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, 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.
<PAGE>
PARKER & PARSLEY 87-B, LTD.
TABLE OF CONTENTS
Page
----
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of June 30, 1997 and
December 31, 1996 ..................................... 3
Statements of Operations for the three and six
months ended June 30, 1997 and 1996....................... 4
Statement of Partners' Capital for the six months
ended June 30, 1997....................................... 5
Statements of Cash Flows for the six months ended
June 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
<PAGE>
PARKER & PARSLEY 87-B, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
June 30, December 31,
1997 1996
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $265,938 at June 30
and $275,996 at December 31 $ 266,438 $ 276,197
Accounts receivable - oil and gas sales 153,745 234,487
---------- ----------
Total current assets 420,183 510,684
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 13,663,963 13,660,524
Accumulated depletion (9,420,369) (9,256,719)
---------- ----------
Net oil and gas properties 4,243,594 4,403,805
---------- ----------
$ 4,663,777 $ 4,914,489
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 42,054 $ 114,235
Partners' capital:
Managing general partner 46,145 47,937
Limited partners (20,089 interests) 4,575,578 4,752,317
---------- ----------
4,621,723 4,800,254
---------- ----------
$ 4,663,777 $ 4,914,489
========== ==========
The financial information included as of June 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 Six months ended
June 30, June 30,
---------------------- ----------------------
1997 1996 1997 1996
--------- ---------- --------- ----------
Revenues:
Oil and gas $ 340,617 $ 427,918 $ 741,362 $ 841,564
Interest 3,858 3,152 7,397 5,810
Salvage income from
equipment disposals - 403 - 13,523
Litigation settlement - 590,715 - 590,715
-------- --------- -------- ---------
344,475 1,022,188 748,759 1,451,612
-------- --------- -------- ---------
Costs and expenses:
Oil and gas production 156,553 168,582 327,386 356,152
General and administrative 10,276 14,318 22,241 26,727
Depletion 82,714 87,330 163,650 196,836
Abandoned property - - - 6,202
Loss on sale of assets - 55,993 - 55,993
-------- --------- -------- ---------
249,543 326,223 513,277 641,910
-------- --------- -------- ---------
Net income $ 94,932 $ 695,965 $ 235,482 $ 809,702
======== ========= ======== =========
Allocation of net income:
Managing general partner $ 950 $ 6,959 $ 2,355 $ 8,097
======== ========= ======== =========
Limited partners $ 93,982 $ 689,006 $ 233,127 $ 801,605
======== ========= ======== =========
Net income per limited
partnership interest $ 4.67 $ 34.30 $ 11.60 $ 39.90
======== ========= ======== =========
Distributions per limited
partnership interest $ 8.79 $ 40.90 $ 20.40 $ 50.86
======== ========= ======== =========
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
<PAGE>
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 (4,147) (409,866) (414,013)
Net income 2,355 233,127 235,482
-------- --------- ---------
Balance at June 30, 1997 $ 46,145 $4,575,578 $4,621,723
======== ========= =========
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)
Six months ended
June 30,
-------------------------
1997 1996
---------- -----------
Cash flows from operating activities:
Net income $ 235,482 $ 809,702
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 163,650 196,836
Salvage income from equipment disposals - (13,523)
Loss on sale of assets - 55,993
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 80,742 (2,263)
Increase (decrease) in accounts payable (71,926) 63,532
--------- ----------
Net cash provided by operating activities 407,948 1,110,277
--------- ----------
Cash flows from investing activities:
Additions to oil and gas properties (3,694) (30,185)
Proceeds from salvage income on equipment
disposals - 13,523
Proceeds from sale of assets - 318,581
--------- ----------
Net cash provided by (used in) investing
activities (3,694) 301,919
--------- ----------
Cash flows from financing activities:
Cash distributions to partners (414,013) (1,026,314)
--------- ----------
Net increase (decrease) in cash and cash
equivalents (9,759) 385,882
Cash and cash equivalents at beginning of period 276,197 186,643
--------- ----------
Cash and cash equivalents at end of period $ 266,438 $ 572,525
========= ==========
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
June 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 June 30, 1997 and for the three and
six months ended June 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 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, Controller, 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
Six months ended June 30, 1997 compared with six months ended
June 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 12% to $741,362 from $841,564
for the six months ended June 30, 1997 as compared to the six months ended June
30, 1996. The decrease in revenues resulted from a 16% decrease in barrels of
oil produced and sold, a 13% decrease in 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 six months ended June 30, 1997, 25,351 barrels
of oil were sold compared to 30,131 for the same period in 1996, a decrease of
4,780 barrels. Of the decrease, 2,770 barrels or 9%, was attributable to the
sale of six oil and gas wells during 1996, while the remaining decrease of 2,010
barrels, or 7%, was due to the decline characteristics of the Partnership's oil
and gas properties. For the six months ended June 30, 1997, 89,066 mcf of gas
were sold compared to 102,081 for the same period in 1996, a decrease of 13,015
mcf. Of the decrease, 5,023 mcf, or 5%, was attributable to the sale of six oil
and gas wells during 1996, while the remaining decrease of 7,992 mcf, or 8%, was
7
<PAGE>
due to the decline characteristics of the Partnership's oil and gas properties.
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 decreased slightly from $20.43 for
the six months ended June 30, 1996 to $20.22 for the same period in 1997, while
the average price received per mcf of gas increased 16% from $2.21 during the
six months ended June 30, 1996 to $2.57 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 six months ended June 30,
1997.
Salvage income of $13,523, received during the six months ended June 30, 1996,
was derived from equipment credits received on one well abandoned in a prior
year.
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 $513,277 for the six months ended June 30,
1997 as compared to $641,910 for the same period in 1996, a decrease of
$128,633, or 20%. This decrease was due to declines in loss on sale of assets,
depletion, production costs, abandoned property costs and general and
administrative expenses ("G&A").
Production costs were $327,386 for the six months ended June 30, 1997 and
$356,152 for the same period in 1996 resulting in a $28,766 decrease, or 8%.
This decrease was primarily attributable to a decline in well repair and
maintenance costs resulting from the sale of six oil and gas wells and four
saltwater disposal 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, 17% from $26,727 for the six months ended June 30, 1996
to $22,241 for the same period in 1997.
Depletion was $163,650 for the six months ended June 30, 1997 compared to
$196,836 for the same period in 1996. This represented a decrease in depletion
of $33,186, or 17%, attributable to the sale of six oil and gas wells and four
8
<PAGE>
saltwater disposal wells in 1996 and a decline in oil production of 2,010
barrels from the six months ended June 30, 1997 compared to the same period in
1996.
Abandoned property costs totaled $6,202 during the six months ended June 30,
1996. These costs were incurred on one well plugged and abandoned during a
previous year.
A loss of $55,993 resulted from the sale of six oil and gas wells and four
saltwater disposal wells to Costilla Energy, L.L.C. during the six months ended
June 30, 1996.
Three months ended June 30, 1997 compared with three months ended
June 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 20% to $340,617 from $427,918
for the three months ended June 30, 1997 as compared to the three months ended
June 30, 1996. The decrease in revenues resulted from a lower average price
received per barrel of oil, a 13% decrease in barrels of oil produced and sold
and a 4% decrease in mcf of gas produced and sold. For the three months ended
June 30, 1997, 12,423 barrels of oil were sold compared to 14,305 for the same
period in 1996, a decrease of 1,882 barrels. Of the decrease, 856 barrels or 6%,
was attributable to the sale of six oil and gas wells during 1996, while the
remaining decrease of 1,026 barrels, or 7%, was due to the decline
characteristics of the Partnership's oil and gas properties. For the three
months ended June 30, 1997, 48,115 mcf of gas were sold compared to 50,229 for
the same period in 1996, a decrease of 2,114 mcf. This decrease was primarily
attributable to the sale of six oil and gas wells during 1996.
The average price received per barrel of oil decreased $3.31, or 15%, from
$21.98 during the three months ended June 30, 1996 to $18.67 for the same period
in 1997, while the average price received per mcf of gas was $2.26 during the
three months ended June 30, 1996 and 1997.
Salvage income of $403, received during the three months ended June 30, 1996,
was derived from equipment credits received on one well abandoned in a prior
year.
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.
9
<PAGE>
Costs and Expenses:
Total costs and expenses decreased to $249,543 for the three months ended June
30, 1997 as compared to $326,223 for the same period in 1996, a decrease of
$76,680, or 24%. This decrease was due to declines in loss on sale of assets,
production costs, depletion and G&A.
Production costs were $156,553 for the three months ended June 30, 1997 and
$168,582 for the same period in 1996 resulting in a $12,029 decrease, or 7%.
This decrease was primarily attributable to a decline in well repair and
maintenance expenses resulting from the sale of six oil and gas wells and four
saltwater disposal 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, 28%, from $14,318 for the three months ended June 30,
1996 to $10,276 for the same period in 1997.
Depletion was $82,714 for the three months ended June 30, 1997 compared to
$87,330 for the same period in 1996. This represented a decrease in depletion of
$4,616, or 5%.
A loss of $55,993 resulted from the sale of six oil and gas wells and four
saltwater disposal wells to Costilla Energy, L.L.C. during the three months
ended June 30, 1996.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $702,329 during the six
months ended June 30, 1997 from the same period ended June 30, 1996. This
decrease was primarily due to the receipt of litigation proceeds received in
1996 as discussed in Item 2 and an increase in production costs paid.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during the six months ended June 30, 1997
and 1996 were related to the addition of oil and gas equipment on active
properties.
For the six months ended June 30, 1996, proceeds from salvage income of $13,523
were received from the sale of equipment on one property abandoned in a prior
year, while proceeds of $318,581 were received 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 six months ended June 30, 1997 to cover
distributions to the partners of $414,013 of which $4,147 was distributed to the
10
<PAGE>
managing general partner and $409,866 to the limited partners. For the same
period ended June 30, 1996, cash was sufficient for distributions to the
partners of $1,026,314 of which $4,571 was distributed to the managing general
partner and $1,021,743 to the limited partners. Cash distributions to the
partners of $1,026,314 for the six months ended June 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.
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
<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: August 12, 1997 By: /s/ Rich Dealy
----------------------------------
Rich Dealy, Controller of PPUSA
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000811000
<NAME> 87B.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 266,438
<SECURITIES> 0
<RECEIVABLES> 153,745
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 420,183
<PP&E> 13,663,963
<DEPRECIATION> 9,420,369
<TOTAL-ASSETS> 4,663,777
<CURRENT-LIABILITIES> 42,054
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,621,723
<TOTAL-LIABILITY-AND-EQUITY> 4,663,777
<SALES> 741,362
<TOTAL-REVENUES> 748,579
<CGS> 0
<TOTAL-COSTS> 513,277
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 235,482
<INCOME-TAX> 0
<INCOME-CONTINUING> 235,482
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 235,482
<EPS-PRIMARY> 11.60
<EPS-DILUTED> 0
</TABLE>
