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, 1995, 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. 33-26097-01
PARKER & PARSLEY 89-A, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 75-2297058
(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.
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $137,324 at September 30
and $117,020 at December 31 $ 137,357 $ 117,053
Accounts receivable - oil and gas sales 101,128 106,506
--------- ---------
Total current assets 238,485 223,559
Oil and gas properties - at cost, based on the
successful efforts accounting method 6,710,556 6,702,682
Accumulated depletion (3,186,783) (2,884,042)
--------- ---------
Net oil and gas properties 3,523,773 3,818,640
--------- ---------
$3,762,258 $4,042,199
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 53,618 $ 17,531
Partners' capital:
Limited partners (8,317 interests) 3,671,358 3,984,222
Managing general partner 37,282 40,446
--------- ---------
3,708,640 4,024,668
--------- ---------
$3,762,258 $4,042,199
========= =========
The financial information included as of September 30, 1995 has been
prepared by management without audit by independent public accountants.
The accompanying notes are an integral part of these statements.
2
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Revenues:
Oil and gas sales $ 227,927 $ 269,237 $ 710,280 $ 736,616
Interest income 2,599 1,625 6,664 3,461
Salvage income from
equipment disposal - - - 157
-------- -------- -------- --------
Total revenues 230,526 270,862 716,944 740,234
Costs and expenses:
Production costs 106,360 103,463 341,758 355,487
General and administrative
expenses 6,112 9,529 21,308 26,017
Depletion 106,873 84,698 302,741 269,942
Amortization of organization
costs - 3,394 - 10,183
-------- -------- -------- --------
Total costs and expenses 219,345 201,084 665,807 661,629
-------- -------- -------- --------
Net income $ 11,181 $ 69,778 $ 51,137 $ 78,605
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 112 $ 732 $ 511 $ 888
======== ======== ======== ========
Limited partners $ 11,069 $ 69,046 $ 50,626 $ 77,717
======== ======== ======== ========
Net income per limited
partnership interest $ 1.33 $ 8.30 $ 6.09 $ 9.34
======== ======== ======== ========
Distributions per limited
partnership interest $ 13.97 $ 16.20 $ 43.70 $ 46.80
======== ======== ======== ========
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 statements.
3
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
Balance at January 1, 1994 $ 44,502 $4,397,122 $4,441,624
Distributions (3,932) (389,235) (393,167)
Net income 888 77,717 78,605
-------- --------- ---------
Balance at September 30, 1994 $ 41,458 $4,085,604 $4,127,062
======== ========= =========
Balance at January 1, 1995 $ 40,446 $3,984,222 $4,024,668
Distributions (3,675) (363,490) (367,165)
Net income 511 50,626 51,137
-------- --------- ---------
Balance at September 30, 1995 $ 37,282 $3,671,358 $3,708,640
======== ========= =========
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 statements.
4
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
1995 1994
Cash flows from operating activities:
Net income $ 51,137 $ 78,605
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion and amortization 302,741 280,125
Salvage income from equipment disposal - (157)
Changes in assets and liabilities:
Decrease in accounts receivable 5,378 27,110
Increase in accounts payable 36,087 32,082
--------- ---------
Net cash provided by operating activities 395,343 417,765
Cash flows from investing activities:
Additions to oil and gas properties (7,874) (3,858)
Salvage income from equipment disposal - 157
---------- ---------
Net cash used in investing activities (7,874) (3,701)
Cash flows from financing activities:
Cash distributions to partners (367,165) (393,167)
--------- ---------
Net increase in cash and cash equivalents 20,304 20,897
Cash and cash equivalents at beginning of period 117,053 124,809
--------- ---------
Cash and cash equivalents at end of period $ 137,357 $ 145,706
========= =========
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 statements.
5
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1.
In the opinion of management, the unaudited financial statements as of September
30, 1995 of Parker & Parsley 89-A, L.P. (the "Registrant") 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. However, the results of operations for the nine months ended September
30, 1995 are not necessarily indicative of the results for the full year ending
December 31, 1995.
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, 1994, 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
The Registrant was formed October 30, 1989. The managing general partner of the
Registrant at December 31, 1994 was Parker & Parsley Development Company
("PPDC") which was merged into Parker & Parsley Development L.P. ("PPDLP") on
January 1, 1995. On January 1, 1995, PPDLP, a Texas limited partnership, became
the sole managing general partner of the Registrant, by acquiring the rights and
assuming the obligations of PPDC. PPDLP acquired PPDC's rights and obligations
as managing general partner of the Registrant in connection with the merger of
PPDC, P&P Producing, Inc. and Spraberry Development Corporation into MidPar LP.,
which survived the merger with a change of name to PPDLP. The sole general
partner of PPDLP is Parker & Parsley Petroleum USA, Inc. PPDLP has the power and
authority to manage, control and administer all Registrant affairs. The limited
partners contributed $8,317,000 representing 8,317 interests ($1,000 per
interest) sold to a total of 616 limited partners.
Since its formation, the Registrant invested $6,710,556 in various prospects
that were drilled in Texas. At September 30, 1995, the Registrant had 33
producing oil and gas wells.
6
<PAGE>
RESULTS OF OPERATIONS
Nine months ended September 30, 1995 compared with nine months ended
September 30, 1994
REVENUES:
The Registrant's oil and gas revenues decreased to $710,280 from $736,616 for
the nine months ended September 30, 1995 and 1994, respectively, a decrease of
4%. The decrease in revenues resulted from a 10% decline in barrels of oil
produced and sold and a 7% decline in mcf of gas produced and sold, offset by an
increase in the average price received per barrel of oil. For the nine months
ended September 30, 1995, 29,619 barrels of oil were sold compared to 32,834 for
the same period in 1994, a decrease of 3,215 barrels. For the nine months ended
September 30, 1995, 119,461 mcf of gas were sold compared to 129,088 for the
same period in 1994, a decrease of 9,627 mcf. The decreases in oil and gas
production were due to the decline characteristics of the Registrant's oil and
gas properties. 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 $1.38, or 9%, from $15.86
for the nine months ended September 30, 1994 to $17.24 for the same period in
1995 while the average price received per mcf of gas remained at $1.67. 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, 1995.
Salvage income of $157 was received during the nine months ended September 30,
1994 from the disposal of equipment on one fully depleted well. There was no
salvage activity during the same period in 1995.
COSTS AND EXPENSES:
Total costs and expenses increased to $665,807 for the nine months ended
September 30, 1995 as compared to $661,629 for the same period in 1994, an
increase of $4,178. This increase was due to an increase in depletion, offset by
decreases in production costs, general and administrative expenses ("G&A") and
amortization of organization costs.
Production costs were $341,758 for the nine months ended September 30, 1995 and
$355,487 for the same period in 1994 resulting in a $13,729 decrease, or 4%. The
decrease was primarily the result of a decline in workover expense and lower ad
valorem taxes.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
period, G&A decreased, in aggregate, 18% from $26,017 for the nine months ended
September 30, 1994 to $21,308 for the same period in 1995.
7
<PAGE>
Depletion was $302,741 for the nine months ended September 30, 1995 compared to
$269,942 for the same period in 1994. This represented an increase in depletion
of $32,799, or 12%. Depletion was computed quarterly on a property-by-property
basis utilizing the unit-of-production method based upon the dominant mineral
produced, generally oil. Oil production decreased 3,215 barrels for the nine
months ended September 30, 1995 from the same period in 1994. Depletion expense
for the nine months ended September 30, 1995 was calculated based on reserves
computed utilizing an oil price of $16.35 per barrel. Comparatively, depletion
expense for the three months ended September 30, 1994 and June 30, 1994 was
calculated based on reserves computed utilizing an oil price of $18.26 per
barrel while depletion expense for the three months ended March 31, 1994 was
calculated based on reserves computed utilizing an oil price of $12.76 per
barrel.
Three months ended September 30, 1995 compared with three months ended
September 30, 1994
REVENUES:
The Registrant's oil and gas revenues decreased to $227,927 from $269,237 for
the three months ended September 30, 1995 and 1994, respectively, a decrease of
15%. The decrease in revenues resulted from a 14% decline in barrels of oil
produced and sold, a 9% decline in mcf of gas produced and sold and a decrease
in the average price received per barrel of oil. For the three months ended
September 30, 1995, 9,715 barrels of oil were sold compared to 11,264 for the
same period in 1994, a decrease of 1,549 barrels. For the three months ended
September 30, 1995, 42,763 mcf of gas were sold compared to 46,919 for the same
period in 1994, a decrease of 4,156 mcf. The decreases in production were due to
the decline characteristics of the Registrant's oil and gas properties.
The average price received per barrel of oil decreased $.85, or 5%, from $17.33
for the three months ended September 30, 1994 to $16.48 for the same period in
1995 while the average price received per mcf of gas increased from $1.58 during
the three months ended September 30, 1994 to $1.59 in 1995.
COSTS AND EXPENSES:
Total costs and expenses increased to $219,345 for the three months ended
September 30, 1995 as compared to $201,084 for the same period in 1994, an
increase of $18,261, or 9%. This increase was due to increases in production
costs and depletion, offset by a decrease in G&A and amortization of
organization costs.
Production costs were $106,360 for the three months ended September 30, 1995 and
$103,463 for the same period in 1994, resulting in a $2,897 increase, or 3%. The
increase was primarily the result of additional well repair and maintenance
costs incurred in an effort to stimulate well production.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
period, G&A decreased, in aggregate, 36% from $9,529 for the three months ended
September 30, 1994 to $6,112 for the same period in 1995.
8
<PAGE>
Depletion was $106,873 for the three months ended September 30, 1995 compared to
$84,698 for the same period in 1994. This represented an increase in depletion
of $22,175, or 26%. Depletion was computed property-by-property utilizing the
unit-of-production method based upon the dominant mineral produced, generally
oil. Oil production decreased 1,549 barrels for the three months ended September
30, 1995 from the same period in 1994. Depletion expense for the three months
ended September 30, 1995 was calculated based on reserves computed utilizing an
oil price of $16.35 per barrel while depletion expense for the three months
ended September 30, 1994 was calculated based on reserves computed utilizing an
oil price of $18.26 per barrel.
LIQUIDITY AND CAPITAL RESOURCES
NET CASH PROVIDED BY OPERATING ACTIVITIES
Net cash provided by operating activities decreased to $395,343 during the nine
months ended September 30, 1995, a 5% decrease from the same period ended
September 30, 1994. This decrease was due to a decline in oil and gas sales,
offset by a decline in production costs. The decline in oil and gas sales
resulted from decreases in barrels of oil and mcf of gas produced and sold and
declining average prices received for oil. Production costs declined due to a
reduction in well repair and maintenance costs.
NET CASH USED IN INVESTING ACTIVITIES
The Registrant's principal investing activities during the nine months ended
September 30, 1995 was for repair and maintenance activity on various oil and
gas properties.
Salvage income of $157 was received during the nine months ended September 30,
1994 from equipment disposal on one fully depleted well.
NET CASH USED IN FINANCING ACTIVITIES
Cash was sufficient for the nine months ended September 30, 1995 to cover
distributions to the partners of $367,165 of which $363,490 was distributed to
the limited partners and $3,675 to the managing general partner. For the same
period ended September 30, 1994, cash was sufficient for distributions to the
partners of $393,167 of which $389,235 was distributed to the limited partners
and $3,932 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.
ACCOUNTING STANDARD ON IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 - Accounting for Impairment of Long-lived
Assets and for Long-lived Assets to Be Disposed Of ("FAS 121") regarding the
impairment of long-lived assets, identifiable intangibles and goodwill related
to those assets. FAS 121 is effective for financial statements for fiscal years
9
<PAGE>
beginning after December 15, 1995, although earlier adoption is encouraged. The
application of FAS 121 to oil and gas companies utilizing the successful efforts
method (such as the Registrant) will require periodic determination of whether
the book value of long-lived assets exceeds the future cash flows expected to
result from the use of such assets and, if so, will require reduction of the
carrying amount of the "impaired" assets to their estimated fair values. There
is currently a great deal of uncertainty as to how FAS 121 will apply to oil and
gas companies using the successful efforts method, including uncertainty
regarding the determination of expected future cash flows from the relevant
assets and, if an impairment is determined to exist, their estimated fair value.
There is also uncertainty regarding the level at which the test might be
applied. Given this uncertainty, the Registrant is currently unable to estimate
the effect that FAS 121 will have on the Registrant's results of operations for
the period in which it is adopted.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
10
<PAGE>
PARKER & PARSLEY 89-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 89-A, L.P.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: November 9, 1995 By: /s/ Steven L. Beal
---------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
11
<PAGE>
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 137,357
<SECURITIES> 0
<RECEIVABLES> 101,128
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 238,485
<PP&E> 6,710,556
<DEPRECIATION> 3,186,783
<TOTAL-ASSETS> 3,762,258
<CURRENT-LIABILITIES> 53,618
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,708,640
<TOTAL-LIABILITY-AND-EQUITY> 3,762,258
<SALES> 710,280
<TOTAL-REVENUES> 716,944
<CGS> 0
<TOTAL-COSTS> 665,807
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 51,137
<INCOME-TAX> 0
<INCOME-CONTINUING> 51,137
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51,137
<EPS-PRIMARY> 6.09
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