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. 33-19659-01
PARKER & PARSLEY 88-A, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 75-2225738
(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 11 pages.
-There are no exhibits-
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PARKER & PARSLEY 88-A, L.P.
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..................... 7
Part II. Other Information......................................... 10
Signatures............................................ 11
2
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PARKER & PARSLEY 88-A, L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1996 1995
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash, including interest bearing deposits of
$245,781 at September 30 and $212,946
at December 31 $ 246,281 $ 213,046
Accounts receivable - oil and gas sales 147,075 136,424
---------- ----------
Total current assets 393,356 349,470
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 10,060,704 10,059,560
Accumulated depletion (6,475,539) (6,287,308)
---------- ----------
Net oil and gas properties 3,585,165 3,772,252
---------- ----------
$ 3,978,521 $ 4,121,722
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 56,197 $ 61,407
Partners' capital:
Limited partners (12,935 interests) 3,882,859 4,019,470
Managing general partner 39,465 40,845
---------- ----------
3,922,324 4,060,315
---------- ----------
$ 3,978,521 $ 4,121,722
========== ==========
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
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PARKER & PARSLEY 88-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
Revenues:
Oil and gas $ 319,859 $ 280,084 $ 974,534 $ 890,762
Interest 3,384 3,527 9,135 8,307
-------- -------- -------- --------
323,243 283,611 983,669 899,069
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 120,672 132,734 377,439 393,848
General and administrative 9,596 8,403 29,236 26,723
Depletion 56,739 99,307 188,231 304,368
-------- -------- -------- --------
187,007 240,444 594,906 724,939
-------- -------- -------- --------
Net income $ 136,236 $ 43,167 $ 388,763 $ 174,130
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 1,363 $ 431 $ 3,888 $ 1,741
======== ======== ======== ========
Limited partners $ 134,873 $ 42,736 $ 384,875 $ 172,389
======== ======== ======== ========
Net income per limited
partnership interest $ 10.42 $ 3.31 $ 29.75 $ 13.33
======== ======== ======== ========
Distributions per limited
partnership interest $ 14.51 $ 11.51 $ 40.32 $ 34.02
======== ======== ======== ========
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 88-A, L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 1996 $ 40,845 $4,019,470 $4,060,315
Distributions (5,268) (521,486) (526,754)
Net income 3,888 384,875 388,763
-------- --------- ---------
Balance at September 30, 1996 $ 39,465 $3,882,859 $3,922,324
======== ========= =========
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 88-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
------------------------
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 388,763 $ 174,130
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 188,231 304,368
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (10,651) 12,893
Increase (decrease) in accounts payable (5,210) 28,217
-------- --------
Net cash provided by operating activities 561,133 519,608
-------- --------
Cash flows from investing activities:
Additions to oil and gas properties (1,144) (6,664)
Cash flows from financing activities:
Cash distributions to partners (526,754) (444,523)
-------- --------
Net increase in cash and cash equivalents 33,235 68,421
Cash and cash equivalents at beginning of period 213,046 118,721
-------- --------
Cash and cash equivalents at end of period $ 246,281 $ 187,142
======== ========
The financial information included herein has been prepared by
management without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
6
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PARKER & PARSLEY 88-A, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
Note 1.
Parker & Parsley 88-A, L.P. (the "Registrant") is a limited partnership
organized in 1988 under the laws of the State of Delaware.
The Registrant engages primarily in oil and gas development and production in
Texas 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.
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 $974,534 from $890,762 for
the nine months ended September 30, 1996 and 1995, respectively, an increase of
9%. The increase in revenues resulted from higher average prices received per
barrel of oil and mcf of gas, offset by a 10% decrease in barrels of oil
7
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produced and sold and a 12% decrease in mcf of gas produced and sold. For the
nine months ended September 30, 1996, 32,824 barrels of oil were sold compared
to 36,546 for the same period in 1995, a decrease of 3,722 barrels. For the nine
months ended September 30, 1996, 130,542 mcf of gas were sold compared to
148,060 for the same period in 1995, a decrease of 17,518 mcf. The decrease in
production volumes was primarily 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 $3.57, or 21%, from
$17.33 for the nine months ended September 30, 1995 to $20.90 for the same
period in 1996 while the average price received per mcf of gas increased 27%
from $1.74 during the nine months ended September 30, 1995 to $2.21 for the same
period 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.
Costs and Expenses:
Total costs and expenses decreased to $594,906 for the nine months ended
September 30, 1996 as compared to $724,939 for the same period in 1995, a
decrease of $130,033, or 18%. This decrease was due to declines in production
costs and depletion, offset by an increase in general and administrative
expenses ("G&A").
Production costs were $377,439 for the nine months ended September 30, 1996 and
$393,848 for the same period in 1995 resulting in a $16,409 decrease, or 4%. The
decrease was due to a reduction in well repair and maintenance costs.
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, 9%, from $26,723 for the nine months ended
September 30, 1995 to $29,236 for the same period in 1996. The Partnership
agreement limits G&A to 3% of gross oil and gas revenues.
Depletion was $188,231 for the nine months ended September 30, 1996 compared to
$304,368 for the same period in 1995, representing a decrease of $116,137, or
38%. 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 3,722 barrels for the
nine months ended September 30, 1996 as compared to the same period in 1995, and
(iii) an increase in oil and gas reserves during the third quarter of 1996 as a
result of higher commodity prices.
8
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Three months ended September 30, 1996 compared with three months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $319,859 from $280,084 for
the three months ended September 30, 1996 and 1994, respectively, an increase of
14%. The increase in revenues resulted from higher average prices received per
barrel of oil and mcf of gas, offset by a 10% decrease in barrels of oil
produced and sold and a 15% decrease in mcf of gas produced and sold. For the
three months ended September 30, 1996, 10,432 barrels of oil were sold compared
to 11,578 for the same period in 1995, a decrease of 1,146 barrels. For the
three months ended September 30, 1996, 45,373 mcf of gas were sold compared to
53,073 for the same period in 1995, a decrease of 7,700 mcf. The decrease in
production volumes was primarily due to the decline characteristics of the
Registrant's oil and gas properties.
The average price received per barrel of oil increased $5.07, or 31%, from
$16.60 for the three months ended September 30, 1995 to $21.67 for the same
period in 1996. The average price received per mcf of gas increased 25% from
$1.65 during the three months ended September 30, 1995 to $2.07 for the same
period in 1996.
Costs and Expenses:
Total costs and expenses decreased to $187,007 for the three months ended
September 30, 1996 as compared to $240,444 for the same period in 1995, a
decrease of $53,437, or 22%. This decrease was due to declines in production
costs and depletion, offset by an increase in G&A.
Production costs were $120,672 for the three months ended September 30, 1996 and
$132,734 for the same period in 1995, resulting in a $12,062 decrease, or 9%.
The decrease was due to a reduction well repair and maintenance costs.
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, 14% from $8,403 for the three months ended
September 30, 1995 to $9,596 for the same period in 1996.
Depletion was $56,739 for the three months ended September 30, 1996 compared to
$99,307 for the same period in 1995, representing a decrease of $42,568, or 43%,
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 1,146 barrels for the three months ended
September 30, 1996 as compared to the same period in 1995, and (iii) an increase
in oil and gas reserves during the third quarter of 1996 as a result of higher
commodity prices.
9
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Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $41,525 during the nine
months ended September 30, 1996 from the same period ended September 30, 1995.
This increase was due to an increase in oil and gas sales, offset by an increase
in production costs paid.
Net Cash Used in Investing Activities
The Registrant's principal investing activities during the nine months ended
September 30, 1996 and 1995 included expenditures related to equipment
replacement on various oil and gas properties.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1996 to cover
distributions to the partners of $526,754 of which $521,486 was distributed to
the limited partners and $5,268 to the managing general partner. For the same
period ended September 30, 1995 cash was sufficient for distributions to the
partners of $444,523 of which $440,076 was distributed to the limited partners
and $4,447 to the managing general partner.
It is expected that future net cash provided by operating activities will be
sufficient for any capital expenditures and any distributions. As the production
from the properties declines, distributions are also expected to decrease.
- - ---------------
(1) "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward looking statements that involve
risks and uncertainties. Accordingly, no assurances can be given that the
actual events and results will not be materially different than the
anticipated results described in the forward looking statements.
Part II. Other Information
None.
10
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PARKER & PARSLEY 88-A, L.P.
(A Delaware 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 88-A, L.P.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: November 6, 1996 By: /s/ Steven L. Beal
--------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
11
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 246,281
<SECURITIES> 0
<RECEIVABLES> 147,075
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 393,356
<PP&E> 10,060,704
<DEPRECIATION> 6,475,539
<TOTAL-ASSETS> 3,978,521
<CURRENT-LIABILITIES> 56,197
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,922,324
<TOTAL-LIABILITY-AND-EQUITY> 3,978,521
<SALES> 974,534
<TOTAL-REVENUES> 983,669
<CGS> 0
<TOTAL-COSTS> 594,906
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 388,763
<INCOME-TAX> 0
<INCOME-CONTINUING> 388,763
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 388,763
<EPS-PRIMARY> 29.75
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