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. 33-19659-01
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.
Exhibit index on page 10.
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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, 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........................... 10
27. Financial Data Schedule
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,
1997 1996
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash, including interest bearing deposits of
$188,451 at September 30 and $178,702
at December 31 $ 188,851 $ 179,202
Accounts receivable - oil and gas sales 131,650 228,344
----------- ----------
Total current assets 320,501 407,546
----------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 10,081,449 10,070,081
Accumulated depletion (6,718,533) (6,537,411)
----------- ----------
Net oil and gas properties 3,362,916 3,532,670
----------- ----------
$ 3,683,417 $ 3,940,216
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 43,602 $ 25,585
Partners' capital:
Managing general partner 36,640 39,388
Limited partners (12,935 interests) 3,603,175 3,875,243
----------- ----------
3,639,815 3,914,631
----------- ----------
$ 3,683,417 $ 3,940,216
=========== ==========
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
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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,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues:
Oil and gas $ 237,057 $ 319,859 $ 832,411 $ 974,534
Interest 3,104 3,384 9,168 9,135
-------- -------- -------- --------
240,161 323,243 841,579 983,669
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 137,533 120,672 399,376 377,439
General and administrative 7,011 9,596 24,972 29,236
Depletion 56,622 56,739 181,122 188,231
-------- -------- -------- --------
201,166 187,007 605,470 594,906
-------- -------- -------- --------
Net income $ 38,995 $ 136,236 $ 236,109 $ 388,763
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 390 $ 1,363 $ 2,361 $ 3,888
======== ======== ======== ========
Limited partners $ 38,605 $ 134,873 $ 233,748 $ 384,875
======== ======== ======== ========
Net income per limited
partnership interest $ 2.98 $ 10.42 $ 18.07 $ 29.75
======== ======== ======== ========
Distributions per limited
partnership interest $ 10.49 $ 14.51 $ 39.10 $ 40.32
======== ======== ======== ========
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, 1997 $ 39,388 $3,875,243 $3,914,631
Distributions (5,109) (505,816) (510,925)
Net income 2,361 233,748 236,109
-------- --------- ---------
Balance at September 30, 1997 $ 36,640 $3,603,175 $3,639,815
======== ========= =========
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,
------------------------
1997 1996
---------- ----------
Cash flows from operating activities:
Net income $ 236,109 $ 388,763
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 181,122 188,231
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 96,694 (10,651)
Increase (decrease) in accounts payable 18,017 (5,210)
--------- ---------
Net cash provided by operating activities 531,942 561,133
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (11,368) (1,144)
Cash flows from financing activities:
Cash distributions to partners (510,925) (526,754)
--------- ---------
Net increase in cash and cash equivalents 9,649 33,235
Cash and cash equivalents at beginning of period 179,202 213,046
--------- ---------
Cash and cash equivalents at end of period $ 188,851 $ 246,281
========= =========
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, 1997
(Unaudited)
Note 1. Basis of presentation
In the opinion of management, the unaudited financial statements of Parker &
Parsley 88-A, L.P. (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 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 & 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 $832,411 from $974,534
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
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received per barrel of oil, offset by a higher average price received per mcf of
gas. For the nine months ended September 30, 1997, 28,350 barrels of oil were
sold compared to 32,824 for the same period in 1996, a decrease of 4,474
barrels, or 14%. For the nine months ended September 30, 1997, 118,994 mcf of
gas were sold compared to 130,542 for the same period in 1996, a decrease of
11,548 mcf, or 9%. The decreases in production volumes were primarily 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 $1.22, or 6%, from $20.90
for the nine months ended September 30, 1996 to $19.68 for the same period in
1997, while the average price received per mcf of gas increased 5% from $2.21
during the nine months ended September 30, 1996 to $2.31 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.
Costs and Expenses:
Total costs and expenses increased to $605,470 for the nine months ended
September 30, 1997 as compared to $594,906 for the same period in 1996, an
increase of $10,564. This increase was due to an increase in production costs,
offset by decreases in depletion and general and administrative expenses
("G&A").
Production costs were $399,376 for the nine months ended September 30, 1997 and
$377,439 for the same period in 1996 resulting in a $21,937 increase, or 6%. The
increase was due to higher workover and well maintenance costs incurred in an
effort to stimulate well production.
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 $29,236 for the nine months ended September
30, 1996 to $24,972 for the same period in 1997. The Partnership agreement
limits G&A to 3% of gross oil and gas revenues.
Depletion was $181,122 for the nine months ended September 30, 1997 compared to
$188,231 for the same period in 1996, representing a decrease of $7,109, or 4%.
This decrease was primarily attributable to a decline in oil production of 4,474
barrels for the nine months ended September 30, 1997 as compared to the same
period ended 1996, offset by a decrease in oil reserves during 1997 due to lower
commodity prices.
Three months ended September 30, 1997 compared with three months ended
September 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 26% to $237,057 from $319,859
for the three months ended September 30, 1997 as compared to the three months
ended September 30, 1996. The decrease in revenues resulted from declines in
barrels of oil and mcf of gas produced and sold and lower average prices
8
<PAGE>
received per barrel of oil and mcf of gas. For the three months ended September
30, 1997, 8,660 barrels of oil were sold compared to 10,432 for the same period
in 1996, a decrease of 1,772 barrels, or 17%. For the three months ended
September 30, 1997, 40,075 mcf of gas were sold compared to 45,373 for the same
period in 1996, a decrease of 5,298 mcf, or 12%. The decreases in production
volumes were primarily due to the decline characteristics of the Partnership's
oil and gas properties.
The average price received per barrel of oil decreased $3.59, or 17%, from
$21.67 for the three months ended September 30, 1996 to $18.08 for the same
period in 1997. The average price received per mcf of gas decreased 3% from
$2.07 during the three months ended September 30, 1996 to $2.01 for the same
period in 1997.
Costs and Expenses:
Total costs and expenses increased to $201,166 for the three months ended
September 30, 1997 as compared to $187,007 for the same period in 1996, an
increase of $14,159, or 8%. This increase was due to an increase in production
costs, offset by decreases in G&A and depletion.
Production costs were $137,533 for the three months ended September 30, 1997 and
$120,672 for the same period in 1996, resulting in a $16,861 increase, or 14%.
The increase was due to additional well maintenance costs incurred in an effort
to stimulate well production.
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, 27% from $9,596 for the three months ended September
30, 1996 to $7,011 for the same period in 1997.
Depletion was $56,622 for the three months ended September 30, 1997 compared to
$56,739 for the same period in 1996, representing a decrease of $117, primarily
attributable to a decline in oil production of 1,772 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 $29,191 during the nine
months ended September 30, 1997 from the same period ended September 30, 1996.
This decrease was due to a decline in oil and gas sales receipts and an increase
in G&A expense paid, offset by a decrease in production costs paid.
Net Cash Used in Investing Activities
The Partnership's principal investing activities during the nine months ended
September 30, 1997 and 1996 included expenditures related to equipment
replacement on various oil and gas properties.
9
<PAGE>
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1997 to cover
distributions to the partners of $510,925 of which $5,109 was distributed to the
managing general partner and $505,816 to the limited partners. For the same
period ended September 30, 1996 cash was sufficient for distributions to the
partners of $526,754 of which $5,268 was distributed to the managing general
partner and $521,486 to the limited partners.
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
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: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 13, 1997 By: /s/ Rich Dealy
----------------------------------
Rich Dealy, Vice President and
Controller
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000828186
<NAME> 88A.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 188,851
<SECURITIES> 0
<RECEIVABLES> 131,650
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 320,501
<PP&E> 10,081,449
<DEPRECIATION> 6,718,533
<TOTAL-ASSETS> 3,683,417
<CURRENT-LIABILITIES> 43,602
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,639,815
<TOTAL-LIABILITY-AND-EQUITY> 3,683,417
<SALES> 832,411
<TOTAL-REVENUES> 841,579
<CGS> 0
<TOTAL-COSTS> 605,470
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 236,109
<INCOME-TAX> 0
<INCOME-CONTINUING> 236,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 236,109
<EPS-PRIMARY> 18.07
<EPS-DILUTED> 0
</TABLE>
