. For the nine months
ended September 30, 1997, 136,592 mcf of gas were sold compared to 149,584 for
the same period in 1996, a decrease of 12,992 mcf, or 9%. Of the decrease, 5,023
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 7,969 mcf,
or 6%, was due to the decline characteristics of the Partnership'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
Partnership's economically recoverable reserves are fully depleted.
The average price received per barrel of oil decreased $1.15, or 6%, from $20.76
for the nine months ended September 30, 1996 to $19.61 for the same period in
1997, while the average price received per mcf of gas increased 9% from $2.16
during the nine months ended September 30, 1996 to $2.35 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 $590,715, which included
$584,808, or $29.11 per limited partnership interest, to the Partnership and its
partners.
Costs and Expenses:
Total costs and expenses decreased to $751,543 for the nine months ended
September 30, 1997 as compared to $868,387 for the same period in 1996, a
decrease of $116,844 , or 13%. This decrease was due to declines in loss on
disposition of assets, depletion, production costs, abandoned property costs and
general and administrative expenses ("G&A").
Production costs were $484,000 for the nine months ended September 30, 1997 and
$506,760 for the same period in 1996 resulting in a $22,760 decrease, or 4%. The
decrease was primarily attributable to a decline in well maintenance costs
resulting from the sale of six oil and gas wells and four saltwater deposal
wells during 1996.
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 $36,775 for the nine months ended September
30, 1996 to $31,189 for the same period in 1997. The Partnership agreement
limits G&A to 3% of gross oil and gas revenues.
8
<PAGE>
Depletion was $236,354 for the nine months ended September 30, 1997 compared to
$276,161 for the same period in 1996, representing a decrease of $39,807, or
14%, attributable to the sale of six oil and gas wells and four saltwater
disposal wells in 1996 and a decline in oil production of 4,041 barrels on the
remaining active properties for the nine months ended September 30, 1997 as
compared to the same period in 1996.
A loss on disposition of assets of $42,470 was recognized during the nine months
ended September 30, 1996. Of the loss, $55,993 resulted from the sale of six oil
and gas wells and four saltwater disposal wells to Costilla Energy, L.L.C.,
offset by salvage income of $13,523 from equipment credits received on one well
plugged and abandoned during a previous year.
Abandoned property costs totaled $6,221 during the nine months ended September
30, 1996. These costs were incurred on one well plugged and abandoned during a
previous year.
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 $298,283 from $384,281
for the three months ended September 30, 1997 as compared to the three months
ended September 30, 1996. This decrease was due to a decline in barrels of oil
produced and sold and lower average prices received per barrel of oil and mcf of
gas, offset by a slight increase in mcf of gas produced and sold. For the three
months ended September 30, 1997, 11,320 barrels of oil were sold compared to
13,351 for the same period in 1996, a decrease of 2,031 barrels, or 15%. For the
three months ended September 30, 1997, 47,526 mcf of gas were sold compared to
47,503 for the same period in 1996, an increase of 23 mcf. The increase in gas
production was due to operational changes on several wells. The decrease in oil
production was due to the decline characteristics of the Partnership's oil and
gas properties. The sale of six oil and gas wells during 1996 had no material
effect on the Partnership's oil and gas properties during the three months ended
September 30, 1997.
The average price received per barrel of oil decreased $3.26, or 15%, from
$21.50 for the three months ended September 30, 1996 to $18.24 for the same
period in 1997, while the average price received per mcf of gas decreased 6%
from $2.05 during the three months ended September 30, 1996 to $1.93 in 1997.
Costs and Expenses:
Total costs and expenses decreased to $238,266 for the three months ended
September 30, 1997 as compared to $240,000 for the same period in 1996, a
decrease of $1,734. This decrease was due to declines in depletion, G&A and
abandoned property costs, offset by an increase in production costs.
Production costs were $156,614 for the three months ended September 30, 1997 and
$150,608 for the same period in 1996 resulting in a $6,006 increase, or 4%. The
increase was due to higher ad valorem taxes, offset by a decline in production
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, 11% from $10,048 for the three months ended September
30, 1996 to $8,948 for the same period in 1997.
Depletion was $72,704 for the three months ended September 30, 1997 compared to
$79,325 for the same period in 1996, representing a decrease of $6,621, or 8%.
The decrease was due to a decline in oil production of 2,031 barrels for the
three months ended September 30, 1997 as compared to the same period in 1996,
offset by a decrease in oil reserves during the third quarter of 1997 due to
lower commodity prices.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $736,492 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 received
in 1996 as discussed in Item 2, a decline in oil and gas sales receipts and an
increase in production costs & G&A paid.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during the nine months ended September
30, 1997 and 1996 were related to the addition of oil and gas equipment on
active properties.
Proceeds of $332,104 from disposition of assets, received during the nine months
ended September 30, 1996, consisted of $13,523 from the sale of equipment on one
property abandoned in a prior year and $318,581 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, 1997 to cover
distributions to the partners of $582,427 of which $5,831 was distributed to the
managing general partner and $576,596 to the limited partners. For the same
period ended September 30, 1996, cash was sufficient for distributions to the
partners of $1,259,005 of which $12,805 was distributed to the managing general
partner and $1,246,200 to the limited partners. Cash distributions to the
partners of $1,259,005 for the nine months ended September 30, 1996 included
$5,907 to the managing general partner and $584,808 to the limited partners,
resulting from proceeds received in the litigation settlement as discussed in
Item 2.
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.
10
<PAGE>
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-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: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 12, 1996 By: /s/ Rich Dealy
----------------------------------
Rich Dealy, Vice President and
Controller
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000811000
<NAME> 87B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 246,071
<SECURITIES> 0
<RECEIVABLES> 150,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 396,771
<PP&E> 13,666,154
<DEPRECIATION> 9,493,073
<TOTAL-ASSETS> 4,569,852
<CURRENT-LIABILITIES> 52,659
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,517,193
<TOTAL-LIABILITY-AND-EQUITY> 4,569,852
<SALES> 1,039,645
<TOTAL-REVENUES> 1,050,909
<CGS> 0
<TOTAL-COSTS> 751,543
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 299,366
<INCOME-TAX> 0
<INCOME-CONTINUING> 299,366
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 299,366
<EPS-PRIMARY> 14.75
<EPS-DILUTED> 0
</TABLE>
