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. 33-26097-01
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.
Exhibit index on page 10.
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PARKER & PARSLEY 89-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 Partner's 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 89-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 and cash equivalents, including interest
bearing deposits of $184,666 at September
30 and $162,738 at December 31 $ 184,799 $ 162,871
Accounts receivable - oil and gas sales 91,616 170,304
----------- ----------
Total current assets 276,415 333,175
----------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 6,517,804 6,709,438
Accumulated depletion (4,089,292) (4,151,873)
----------- ----------
Net oil and gas properties 2,428,512 2,557,565
----------- ----------
$ 2,704,927 $ 2,890,740
=========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 35,061 $ 22,606
Partners' capital:
Managing general partner 26,890 28,873
Limited partners (8,317 interests) 2,642,976 2,839,261
----------- ----------
2,669,866 2,868,134
----------- ----------
$ 2,704,927 $ 2,890,740
=========== ==========
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 89-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 $ 193,549 $ 257,114 $ 640,813 $ 802,427
Interest 2,606 2,687 7,412 6,766
Gain on disposition of assets 13,269 - 13,269 -
-------- -------- -------- --------
209,424 259,801 661,494 809,193
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 96,814 96,766 303,348 323,712
General and administrative 6,863 8,199 20,988 25,467
Depletion 40,371 43,458 128,249 151,652
Abandoned property 10,623 - 10,623 -
-------- -------- -------- --------
154,671 148,423 463,208 500,831
-------- -------- -------- --------
Net income $ 54,753 $ 111,378 $ 198,286 $ 308,362
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 548 $ 1,113 $ 1,983 $ 3,083
======== ======== ======== ========
Limited partners $ 54,205 $ 110,265 $ 196,303 $ 305,279
======== ======== ======== ========
Net income per limited
partnership interest $ 6.51 $ 13.26 $ 23.60 $ 36.71
======== ======== ======== ========
Distributions per limited
partnership interest $ 14.00 $ 19.02 $ 47.20 $ 49.22
======== ======== ======== ========
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 89-A, L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 1997 $ 28,873 $2,839,261 $2,868,134
Distributions (3,966) (392,588) (396,554)
Net income 1,983 196,303 198,286
-------- --------- ---------
Balance at September 30, 1997 $ 26,890 $2,642,976 $2,669,866
======== ========= =========
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 89-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 $ 198,286 $ 308,362
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 128,249 151,652
Gain on disposition of assets (13,269) -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 78,688 (8,444)
Increase (decrease) in accounts payable 14,789 (15,706)
--------- ---------
Net cash provided by operating activities 406,743 435,864
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (8,778) -
Proceeds from disposition of assets 20,517 2,749
--------- ---------
Net cash provided by investing activities 11,739 2,749
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (396,554) (413,500)
--------- ---------
Net increase in cash and cash equivalents 21,928 25,113
Cash and cash equivalents at beginning of period 162,871 170,141
--------- ---------
Cash and cash equivalents at end of period $ 184,799 $ 195,254
========= =========
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 89-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 89-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 and 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 20% to $640,813 from $802,427
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, 22,626 barrels of oil were
sold compared to 27,017 for the same period in 1996, a decrease of 4,391
barrels, or 16%. For the nine months ended September 30, 1997, 81,320 mcf of gas
were sold compared to 102,999 for the same period in 1996, a decrease of 21,679
mcf, or 21%. The decreases in oil and gas production were due to the decline
characteristics of the Partnership's oil and gas properties. 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 $1.09, or 5%, from $20.81
for the nine months ended September 30, 1996 to $19.72 for the same period in
1997, while the average price received per mcf of gas increased 3% from $2.33
during the nine months ended September 30, 1996 to $2.39 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.
Gain on disposition of assets of $13,269 for the nine months ended September 30,
1997 was attributable to the abandonment of one fully depleted oil and gas well.
Costs and Expenses:
Total costs and expenses decreased to $463,208 for the nine months ended
September 30, 1997 as compared to $500,831 for the same period in 1996, a
decrease of $37,623, or 8%. This decrease was due to declines in depletion,
production costs and general and administrative expenses ("G&A"), offset by an
increase in abandoned property costs.
Production costs were $303,348 for the nine months ended September 30, 1997 and
$323,712 for the same period in 1996 resulting in a $20,364 decrease, or 6%. The
decrease was the result of declines in workover 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, 18% from $25,467 for the nine months ended September
30, 1996 to $20,988 for the same period in 1997.
Depletion was $128,249 for the nine months ended September 30, 1997 compared to
$151,652 for the same period in 1996, representing a decrease of $23,403, or
15%. This decrease was primarily attributable to a decline in oil production of
4,391 barrels for the nine months ended September 30, 1997 from the same period
in 1996.
Abandoned property costs of $10,623 were incurred on one well during the nine
months ended September 30, 1997.
8
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Three months ended September 30, 1997 compared with three months ended
September 30, 1996
Revenues:
The Partnership's oil and gas revenues decreased 25% to $193,549 from $257,114
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 a lower average price
received per barrel of oil, offset by a higher average price received per mcf of
gas. For the three months ended September 30, 1997, 7,126 barrels of oil were
sold compared to 8,657 for the same period in 1996, a decrease of 1,531 barrels,
or 18%. For the three months ended September 30, 1997, 27,860 mcf of gas were
sold compared to 31,414 for the same period in 1996, a decrease of 3,554 mcf, or
11%. The decreases in production were due to the decline characteristics of the
Partnership's oil and gas properties.
The average price received per barrel of oil decreased $3.27, or 15%, from
$21.58 for the three months ended September 30, 1996 to $18.31 for the same
period in 1997, while the average price received per mcf of gas increased
slightly from $2.24 during the three months ended September 30, 1996 to $2.26 in
1997.
For the three months ended September 30, 1997, the Partnership recognized a gain
on the disposition of assets of $13,269 which was attributable to the
abandonment of one fully depleted oil and gas well.
Costs and Expenses:
Total costs and expenses increased to $154,671 for the three months ended
September 30, 1997 as compared to $148,423 for the same period in 1996, an
increase of $6,248, or 4%. This increase was due to increases in abandoned
property costs and production costs, offset by decreases in depletion and G&A.
Production costs were $96,814 for the three months ended September 30, 1997 and
$96,766 for the same period in 1996, resulting in a $48 increase. The increase
was the result of higher ad valorem taxes, offset by lower production taxes.
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, 16% from $8,199 for the three months ended September
30, 1996 to $6,863 for the same period in 1997.
Depletion was $40,371 for the three months ended September 30, 1997 compared to
$43,458 for the same period in 1996. This represented a decrease in depletion of
$3,087, or 7%. The decrease was attributable to a decline in oil production of
1,531 barrels during the three months ended September 30, 1997, as compared to
the same period in 1996, offset by a decrease in oil reserves for the third
quarter of 1997 due to lower commodity prices.
Abandoned property costs of $10,623 were incurred on one well during the three
months ended September 30, 1997.
9
<PAGE>
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $29,121 during the nine
months ended September 30, 1997 from the same period ended September 30, 1996.
This decrease was primarily attributable to a decrease in oil and gas sales
receipts and an increase in abandoned property costs paid, offset by a decrease
in production costs paid.
Net Cash Provided by Investing Activities
The Partnership's investing activities during the nine months ended September
30, 1997 and 1996, respectively, were related to the disposal or replacement of
oil and gas equipment on active properties.
Proceeds on disposition of assets of $20,517 resulted from the abandonment of
one oil and gas well during the nine months ended September 30, 1997.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1997 to cover
distributions to the partners of $396,554 of which $3,966 was distributed to the
managing general partner and $392,588 to the limited partners. For the same
period ended September 30, 1996, cash was sufficient for distributions to the
partners of $413,500 of which $4,145 was distributed to the managing general
partner and $409,355 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
<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: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 7, 1997 By: /s/ Rich Dealy
-------------------------------
Rich Dealy, Vice President and
Controller
11
<PAGE>
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<ARTICLE> 5
<CIK> 0000844582
<NAME> 89A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 184,799
<SECURITIES> 0
<RECEIVABLES> 91,616
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 276,415
<PP&E> 6,517,804
<DEPRECIATION> 4,089,292
<TOTAL-ASSETS> 2,704,927
<CURRENT-LIABILITIES> 35,061
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,669,866
<TOTAL-LIABILITY-AND-EQUITY> 2,704,927
<SALES> 640,813
<TOTAL-REVENUES> 661,494
<CGS> 0
<TOTAL-COSTS> 463,208
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 198,286
<INCOME-TAX> 0
<INCOME-CONTINUING> 198,286
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 198,286
<EPS-PRIMARY> 23.60
<EPS-DILUTED> 0
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