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. 33-19659-02
PARKER & PARSLEY 88-B, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 75-2240121
(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-B, 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-B, 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 and cash equivalents, including interest
bearing deposits of $148,528 at September
30 and $106,356 at December 31 $ 148,928 $ 106,856
Accounts receivable - oil and gas sales 86,805 210,757
----------- ----------
Total current assets 235,733 317,613
----------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,114,408 7,107,384
Accumulated depletion (4,712,019) (4,576,529)
----------- ----------
Net oil and gas properties 2,402,389 2,530,855
----------- ----------
$ 2,638,122 $ 2,848,468
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 33,076 $ 22,500
Partners' capital:
Managing general partner 26,019 28,229
Limited partners (8,954 interests) 2,579,027 2,797,739
------------ ----------
2,605,046 2,825,968
------------ ----------
$ 2,638,122 $ 2,848,468
============ ==========
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-B, 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 $ 163,768 $ 251,519 $ 602,188 $ 734,451
Interest 2,340 2,250 6,878 5,822
-------- -------- -------- --------
166,108 253,769 609,066 740,273
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 99,377 109,127 304,817 306,417
General and administrative 4,813 7,546 18,066 22,034
Depletion 41,858 46,174 135,490 156,356
Loss on disposition of assets - - - 951
Abandoned property - 17 - 348
-------- -------- -------- --------
146,048 162,864 458,373 486,106
-------- -------- -------- --------
Net income $ 20,060 $ 90,905 $ 150,693 $ 254,167
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 201 $ 910 $ 1,507 $ 2,542
======== ======== ======== ========
Limited partners $ 19,859 $ 89,995 $ 149,186 $ 251,625
======== ======== ======== ========
Net income per limited
partnership interest $ 2.22 $ 10.05 $ 16.66 $ 28.10
======== ======== ======== ========
Distributions per limited
partnership interest $ 10.56 $ 14.22 $ 41.09 $ 39.63
======== ======== ======== ========
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-B, L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 1997 $ 28,229 $2,797,739 $2,825,968
Distributions (3,717) (367,898) (371,615)
Net income 1,507 149,186 150,693
-------- --------- ---------
Balance at September 30, 1997 $ 26,019 $2,579,027 $2,605,046
======== ========= =========
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-B, 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 $ 150,693 $ 254,167
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 135,490 156,356
Loss on disposition of assets - 951
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 123,952 (13,740)
Increase (decrease) in accounts payable 10,576 (9,489)
--------- ---------
Net cash provided by operating activities 420,711 388,245
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (7,024) -
Proceeds from disposition of assets - 3,847
--------- ---------
Net cash provided by (used in) investing
activities (7,024) 3,847
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (371,615) (358,449)
--------- ---------
Net increase in cash and cash equivalents 42,072 33,643
Cash and cash equivalents at beginning of period 106,856 126,330
--------- ---------
Cash and cash equivalents at end of period $ 148,928 $ 159,973
========= =========
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-B, 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-B, 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 18% to $602,188 from $734,451
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, 23,297 barrels of oil were
sold compared to 27,480 for the same period in 1996, a decrease of 4,183
barrels, or 15%. For the nine months ended September 30, 1997, 63,389 mcf of gas
were sold compared to 74,685 for the same period in 1996, a decrease of 11,296
mcf, or 15%. The production volume decreases were 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 $1.11, or 5%, from $20.65
for the nine months ended September 30, 1996 to $19.54 for the same period in
1997, while the average price received per mcf of gas increased 4% from $2.23
during the nine months ended September 30, 1996 to $2.32 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 decreased to $458,373 for the nine months ended
September 30, 1996 as compared to $486,106 for the same period in 1996, a
decrease of $27,733, or 6%. This decrease was due to declines in depletion,
general and administrative expenses ("G&A"), production costs, loss on
disposition of assets and abandoned property costs.
Production costs were $304,817 for the nine months ended September 30, 1997 and
$306,417 for the same period in 1996, resulting in a $1,600 decrease. The
decrease was due to lower production taxes paid due to the decline in oil and
gas sales, offset by higher workover expenses 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, 18% from $22,034 for the nine months ended September
30, 1996 to $18,066 for the same period in 1997. The Partnership agreement
limits G&A to 3% of gross oil and gas revenues.
Depletion was $135,490 for the nine months ended September 30, 1997 compared to
$156,356 for the same period in 1996, representing a decrease of $20,866, or
13%. The decrease was primarily attributable to the decline in oil production of
4,183 barrels for the nine months ended September 30, 1997 as compared to the
same period in 1996.
A loss on disposition of assets of $951 was recognized during the nine months
ended September 30, 1996. This loss resulted from the abandonment of a saltwater
disposal well. Abandoned property costs incurred on this well totaled $348 for
the nine months ended September 30, 1996.
8
<PAGE>
Three months ended September 30, 1997 compared with three months ended September
30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 35% to $163,768 from $251,519
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
received per barrel of oil and mcf of gas. For the three months ended September
30, 1997, 7,022 barrels of oil were sold compared to 9,143 for the same period
in 1996, a decrease of 2,121 barrels, or 23%. For the three months ended
September 30, 1997, 21,315 mcf of gas were sold compared to 26,453 for the same
period in 1996, a decrease of 5,138 mcf, or 19%. The production volume decreases
were due to the decline characteristics of the Partnership's oil and gas
properties.
The average price received per barrel of oil decreased $3.40, or 16%, from
$21.43 for the three months ended September 30, 1996 to $18.03 for the same
period in 1997, while the average price received per mcf of gas decreased 17%
from $2.10 during the three months ended September 30, 1996 to $1.74 in 1997.
Costs and Expenses:
Total costs and expenses decreased to $146,048 for the three months ended
September 30, 1997 as compared to $162,864 for the same period in 1996, a
decrease of $16,816, or 10%. This decrease was due to a decline in production
costs, depletion, G&A and abandoned property costs.
Production costs were $99,377 for the three months ended September 30, 1997 and
$109,127 for the same period in 1996 resulting in a $9,750 decrease, or 9%. The
decrease was primarily due to lower well maintenance costs.
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, 36% from $7,546 for the three months ended September
30, 1996 to $4,813 for the same period in 1997.
Depletion was $41,858 for the three months ended September 30, 1997 compared to
$46,174 for the same period in 1996, representing a decrease of $4,316, or 9%,
primarily attributable to a decline in oil production of 2,121 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 increased $32,466 during the nine
months ended September 30, 1997 from the same period ended September 30, 1996.
9
<PAGE>
This increase was due to an increase in oil and gas sales receipts and a
decrease in production costs paid, offset by an increase in G&A expenses 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 replacement or disposal of oil and gas
equipment on active properties.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1997 to cover
distributions to the partners of $371,615 of which $3,717 was distributed to the
managing general partner and $367,898 to the limited partners. For the same
period ended September 30, 1996, cash was sufficient for distributions to the
partners of $358,449 of which $3,585 was distributed to the managing general
partner and $354,864 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-B, 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-B, 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>
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<ARTICLE> 5
<CIK> 0000828191
<NAME> 88B.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 148,928
<SECURITIES> 0
<RECEIVABLES> 86,805
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 235,733
<PP&E> 7,114,408
<DEPRECIATION> 4,712,019
<TOTAL-ASSETS> 2,638,122
<CURRENT-LIABILITIES> 33,076
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,605,046
<TOTAL-LIABILITY-AND-EQUITY> 2,638,122
<SALES> 602,188
<TOTAL-REVENUES> 609,066
<CGS> 0
<TOTAL-COSTS> 458,373
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 150,693
<INCOME-TAX> 0
<INCOME-CONTINUING> 150,693
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150,693
<EPS-PRIMARY> 16.66
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