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 March 31, 1996
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. 33-26097-03
PARKER & PARSLEY 89-B CONV., L.P.
(Exact name of Registrant as specified in its charter)
Delaware 75-2302015
(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 10 pages.
-There are no exhibits-
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PARKER & PARSLEY 89-B CONV., L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $78,158 at March 31 and
$87,528 at December 31 $ 78,191 $ 87,561
Accounts receivable - oil and gas sales 73,407 68,927
---------- ----------
Total current assets 151,598 156,488
Oil and gas properties - at cost, based on the
successful efforts accounting method 5,275,605 5,276,365
Accumulated depletion (3,149,167) (3,106,613)
---------- ----------
Net oil and gas properties 2,126,438 2,169,752
---------- ----------
$ 2,278,036 $ 2,326,240
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 25,534 $ 48,970
Partners' capital:
Limited partners (6,307 interests) 2,229,931 2,254,349
Managing general partner 22,571 22,921
---------- ----------
2,252,502 2,277,270
---------- ----------
$ 2,278,036 $ 2,326,240
========== ==========
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.
2
<PAGE>
PARKER & PARSLEY 89-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
1996 1995
----------- -----------
Revenues:
Oil and gas sales $ 177,066 $ 179,474
Interest income 1,048 1,040
---------- ----------
Total revenues 178,114 180,514
Costs and expenses:
Production costs 84,757 85,998
General and administrative expenses 5,312 6,046
Depletion 42,554 65,248
---------- ----------
Total costs and expenses 132,623 157,292
---------- ----------
Net income $ 45,491 $ 23,222
========== ==========
Allocation of net income:
Managing general partner $ 455 $ 232
========== ==========
Limited partners $ 45,036 $ 22,990
========== ==========
Net income per limited partnership interest $ 7.14 $ 3.65
========== ==========
Distributions per limited partnership interest $ 11.01 $ 14.60
========== ==========
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.
3
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PARKER & PARSLEY 89-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
----------- ----------- -----------
Balance at January 1, 1995 $ 30,874 $ 3,041,407 $ 3,072,281
Distributions (930) (92,110) (93,040)
Net income 232 22,990 23,222
---------- ---------- ----------
Balance at March 31, 1995 $ 30,176 $ 2,972,287 $ 3,002,463
========== ========== ==========
Balance at January 1, 1996 $ 22,921 $ 2,254,349 $ 2,277,270
Distributions (805) (69,454) (70,259)
Net income 455 45,036 45,491
---------- ---------- ----------
Balance at March 31, 1996 $ 22,571 $ 2,229,931 $ 2,252,502
========== ========== ==========
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
<PAGE>
PARKER & PARSLEY 89-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 45,491 $ 23,222
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 42,554 65,248
Changes in assets and liabilities:
Increase in accounts receivable (4,480) (2,600)
Increase (decrease) in accounts payable (23,436) 6,455
--------- ---------
Net cash provided by operating activities 60,129 92,325
Cash flows from investing activities:
(Additions) disposals to oil and gas properties 760 (3,107)
Cash flows from financing activities:
Cash distributions to partners (70,259) (93,040)
--------- ---------
Net decrease in cash and cash equivalents (9,370) (3,822)
Cash and cash equivalents at beginning of period 87,561 59,358
--------- ---------
Cash and cash equivalents at end of period $ 78,191 $ 55,536
========= =========
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
<PAGE>
PARKER & PARSLEY 89-B CONV., L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
NOTE 1.
Parker & Parsley 89-B Conv., L.P. (the "Registrant") was organized as a general
partner in 1989 under the laws of the State of Texas and was converted to a
Delaware limited partnership on May 30, 1980.
The Registrant engages primarily in oil and gas development and production in
Texas and is not involved in any industry segment other than oil and gas.
NOTE 2.
In the opinion of management, the unaudited financial statements as of March 31,
1996 of 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, these interim results are not
necessarily indicative of results for a full year.
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, 1995, 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(1)
The Registrant was formed December 30, 1989. On January 1, 1995, Parker &
Parsley Development L.P. ("PPDLP"), a Texas limited partnership, became the sole
managing general partner of the Registrant, by acquiring the rights and assuming
the obligations of Parker & Parsley Development Company ("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 L.P., which survived the merger with a
change of name to PPDLP. PPDLP has the power and authority to manage, control
and administer all Registrant affairs. The partners contributed $6,307,000 which
represents 6,307 interests ($1,000 per interest) sold to a total of 337
partners. The Registrant converted to a Delaware limited partnership on May 31,
1990. The managing general partner received an opinion of legal counsel to the
effect that such conversion would not result in material adverse tax
consequences to the Registrant.
6
<PAGE>
Since its formation, the Registrant invested $5,275,605 in various prospects
drilled in Texas. At March 31, 1996, the Registrant had 33 producing oil and gas
wells.
Results of Operations
Revenues:
The Registrant's oil and gas revenues decreased to $177,066 from $179,474 for
the three months ended March 31, 1996 and 1995, respectively, a decrease of
$2,408. The decrease in revenues was primarily the result of a 14% decline in
barrels of oil produced and sold and a 9% decline in mcf of gas produced and
sold, offset by higher average prices per barrel of oil and mcf of gas. For the
three months ended March 31, 1996, 6,546 barrels of oil were sold compared to
7,586 for the same period in 1995, a decrease of 1,040 barrels. For the three
months ended March 31, 1996, 23,263 mcf of gas were sold compared to 25,454 for
the same period in 1995, a decrease of 2,191 mcf. The decrease in production
volumes was 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 $1.81, or 11%, from
$17.23 for the three months ended March 31, 1995 to $19.04 for the same period
in 1996 while the average price received per mcf of gas increased 17% from $1.92
during the three months ended March 31, 1995 to $2.25 in 1996. The market price
for oil and gas has been extremely volatile in the past decade, and management
expects a certain amount of volatility 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 three months ended March 31, 1996.
Costs and Expenses:
Total costs and expenses decreased to $132,623 for the three months ended March
31, 1996 as compared to $157,292 for the same period in 1995, a decrease of
$24,669, or 16%. This decrease was due to declines in production costs, general
and administrative expenses ("G&A") and depletion.
Production costs were $84,757 for the three months ended March 31, 1996 and
$85,998 for the same period in 1995 resulting in a $1,241 decrease. The decrease
was due to reductions in well repair and maintenance costs and 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, 12% from $6,046 for the three months ended
March 31, 1995 to $5,312 for the same period in 1996. The Partnership agreement
limits G&A to 3% of oil and gas revenues.
Depletion was $42,554 for the three months ended March 31, 1996 compared to
$65,248 for the same period in 1995. This represented a decrease in depletion of
$22,694, or 35%, primarily attributable to the adoption of the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
7
<PAGE>
effective for the fourth quarter of 1995 and the reduction of net depletable
basis resulting from the charge taken upon such adoption. Depletion was computed
property-by-property utilizing the unit-of-production method based upon the
dominant mineral produced, generally oil. Oil production decreased 1,040 barrels
for the three months ended March 31, 1996 from 1995, while oil reserves of
barrels were revised downward by 2,220 barrels.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased to $60,129 during the three
months ended March 31, 1996, a $32,196, or 35%, decrease from the same period
ended March 31, 1995. This decrease was due to a decline in oil and gas sales
receipts and an increase in expenditures for production costs. The decline in
oil and gas sales receipts was the result of decreases in barrels of oil and mcf
of gas produced and sold, offset by higher average prices received for both oil
and gas. The increase in production cost expenditures was due to additional well
repair and maintenance costs.
Net Cash Provided by (Used in) Investing Activities
The Registrant's investing activities during the three months ended March 31,
1996 yielded $760 in proceeds received from the disposal of oil and gas
equipment on active properties. For the three months ended March 31, 1995,
investing activities included expenditures of $3,107 related to repair and
maintenance activity on various oil and gas properties.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1996 to cover
distributions to the partners of $70,259 of which $69,454 was distributed to the
limited partners and $805 to the managing general partner. For the same period
ended March 31, 1995, cash was sufficient for distributions of $93,040 to the
partners of which $92,110 was distributed to the limited partners and $930 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 these 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.
8
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
9
<PAGE>
PARKER & PARSLEY 89-B CONV., 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-B CONV., L.P.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: May 13, 1996 By: /s/ Steven L. Beal
-------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
10
<PAGE>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 78,191
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<RECEIVABLES> 73,407
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0
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<OTHER-SE> 2,252,502
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<SALES> 177,066
<TOTAL-REVENUES> 178,114
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<INCOME-TAX> 0
<INCOME-CONTINUING> 45,491
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