UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
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)
1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas 75039
- ---------------------------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (972) 444-9001
303 West Wall, Suite 101, Midland, Texas 79701
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited partnership interests ($1,000 per unit)
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / x /
No market currently exists for the limited partnership interests of the
Registrant. Based on original purchase price the aggregate market value of
limited partnership interests owned by non-affiliates of the Registrant is
$8,212,000.
As of March 8, 2000, the number of outstanding limited partnership interests was
8,317.
The following documents are incorporated by reference into the indicated parts
of this Annual Report on Form 10-K: None
<PAGE>
Parts I and II of this Report contain 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. See "Item 1. Business" for a
description of various factors that could materially affect the ability of the
Partnership to achieve the anticipated results described in the forward looking
statements.
PART I
ITEM 1. Business
Parker & Parsley 89-A, L.P. (the "Partnership") is a limited partnership
organized in 1989 under the laws of the State of Delaware. As of August 8, 1997,
Pioneer Natural Resources USA, Inc. ("Pioneer USA") became the managing general
partner of the Partnership. Prior to August 8, 1997, the Partnership's managing
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. ("Mesa") 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 managing general partner of the
Partnership as PPDLP's successor by merger.
A Registration Statement, as amended, filed pursuant to the Securities Act of
1933, registering limited partnership interests aggregating $70,000,000 in a
series of Delaware limited partnerships formed under the Parker & Parsley 89
Development Drilling Program, was declared effective by the Securities and
Exchange Commission on August 1, 1989. On October 30, 1989, the offering of
limited partnership interests in the Partnership, the first partnership formed
under such registra tion statement, was closed, with interests aggregating
$8,317,000 being sold to 616 subscribers.
The Partnership engages in oil and gas development and production and is not
involved in any industry segment other than oil and gas. See "Item 6. Selected
Financial Data" for a summary of the Partnership's oil and gas sales, net income
and identifiable assets.
The principal markets during 1999 for the oil produced by the Partnership were
refineries and oil transmission companies that have facilities near the
Partnership's oil producing properties. During 1999, Pioneer USA marketed the
Partnership's gas to a variety of purchasers, none of which accounted for 10% or
more of the Partnership's oil and gas revenues. Of the Partnership's total oil
and gas revenues for 1999, approximately 62% was attributable to sales made to
Plains All American Inc. Pioneer USA is of the opinion that the loss of any one
purchaser would not have an adverse effect on its ability to sell its oil and
gas production or natural gas products.
The Partnership's revenues, profitability, cash flow and future rate of growth
are highly dependent on the prevailing prices of oil and gas, which are affected
by numerous factors beyond the Partnership's control. Oil and gas prices
historically have been very volatile. A substantial or extended decline in the
prices of oil or gas could have a material adverse effect on the Partnership's
revenues, profitability and cash flow and could, under certain circumstances,
result in a reduction in the carrying value of the Partnership's oil and gas
properties.
2
<PAGE>
Federal and state regulation of oil and gas operations generally includes the
fixing of maximum prices for regulated categories of natural gas, the imposition
of maximum allowable production rates, the taxation of income and other items
and the protection of the environment. Although the Partnership believes that
its business operations do not impair environmental quality and that its costs
of complying with any applicable environmental regulations are not currently
significant, the Partnership cannot predict what, if any, effect these
environmental regulations may have on its current or future operations.
The Partnership does not have any employees of its own. Pioneer USA employs 687
persons, many of whom dedicated a part of their time to the conduct of the
Partnership's business during the period for which this report is filed. Pioneer
USA supplies all management functions.
Numerous uncertainties exist in estimating quantities of proved reserves and
future net revenues therefrom. The estimates of proved reserves and related
future net revenues set forth in this report are based on various assumptions,
which may ultimately prove to be inaccurate. Therefore, such estimates should
not be construed as estimates of the current market value of the Partnership's
proved reserves.
No material part of the Partnership's business is seasonal and the Partnership
conducts no foreign operations.
ITEM 2. Properties
The Partnership's properties consist of leasehold interests in properties on
which oil and gas wells are located. Such property interests are often subject
to landowner royalties, overriding royalties and other oil and gas leasehold
interests.
Fractional working interests in developmental oil and gas prospects located in
the Spraberry Trend area of West Texas were acquired by the Partnership,
resulting in the Partnership's participation in the drilling of 33 oil and gas
wells. One well has been plugged and abandoned. At December 31, 1999, 32 wells
were producing.
For information relating to the Partnership's estimated proved oil and gas
reserves at December 31, 1999, 1998 and 1997 and changes in such quantities for
the years then ended, see Note 7 of Notes to Financial Statements included in
"Item 8. Financial Statements and Supplementary Data" below. Such reserves have
been estimated by the engineering staff of Pioneer USA with a review by
Williamson Petroleum Consultants, Inc., an independent petroleum consultant.
ITEM 3. Legal Proceedings
The Partnership from time to time is a party to various legal proceedings
incidental to its business involving claims in oil and gas leases or interests,
other claims for damages in amounts not in excess of 10% of its current assets
and other matters, none of which Pioneer USA believes to be material to the
Partnership.
3
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ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth
quarter of 1999.
4
<PAGE>
PART II
ITEM 5. Market for Partnership's Common Equity and Related Stockholder
Matters
At March 8, 2000, the Partnership had 8,317 outstanding limited partnership
interests held of record by 610 subscribers. There is no established public
trading market for the limited partnership interests. Under the limited
partnership agreement, Pioneer USA has made certain commitments to purchase
partnership interests at a computed value.
Revenues which, in the sole judgement of the managing general partner, are not
required to meet the Partnership's obligations are distributed to the partners
at least quarterly in accordance with the limited partnership agreement. During
the years ended December 31, 1999 and 1998, $237,558 and $237,642, respectively,
of such revenue-related distributions were made to the limited partners.
ITEM 6. Selected Financial Data
The following table sets forth selected financial data for the years ended
December 31:
<TABLE>
1999 1998 1997 1996 1995
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Operating results:
Oil and gas sales $ 718,969 $ 583,396 $ 856,926 $1,132,944 $ 932,815
========= ========= ========= ========= =========
Impairment of oil and
gas properties $ - $ 306,826 $ 531,929 $ - $ 692,515
========= ========= ========= ========= =========
Net income (loss) $ 231,838 $ (444,718) $ (269,363) $ 488,019 $ (589,248)
========= ========= ========= ========= =========
Allocation of net
income (loss):
Managing general
partner $ 2,318 $ (4,447) $ (2,693) $ 4,880 $ (5,893)
========= ========= ========= ========= =========
Limited partners $ 229,520 $ (440,271) $ (266,670) $ 483,139 $ (583,355)
========= ========= ========= ========= =========
Limited partners' net
income (loss) per limited
partnership interest $ 27.60 $ (52.94) $ (32.06) $ 58.09 $ (70.14)
========= ========= ========= ========= =========
Limited partners' cash
distributions per
limited partnership
interest $ 28.56 $ 28.57 $ 62.59 $ 68.92 $ 56.70
========= ========= ========= ========= =========
At year end:
Identifiable assets $1,397,183 $1,392,439 $2,099,131 $2,890,740 $3,021,200
========= ========= ========= ========= =========
</TABLE>
5
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of operations
1999 compared to 1998
The Partnership's 1999 oil and gas revenues increased 23% to $718,969 from
$583,396 in 1998. The increase in revenues resulted from higher average prices
received, offset by a decline in production. In 1999, 27,333 barrels of oil,
14,796 barrels of natural gas liquids ("NGLs") and 60,905 mcf of gas were sold,
or 52,280 barrel of oil equivalents ("BOEs"). In 1998, 29,084 barrels of oil,
12,847 barrels of NGLs and 62,751 mcf of gas were sold, or 52,390 BOEs. Due to
the decline characteristics of the Partnership's oil and gas properties,
management expects a certain amount of decline in production in the future until
the Partnership's economically recoverable reserves are fully depleted.
The average price received per barrel of oil increased $3.88, or 29%, from
$13.23 in 1998 to $17.11 in 1999. The average price received per barrel of NGLs
increased $2.59, or 37%, from $6.95 in 1998 to $9.54 in 1999. The average price
received per mcf of gas increased 4% from $1.74 in 1998 to $1.81 in 1999. 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 in 1999.
The volatility of commodity prices has had, and continues to have, a significant
impact on the Partnership's revenues and operating cash flow and could result in
additional decreases to the carrying value of the Partnership's oil and gas
properties.
Gain on disposition of assets of $4,410 in 1999 was attributable to equipment
credits on one fully depleted well. During 1998, gain on disposition of assets
of $1,926 was attributable to credits received from the disposal of oil and gas
equipment on a well that was plugged and abandoned in a prior year.
Total costs and expenses decreased in 1999 to $498,672 as compared to $1,038,152
in 1998, a decrease of $539,480, or 52%. The decrease was primarily due to
declines in the impairment of oil and gas properties, depletion and production
costs, offset by an increase in general and administrative expenses ("G&A").
Production costs were $352,977 in 1999 and $362,377 in 1998, resulting in a
$9,400 decrease, or 3%. The decrease was due to declines in ad valorem taxes and
well maintenance costs, offset by an increase in workover costs incurred to
stimulate well production and an increase in production taxes due to increased
oil and gas revenues.
G&A components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
increased, in aggregate, 38% from $20,635 in 1998 to $28,521 in 1999. The
Partnership paid the managing general partner $21,420 in 1999 and $17,270 in
6
<PAGE>
1998 for G&A incurred on behalf of the Partnership. G&A is allocated, in part,
to the Partnership by the managing general partner. Allocated expenses are
determined by the managing general partner based upon the level of activity of
the Partnership relative to the non- partnership activities of the managing
general partner. The method of allocation has been consistent over the past
several years with certain modifications incorporated to reflect changes in
Pioneer USA's overall business activities.
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" ("SFAS 121"), the managing general partner reviews the
Partnership's oil and gas properties for impairment whenever events or
circumstances indicate a decline in the recoverability of the carrying value of
the Partnership's assets may have occurred. As a result of the review and
evaluation of its long- lived assets for impairment, the Partnership recognized
a non-cash charge of $306,826 related to its oil and gas properties during 1998.
Depletion was $117,174 in 1999 compared to $348,314 in 1998. This represented a
decrease of $231,140, or 66%. This decrease was the result of a combination of
factors that included an increase in proved reserves during 1999 due to higher
commodity prices, a reduction in the Partnership's net depletable basis from
charges taken in accordance with SFAS 121 during the fourth quarter of 1998 and
a decline in oil production of 1,751 barrels for the period ended December 31,
1999 compared to the same period in 1998.
1998 compared to 1997
The Partnership's 1998 oil and gas revenues decreased 32% to $583,396 from
$856,926 in 1997. The decrease in revenues resulted from lower average prices
received. In 1998, 29,084 barrels of oil, 12,847 barrels of NGLs and 62,751 mcf
of gas were sold, or 52,390 BOEs. In 1997, 30,029 barrels of oil, 6,032 barrels
of NGLs and 92,294 mcf of gas were sold, or 51,443 BOEs.
Consistent with the managing general partner, the Partnership has historically
accounted for processed natural gas production as wellhead production on a wet
gas basis. Effective September 30, 1997, as a result of the merger with Mesa,
the managing general partner accounts for processed natural gas production in
two components: natural gas liquids and dry residue gas. As a result of the
change in the managing general partner's policy, the Partnership now accounts
for processed natural gas production as processed natural gas liquids and dry
residue gas. Consequently, separate product volumes will not be comparable for
periods prior to September 30, 1997. Also, prices for gas products will not be
comparable as the price per mcf for natural gas for the year ended December 31,
1998 is the price received for dry residue gas and the price per mcf for natural
gas produced prior to October 1997 was presented as a price for wet gas (i.e.,
natural gas liquids combined with dry residue gas).
The average price received per barrel of oil decreased $6.25, or 32%, from
$19.48 in 1997 to $13.23 in 1998. The average price received per barrel of NGLs
decreased $4.13, or 37%, from $11.08 in 1997 to $6.95 in 1998. The average price
received per mcf of gas decreased 22% from $2.22 in 1997 to $1.74 in 1998.
7
<PAGE>
Gain on disposition of assets of $1,926 recognized in 1998 was attributable to
credits received from the disposal of oil and gas equipment on a well that was
plugged and abandoned in a prior year. A gain on disposition of assets of
$22,957 recognized during 1997 was comprised of equipment credits on a well
plugged and abandoned in 1997 less the write-off of remaining capitalized costs.
Total costs and expenses decreased in 1998 to $1,038,152 as compared to
$1,159,545 in 1997, a decrease of $121,393, or 10%. The decrease was primarily
due to declines in the impairment of oil and gas properties, production costs,
abandonments and G&A, offset by an increase in depletion.
Production costs were $362,377 in 1998 and $405,273 in 1997, resulting in a
$42,896 decrease, or 11%. The decrease was due to declines in well maintenance
costs, production taxes and workover costs.
During this period, G&A decreased, in aggregate, 30% from $29,451 in 1997 to
$20,635 in 1998. The Partnership paid the managing general partner $17,270 in
1998 and $25,384 in 1997 for G&A incurred on behalf of the Partnership.
The Partnership recognized non-cash SFAS 121 charges of $306,826 and $531,929
related to its oil and gas properties during 1998 and 1997, respectively.
Depletion was $348,314 in 1998 compared to $182,263 in 1997. This represented an
increase of $166,051. This increase was the result of a combination of factors
that included a decline in proved reserves during 1998 due to lower commodity
prices, offset by a reduction in the Partnership's net depletable basis from
charges taken in accordance with SFAS 121 during the fourth quarter of 1997 and
a decline in oil production of 945 barrels for the period ended December 31,
1998 compared to the same period in 1997.
Impact of inflation and changing prices on sales and net income
Inflation generally does not impact revenues in the oil and gas industry.
However, inflation generally does impact expenses, the most significant for the
Partnership is lease operating expenses.
The petroleum industry has been characterized by volatile oil, NGL and natural
gas commodity prices and relatively stable supplier costs during the three years
ended December 31, 1999. During 1997 and 1998, weather patterns, regional
economic recessions and political matters combined to cause worldwide crude oil
supplies to exceed demand. As a result, crude oil prices declined substantially
from the price levels of 1996. Also during 1997 and 1998, but to a lesser
extent, market prices for natural gas declined. During 1999, the price per
barrel for oil production similar to the Partnership's ranged from approximately
$11.00 to $24.00. The decrease in crude oil exports during 1999 by members of
the Organization of Petroleum Exporting Countries ("OPEC") and other crude oil
exporting nations has resulted in higher Partnership revenues and operating cash
flow as compared to 1998.
8
<PAGE>
Prices for natural gas are subject to ordinary seasonal fluctuations, and this
volatility of natural gas prices may result in production being curtailed and,
in some cases, wells being completely shut-in.
Liquidity and capital resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $80,345 during the year
ended December 31, 1999 from 1998. The increase was primarily attributable to an
increase of $69,631 in oil and gas sales receipts and reductions in operating
costs paid of $15,969 that have resulted from the managing general partner's
cost containment measures, partially offset by an increase in G&A expenses paid
of $5,255.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during 1999 and 1998 were related to
expenditures for equipment upgrades on active oil and gas properties.
Proceeds from disposition of assets of $4,410 recognized in 1999 were from
equipment credits received on one fully depleted well. During 1998, proceeds
from disposition of assets of $1,926 were from the salvage of equipment on one
well plugged and abandoned in a prior year.
Net Cash Used in Financing Activities
For 1999, cash distributions to the partners were $239,958, of which $2,400 was
distributed to the managing general partner and $237,558 to the limited
partners. For 1998, cash distributions to the partners were $240,042, of which
$2,400 was distributed to the managing general partner and $237,642 to the
limited partners.
Since the first quarter of 1999, world crude oil prices have increased,
primarily as a result of decreases in crude oil supplies made available by OPEC
and other crude oil exporting nations. During the period from the third quarter
of 1997 through the first quarter of 1999, there was a significant declining
trend in world oil prices and, to a lesser extent, natural gas prices. During
the first quarter of 1999, OPEC and certain other crude oil exporting nations
announced reductions in their planned export volumes. These announcements,
together with the enactment of announced reductions in export volumes, have had
a positive impact on world crude oil prices. No assurances can be given that the
reductions in export volumes or the positive trend in oil and gas commodity
prices can be sustained for an extended period of time.
Proposal to acquire partnerships
On September 8, 1999, Pioneer USA filed a preliminary proxy statement with the
SEC proposing an agreement and plan of merger to the limited partners of 25
publicly-held Parker & Parsley limited partnerships. The preliminary proxy
statement is non-binding and is subject to, among other things, consideration of
offers from third parties to purchase any partnership or its assets, the
majority approval of the limited partners in each partnership and the resolution
9
<PAGE>
of SEC review comments. Pioneer is continuing to evaluate the feasibility of the
proposed agreement and plan of merger; however, the current commodity price
outlook has diminished the likelihood that the proposed agreement and plan of
merger will be consummated.
Year 2000 project readiness
As the year 2000 was approaching, the inability of some computer programs and
embedded technologies to distinguish between "1900" and "2000" gave rise to the
"Year 2000" problem. Such computer programs and related technology were at risk
to fail outright or communicate inaccurate data, if not remediated or replaced.
With the proliferation of electronic data interchange, the Year 2000 problem
represented a significant exposure to the entire global community, the full
extent of which could not be accurately assessed prior to the year 2000.
In proactive response to the Year 2000 problem, the managing general partner
established a "Year 2000" project that assessed, to the extent possible, the
Partnership's and the managing general partner's internal Year 2000 problem;
took remedial actions necessary to minimize the Year 2000 risk exposure to the
managing general partner and significant third parties with whom it has data
interchange; and, tested the managing general partner's systems and processes
once remedial actions were taken. The managing general partner contracted with
IBM Global Services to perform the assessment and remedial phases of its Year
2000 project. The managing general partner's total costs related to the Year
2000 problem were $2.5 million.
The managing general partner has closely monitored its information and
non-information technology systems since the beginning of 2000 and has
identified no significant Year 2000 failures or problems. The managing general
partner will continue to monitor Year 2000 risks and issues. There can be no
assurances that unforeseen problems will not be encountered in the future.
10
<PAGE>
ITEM 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
Financial Statements of Parker & Parsley 89-A, L.P.:
Independent Auditors' Report - Ernst & Young LLP................. 12
Independent Auditors' Report - KPMG LLP.......................... 13
Balance Sheets as of December 31, 1999 and 1998.................. 14
Statements of Operations for the Years Ended December 31,
1999, 1998 and 1997............................................ 15
Statements of Partners' Capital for the Years Ended
December 31, 1999, 1998 and 1997............................... 16
Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997............................................ 17
Notes to Financial Statements.................................... 18
11
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Parker & Parsley 89-A, L.P.
(A Delaware Limited Partnership):
We have audited the balance sheets of Parker & Parsley 89-A, L.P. as of December
31, 1999 and 1998, and the related statements of operations, partners' capital
and cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parker & Parsley 89-A, L.P. as
of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States.
Ernst & Young LLP
Dallas, Texas
March 10, 2000
12
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INDEPENDENT AUDITORS' REPORT
The Partners
Parker & Parsley 89-A, L.P.
(A Delaware Limited Partnership):
We have audited the statement of operations, partners' capital and cash flows of
Parker & Parsley 89-A, L.P. for the year ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the results of operations and cash flows of Parker &
Parsley 89-A, L.P. for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
KPMG LLP
Midland, Texas
March 20, 1998
13
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PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
BALANCE SHEETS
December 31
1999 1998
----------- -----------
ASSETS
Current assets:
Cash $ 180,301 $ 117,381
Accounts receivable - oil and gas sales 112,165 65,380
---------- ----------
Total current assets 292,466 182,761
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 6,552,266 6,540,053
Accumulated depletion (5,447,549) (5,330,375)
---------- ----------
Net oil and gas properties 1,104,717 1,209,678
---------- ----------
$ 1,397,183 $ 1,392,439
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 17,110 $ 4,246
Partners' capital:
Managing general partner 13,993 14,075
Limited partners (8,317 interests) 1,366,080 1,374,118
---------- ----------
1,380,073 1,388,193
---------- ----------
$ 1,397,183 $ 1,392,439
========== ==========
The accompanying notes are an integral part of these financial statements.
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<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31
1999 1998 1997
---------- ---------- ----------
Revenues:
Oil and gas $ 718,969 $ 583,396 $ 856,926
Interest 7,131 8,112 10,299
Gain on disposition of assets 4,410 1,926 22,957
--------- --------- ---------
730,510 593,434 890,182
--------- --------- ---------
Costs and expenses:
Oil and gas production 352,977 362,377 405,273
General and administrative 28,521 20,635 29,451
Impairment of oil and gas properties - 306,826 531,929
Depletion 117,174 348,314 182,263
Abandonments - - 10,629
--------- --------- ---------
498,672 1,038,152 1,159,545
--------- --------- ---------
Net income (loss) $ 231,838 $ (444,718) $ (269,363)
========= ========= =========
Allocation of net income (loss):
Managing general partner $ 2,318 $ (4,447) $ (2,693)
========= ========= =========
Limited partners $ 229,520 $ (440,271) $ (266,670)
========= ========= =========
Net income (loss) per limited
partnership interest $ 27.60 $ (52.94) $ (32.06)
========= ========= =========
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Managing
general Limited
partner partners Total
---------- ---------- -----------
Partners' capital at January 1, 1997 $ 28,873 $2,839,261 $ 2,868,134
Distributions (5,258) (520,560) (525,818)
Net loss (2,693) (266,670) (269,363)
--------- --------- ----------
Partners' capital at December 31, 1997 20,922 2,052,031 2,072,953
Distributions (2,400) (237,642) (240,042)
Net loss (4,447) (440,271) (444,718)
--------- --------- ----------
Partners' capital at December 31, 1998 14,075 1,374,118 1,388,193
Distributions (2,400) (237,558) (239,958)
Net income 2,318 229,520 231,838
--------- --------- ----------
Partners' capital at December 31, 1999 $ 13,993 $1,366,080 $ 1,380,073
========= ========= ==========
The accompanying notes are an integral part of these statements.
16
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
For the years ended December 31
1999 1998 1997
--------- --------- ---------
Cash flows from operating activities:
Net income (loss) $ 231,838 $(444,718) $(269,363)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Impairment of oil and gas properties - 306,826 531,929
Depletion 117,174 348,314 182,263
Gain on disposition of assets (4,410) (1,926) (22,957)
Changes in assets and liabilities:
Accounts receivable (46,785) 18,178 86,746
Accounts payable 67 (9,135) 3,572
-------- -------- --------
Net cash provided by operating
activities 297,884 217,539 512,190
-------- -------- --------
Cash flows from investing activities:
(Additions) deletions to oil and gas
properties 584 (29,716) (14,108)
Proceeds from disposition of assets 4,410 1,926 32,539
-------- -------- --------
Net cash provided by (used in)
investing activities 4,994 (27,790) 18,431
-------- -------- --------
Cash flows used in financing activities:
Cash distributions to partners (239,958) (240,042) (525,818)
-------- -------- --------
Net increase (decrease) in cash 62,920 (50,293) 4,803
Cash at beginning of year 117,381 167,674 162,871
-------- -------- --------
Cash at end of year $ 180,301 $ 117,381 $ 167,674
======== ======== ========
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
PARKER & PARSLEY 89-A, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
Note 1. Organization and nature of operations
Parker & Parsley 89-A, L.P. (the "Partnership") is a limited partnership
organized in 1989 under the laws of the State of Delaware. As of August 8, 1997,
Pioneer Natural Resources USA, Inc. ("Pioneer USA") became the managing general
partner of the Partnership. Prior to August 8, 1997, the Partnership's managing
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 managing general partner of the
Partnership as PPDLP's successor by merger.
The Partnership engages in oil and gas development and production in
Texas and is not involved in any industry segment other than oil and gas.
Note 2. Summary of significant accounting policies
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
Oil and gas properties - The Partnership utilizes the successful efforts
method of accounting for its oil and gas properties and equipment. Under this
method, all costs associated with productive wells and nonproductive development
wells are capitalized while nonproductive exploration costs are expensed.
Capitalized costs relating to proved properties are depleted using the
unit-of-production method on a property-by-property basis based on proved oil
(dominant mineral) reserves as determined by the engineering staff of Pioneer
USA, the Partnership's managing general partner, and reviewed by independent
petroleum consultants. The carrying amounts of properties sold or otherwise
disposed of and the related allowances for depletion are eliminated from the
accounts and any gain or loss is included in operations.
Impairment of long-lived assets - 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" ("SFAS 121"), the
Partnership reviews its long-lived assets to be held and used on an individual
property basis, including oil and gas properties accounted for under the
successful efforts method of accounting, whenever events or circumstances
indicate that the carrying value of those assets may not be recoverable. An
impairment loss is indicated if the sum of the expected future cash flows is
less than the carrying amount of the assets. In this circumstance, the
Partnership recognizes an impairment loss for the amount by which the carrying
amount of the asset exceeds the estimated fair value of the asset.
18
<PAGE>
Use of estimates in the preparation of financial statements - Preparation
of the accompanying financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reporting amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Net income (loss) per limited partnership interest - The net income
(loss) per limited partnership interest is calculated by using the number of
outstanding limited partnership interests.
Income taxes - A Federal income tax provision has not been included in
the financial statements as the income of the Partnership is included in the
individual Federal income tax returns of the respective partners.
Statements of cash flows - For purposes of reporting cash flows, cash
includes depository accounts held by banks.
General and administrative expenses - General and administrative expenses
are allocated in part to the Partnership by the managing general partner or its
affiliates. Allocated expenses are determined by the managing general partner
based upon the level of activity of the Partnership relative to the
non-partnership activities of the managing general partner. The method of
allocation has been consistent over the past several years with certain
modifications incorporated to reflect changes in Pioneer USA's overall business
activities.
Reclassifications - Certain reclassifications may have been made to the
1998 and 1997 financial statements to conform to the 1999 financial statement
presentations.
Environmental - The Partnership is subject to extensive federal, state
and local environmental laws and regulations. These laws, which are constantly
changing, regulate the discharge of materials into the environment and may
require the Partnership to remove or mitigate the environmental effects of the
disposal or release of petroleum or chemical substances at various sites.
Environmental expenditures are expensed or capitalized depending on their future
economic benefit. Expenditures that relate to an existing condition caused by
past operations and that have no future economic benefits are expensed.
Liabilities for expenditures of a noncapital nature are recorded when
environmental assessment and/or remediation is probable, and the costs can be
reasonably estimated. Such liabilities are generally undiscounted unless the
timing of cash payments for the liability or component are fixed or reliably
determinable. No such liabilities have been accrued as of December 31, 1999.
Revenue recognition - The Partnership uses the entitlements method of
accounting for crude oil and natural gas revenues.
19
<PAGE>
Note 3. Impairment of long-lived assets
In accordance with SFAS 121, the Partnership reviews its proved oil and
gas properties for impairment whenever events and circumstances indicate a
decline in the recoverability of the carrying value of the Partnership's oil and
gas properties. The Partnership has estimated the expected future cash flows of
its oil and gas properties as of December 31, 1999, 1998 and 1997, based on
proved reserves, and compared such estimated future cash flows to the respective
carrying amount of the oil and gas properties to determine if the carrying
amounts were likely to be recoverable. For those proved oil and gas properties
for which the carrying amount exceeded the estimated future cash flows, an
impairment was determined to exist; therefore, the Partnership adjusted the
carrying amount of those oil and gas properties to their fair value as
determined by discounting their expected future cash flows at a discount rate
commensurate with the risks involved in the industry. As a result, the
Partnership recognized non-cash impairment provisions of $306,826 and $531,929
related to its proved oil and gas properties during 1998 and 1997, respectively.
Note 4. Income taxes
The financial statement basis of the Partnership's net assets and
liabilities was $226,804 greater than the tax basis at December 31, 1999.
The following is a reconciliation of net income (loss) per statements of
operations with the net income per Federal income tax returns for the years
ended December 31:
1999 1998 1997
--------- --------- ---------
Net income (loss) per statements of
operations $ 231,838 $(444,718) $(269,363)
Depletion and depreciation provisions for
tax reporting purposes less than amounts
for financial reporting purposes 105,234 336,801 142,231
Impairment of oil and gas properties for
financial reporting purposes - 306,826 531,929
Salvage income - - 31,751
Other, net (3,610) 3,948 (28,358)
-------- -------- --------
Net income per Federal
income tax returns $ 333,462 $ 202,857 $ 408,190
======== ======== ========
Note 5. Oil and gas producing activities
The following is a summary of the net costs incurred, whether capitalized
or expensed, related to the Partnership's oil and gas producing activities for
the years ended December 31:
1999 1998 1997
--------- --------- ---------
Development costs $ 12,213 $ 16,919 $ (406)
======== ======== ========
20
<PAGE>
Capitalized oil and gas properties consist of the following:
1999 1998
----------- -----------
Proved properties:
Property acquisition costs $ 279,410 $ 279,410
Completed wells and equipment 6,272,856 6,260,643
---------- ----------
6,552,266 6,540,053
Accumulated depletion (5,447,549) (5,330,375)
---------- ----------
Net capitalized costs $ 1,104,717 $ 1,209,678
========== ==========
Note 6. Related party transactions
Pursuant to the limited partnership agreement, the Partnership had the
following related party transactions with the managing general partner or its
affiliates during the years ended December 31:
1999 1998 1997
--------- --------- ---------
Payment of lease operating and supervision
charges in accordance with standard
industry operating agreements $ 156,639 $ 153,822 $ 161,457
Reimbursement of general and
administrative expenses $ 21,420 $ 17,270 $ 25,384
The Partnership participates in oil and gas activities through an income
tax partnership (the "Program") pursuant to the Program agreement. Pioneer USA,
P&P Employees 89-A Conv., Ltd. ("EMPL") (the "Entities"), Parker & Parsley 89-A
Conv., L.P. and the Partnership (the "Partner ships") are parties to the Program
agreement. EMPL is a limited partnership organized for the benefit of certain
employees of Pioneer USA.
The costs and revenues of the Program are allocated to the Entities and
the Partnerships as follows:
Entities (1) Partnerships (2)
------------ ----------------
Revenues:
Proceeds from disposition of depreciable
and depletable properties -
First three years 14.141414% 85.858586%
After first three years 19.191919% 80.808081%
All other revenues -
First three years 14.141414% 85.858586%
After first three years 19.191919% 80.808081%
Costs and expenses:
Lease acquisition costs, drilling and
completion costs and all other costs 9.090909% 90.909091%
Operating costs, reporting and legal expenses
and general and administrative expenses -
First three years 14.141414% 85.858586%
After first three years 19.191919% 80.808081%
21
<PAGE>
(1) Excludes Pioneer USA's 1% general partner ownership which is allocated
at the Partnership level and 105 limited partner interests owned by
Pioneer USA.
(2) The allocation between the Partnership and Parker & Parsley 89-A Conv.,
L.P. is 74.833543% and 25.166457%, respectively.
Note 7. Oil and gas information (unaudited)
The following table presents information relating to the Partnership's
estimated proved oil and gas reserves at December 31, 1999, 1998 and 1997 and
changes in such quantities during the years then ended. Due to a change in the
accounting policy of the managing general partner in 1997, the Partnership began
accounting for processed natural gas production in two components: processed
natural gas liquids ("NGLs") and dry residue gas. NGLs are reflected in "Oil and
NGLs" in the table below. All of the Partnership's reserves are proved developed
and located within the United States. The Partnership's reserves are based on an
evaluation prepared by the engineering staff of Pioneer USA and reviewed by
Williamson Petroleum Consultants, Inc., an independent petroleum consultant,
using criteria established by the Securities and Exchange Commission. Reserve
value information is available to limited partners pursuant to the Partnership
agreement and, therefore, is not presented.
Oil and NGLs Gas
(bbls) (mcf)
------------ -----------
Net proved reserves at January 1, 1997 555,575 2,212,767
Revisions 45,139 (1,149,379)
Production (36,061) (92,294)
----------- -----------
Net proved reserves at December 31, 1997 564,653 971,094
Revisions (248,699) (328,006)
Production (41,931) (62,751)
----------- -----------
Net proved reserves at December 31, 1998 274,023 580,337
Revisions 317,834 471,328
Production (42,129) (60,905)
----------- -----------
Net proved reserves at December 31, 1999 549,728 990,760
=========== ===========
As of December 31, 1999, the estimated present value of future net
revenues of proved reserves, calculated using December 31, 1999 prices of $25.36
per barrel of oil, $14.30 per barrel of NGLs and $1.82 per mcf of gas,
discounted at 10% was approximately $3,100,000 and undiscounted was $5,749,000.
Numerous uncertainties exist in estimating quantities of proved reserves
and future net revenues therefrom. The estimates of proved reserves and related
future net revenues set forth in this report are based on various assumptions,
which may ultimately prove to be inaccurate. Therefore, such estimates should
not be construed as estimates of the current market value of the Partnership's
proved reserves. The Partnership emphasizes that reserve estimates are
inherently imprecise and, accordingly, the estimates are expected to change as
future information becomes available.
22
<PAGE>
Note 8. Major customers
The following table reflects the major customers of the Partnership's oil
and gas sales (a major customer is defined as a customer whose sales exceed 10%
of total sales) during the years ended December 31:
1999 1998 1997
-------- -------- --------
Plains All American Inc. 62% - -
Genesis Crude Oil, L.P. - 59% 60%
Western Gas Resources, Inc. 3% 12% 11%
Producers Energy Marketing, LLC - 1% 10%
At December 31, 1999, the amount receivable from Plains All American Inc.
was $53,445 which is included in the caption "Accounts receivable - oil and gas
sales" in the accompanying Balance Sheet.
Pioneer USA is of the opinion that the loss of any one purchaser would
not have an adverse effect on the ability of the Partnership to sell its oil and
gas production or natural gas products.
Note 9. Organization and operations
The Partnership was organized October 30, 1989 as a limited partnership
under the Delaware Act for the purpose of acquiring and developing oil and gas
properties. The following is a brief summary of the more significant provisions
of the limited partnership agreement:
Managing general partner - The managing general partner of the
Partnership is Pioneer USA. Pioneer USA has the power and authority to
manage, control and administer all Program and Partnership affairs. As
managing general partner and operator of the Partnership's properties,
all production expenses are incurred by Pioneer USA and billed to the
Partnership and a portion of revenue is initially received by Pioneer USA
prior to being paid to the Partnership. Under the limited partnership
agreement, the managing general partner pays 1% of the Partnership's
acquisition, drilling and completion costs and 1% of its operating and
general and administrative expenses. In return, it is allocated 1% of the
Partnership's revenues.
Limited partner liability - The maximum amount of liability of any
limited partner is the total contributions of such partner plus his share
of any undistributed profits.
Initial capital contributions - The limited partners entered into
subscription agreements for aggregate capital contributions of
$8,317,000. The managing general partner is required to contribute
amounts equal to 1% of initial Partnership capital less commission and
offering expenses allocated to the limited partners and to contribute
amounts necessary to pay costs and expenses allocated to it under the
Partnership agreement to the extent its share of revenues does not cover
such costs.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
23
<PAGE>
PART III
ITEM 10. Directors and Executive Officers of the Partnership
The Partnership does not have any officers or directors. Under the limited
partnership agreement, the Partnership's managing general partner, Pioneer USA,
is granted the exclusive right and full authority to manage, control and
administer the Partnership's business.
Set forth below are the names, ages and positions of the directors and executive
officers of Pioneer USA. Directors of Pioneer USA are elected to serve until the
next annual meeting of stockholders or until their successors are elected and
qualified. During June 1999, Mr. Lon C. Kile resigned as an officer of Pioneer
USA. During January 2000, Mr. M. Garrett Smith also resigned his position as
Director and Chief Financial Officer of Pioneer USA. Mr. Timothy L. Dove assumed
the responsibility of Chief Financial Officer of Pioneer USA after Mr. Smith's
resignation.
Age at
December 31,
Name 1999 Position
- ---------------------- ------------ ----------------------------------
Scott D. Sheffield 47 President
Timothy L. Dove 43 Executive Vice President, Chief
Financial Officer and Director
Dennis E. Fagerstone 50 Executive Vice President and Director
Mark L. Withrow 52 Executive Vice President, General
Counsel and Director
Rich Dealy 33 Vice President and Chief Accounting
Officer
Scott D. Sheffield. Mr. Sheffield is a graduate of The University of
Texas with a B.S. in Petroleum Engineering. Since August 1997, he has served as
President, Chief Executive Officer and a director of Pioneer and President of
Pioneer USA. Mr. Sheffield assumed the position of Chairman of the Board of
Pioneer in August 1999. He served as a director of Pioneer USA from August 1997
until his resignation from the board in June 1999. Mr. Sheffield was the
President and a director of Parker & Parsley from May 1990 until August 1997 and
was the Chairman of the Board and Chief Executive Officer of Parker & Parsley
from October 1990 until August 1997. He was the sole director of Parker &
Parsley from May 1990 until October 1990. Mr. Sheffield joined Parker & Parsley
Development Company ("PPDC"), a predecessor of Parker & Parsley, as a petroleum
engineer in 1979. He served as Vice President - Engineering of PPDC from
September 1981 until April 1985 when he was elected President and a director. In
March 1989, Mr. Sheffield was elected Chairman of the Board and Chief Executive
Officer of PPDC. Before joining PPDC's predecessor, Mr. Sheffield was employed
as a production and reservoir engineer for Amoco Production Company.
24
<PAGE>
Timothy L. Dove. Mr. Dove earned a B.S. in Mechanical Engineering from
Massachusetts Institute of Technology in 1979 and received his M.B.A. in 1981
from the University of Chicago. He became Executive Vice President - Business
Development of Pioneer and Pioneer USA in August 1997 and was also appointed a
director of Pioneer USA in August 1997. Mr. Dove assumed the position of Chief
Financial Officer of Pioneer and Pioneer USA effective February 1, 2000. Mr.
Dove joined Parker & Parsley in May 1994 as Vice President - International and
was promoted to Senior Vice President - Business Development in October 1996, in
which position he served until August 1997. Prior to joining Parker & Parsley,
Mr. Dove was employed with Diamond Shamrock Corp., and its successor, Maxus
Energy Corp, in various capacities in international exploration and production,
marketing, refining and marketing and planning and development.
Dennis E. Fagerstone. Mr. Fagerstone, a graduate of the Colorado School
of Mines with a B.S. in Petroleum Engineering, became an Executive Vice
President of Pioneer and Pioneer USA in August 1997. He was also appointed a
director of Pioneer USA in August 1997. He served as Executive Vice President
and Chief Operating Officer of Mesa from March 1, 1997 until August 1997. From
October 1996 to February 1997, Mr. Fagerstone served as Senior Vice President
and Chief Operating Officer of Mesa and from May 1991 to October 1996, he served
as Vice President - Exploration and Production of Mesa. From June 1988 to May
1991, Mr. Fagerstone served as Vice President - Operations of Mesa.
Mark L. Withrow. Mr. Withrow, a graduate of Abilene Christian University
with a B. S. in Accounting and Texas Tech University with a Juris Doctorate
degree, became Executive Vice President, General Counsel and Secretary of
Pioneer and Pioneer USA in August 1997. He was also appointed a director of
Pioneer USA in August 1997. Mr. Withrow was Vice President - General Counsel of
Parker & Parsley from January 1991, when he joined Parker & Parsley, to January
1995, when he was appointed Senior Vice President - General Counsel. He was
Parker & Parsley's Secretary from August 1992 until August 1997. Prior to
joining Parker & Parsley, Mr. Withrow was the managing partner of the law firm
of Turpin, Smith, Dyer, Saxe & MacDonald, Midland, Texas.
Rich Dealy. Mr. Dealy is a graduate of Eastern New Mexico University with
a B.B.A. in Accounting and Finance and is a Certified Public Accountant. He
became Vice President and Chief Accounting Officer of Pioneer and Pioneer USA in
February 1998. Mr. Dealy served as Controller of Pioneer USA from August 1997 to
February 1998. He served as Controller of Parker & Parsley from August 1995 to
August 1997. Mr. Dealy joined Parker & Parsley as an Accounting Manager in July,
1992. He was previously employed with KPMG Peat Marwick as an Audit Senior, in
charge of Parker & Parsley's audit.
ITEM 11. Executive Compensation
The Partnership does not have any directors or officers. Management of the
Partnership is vested in Pioneer USA, the managing general partner. The
Partnership participates in oil and gas activities through an income tax
partnership (the "Program") pursuant to the Program agreement. Under the Program
agreement, Pioneer USA and P&P Employees 89-A Conv., Ltd. ("EMPL") pay
approximately 10% of the Program's acquisition, drilling and completion costs
and approximately 15% during the first three years and approximately 20% after
three years of its operating and general and administrative expenses. In return,
25
<PAGE>
they are allocated approximately 15% during the first three years and
approximately 20% after three years of the Program's revenues. See Notes 6 and 9
of Notes to Financial Statements included in "Item 8. Financial Statements and
Supplementary Data" for information regarding fees and reimbursements paid to
the managing general partner or its affiliates by the Partnership.
Pioneer USA's current executive officers and other employees are general
partners of EMPL which serves as a co-general partner of the Program. Under this
arrangement, EMPL pays approximately 2.5% of the Program's acquisition, drilling
and completion costs and approximately 3.75% during the first three years and
approximately 5% after three years of its operating and general and
administrative expenses. In return, EMPL is allocated approximately 3.75% during
the first three years and approximately 5% after three years of the Program's
revenues. EMPL does not receive any fees or reimbursements from the Partnership.
The Partnership does not directly pay any salaries of the executive officers of
Pioneer USA, but does pay a portion of Pioneer USA's general and administrative
expenses of which these salaries are a part. See Note 6 of Notes to Financial
Statements included in "Item 8. Financial Statements and Supplementary Data".
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) Beneficial owners of more than five percent
The Partnership is not aware of any person who beneficially owns 5% or more of
the outstanding limited partnership interests of the Partnership. Pioneer USA
owned 105 limited partner interests at January 1, 2000.
(b) Security ownership of management
The Partnership does not have any officers or directors. The managing general
partner of the Partnership, Pioneer USA, has the exclusive right and full
authority to manage, control and administer the Partnership's business. Under
the limited partnership agreement, limited partners holding a majority of the
outstanding limited partnership interests have the right to take certain
actions, including the removal of the managing general partner or any other
general partner. The Partnership is not aware of any current arrangement or
activity which may lead to such removal. The Partnership is not aware of any
officer or director of Pioneer USA who beneficially owns limited partnership
interests in the Partnership.
ITEM 13. Certain Relationships and Related Transactions
Transactions with the managing general partner or its affiliates
Pursuant to the limited partnership agreement, the Partnership had the following
related party transactions with the managing general partner or its affiliates
during the years ended December 31:
26
<PAGE>
1999 1998 1997
--------- --------- ---------
Payment of lease operating and
supervision charges in accordance
with standard industry operating
agreements $ 156,639 $ 153,822 $ 161,457
Reimbursement of general and
administrative expenses $ 21,420 $ 17,270 $ 25,384
Under the limited partnership agreement, the managing general partner pays 1% of
the Partnership's acquisition, drilling and completion costs and 1% of its
operating and general and administrative expenses. In return, it is allocated 1%
of the Partnership's revenues. Also, see Notes 6 and 9 of Notes to Financial
Statements included in "Item 8. Financial Statements and Supplementary Data"
regarding the Partnership's participation with the managing general partner in
oil and gas activities of the Program.
27
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial statements
The following are filed as part of this annual report:
Independent Auditors' Report - Ernst & Young LLP
Independent Auditors' Report - KPMG LLP
Balance sheets as of December 31, 1999 and 1998
Statements of operations for the years ended December 31, 1999,
1998 and 1997
Statements of partners' capital for the years ended December 31,
1999, 1998 and 1997
Statements of cash flows for the years ended December 31, 1999,
1998 and 1997
Notes to financial statements
2. Financial statement schedules
All financial statement schedules have been omitted since the
required information is in the financial statements or notes
thereto, or is not applicable nor required.
(b) Reports on Form 8-K
None.
(c) Exhibits
The exhibits listed on the accompanying index to exhibits are filed or
incorporated by reference as part of this annual report.
28
<PAGE>
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.
Dated: March 24, 2000 By: Pioneer Natural Resources USA, Inc.
Managing General Partner
By: /s/ Scott D. Sheffield
----------------------------
Scott D. Sheffield, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
/s/ Scott D. Sheffield President of Pioneer USA March 24, 2000
- ------------------------
Scott D. Sheffield
/s/ Timothy L. Dove Executive Vice President, Chief March 24, 2000
- ------------------------ Financial Officer and Director of
Timothy L. Dove Pioneer USA
/s/ Dennis E. Fagerstone Executive Vice President and March 24, 2000
- ------------------------ Director of Pioneer USA
Dennis E. Fagerstone
/s/ Mark L. Withrow Executive Vice President, General March 24, 2000
- ------------------------ Counsel and Director of Pioneer USA
Mark L. Withrow
/s/ Rich Dealy Vice President and Chief Accounting March 24, 2000
- ------------------------ Officer of Pioneer USA
Rich Dealy
29
<PAGE>
PARKER & PARSLEY 89-A, L.P.
INDEX TO EXHIBITS
The following documents are incorporated by reference in response to Item
14(c):
Exhibit No. Description Page
3(a) Form of Agreement of Limited Partnership -
of Parker & Parsley 89-A, L.P. incorporated
by reference to Exhibit A of the Post-Effective
Amendment No. 1 of the Partnership's
Registration Statement on Form S-1
(Registration No. 33-26097)
4(b) Form of Limited Partner Subscription Agree- -
ment incorporated by reference to Exhibit C
of the Post-Effective Amendment No. 1 of
the Partnership's Registration Statement on
Form S-1 (Registration No. 33-26097)
4(b) Form of General Partner Subscription Agreement -
incorporated by reference to Exhibit D of the
Post-Effective Amendment No. 1 of the Part-
nership's Registration Statement on Form S-1
(Registration No. 33-26097)
4(b) Power of Attorney incorporated by reference to -
Exhibit B of Amendment No. 1 of the Partner-
ship's Registration Statement on Form S-1
Registration No. 33-26097)
4(c) Specimen Certificate of Limited Partnership -
Interest incorporated by reference to
Exhibit 4c of the Partnership's Registration
Statement on Form S-1 (Registration No.
33-26097)
10(b) Form of Development Drilling Program -
Agreement incorporated by reference to Exhibit
B of the Post-Effective Amendment No. 1 of
the Partnership's Registration Statement on
Form S-1 (Registration No. 33-26097)
27.1* Financial Data Schedule
*Filed herewith
30
<PAGE>
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<ARTICLE> 5
<CIK> 0000844582
<NAME> 89A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 180,301
<SECURITIES> 0
<RECEIVABLES> 112,165
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 292,466
<PP&E> 6,552,266
<DEPRECIATION> 5,447,549
<TOTAL-ASSETS> 1,397,183
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0
0
<COMMON> 0
<OTHER-SE> 1,380,073
<TOTAL-LIABILITY-AND-EQUITY> 1,397,183
<SALES> 718,969
<TOTAL-REVENUES> 730,510
<CGS> 0
<TOTAL-COSTS> 498,672
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<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 231,838
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<INCOME-CONTINUING> 231,838
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