UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2001
Commission File No. 33-3353A
PARKER & PARSLEY 86-A, LTD.
(Exact name of Registrant as specified in its charter)
Texas 75-2124884
-------------------------------- ---------------------
(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
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(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (972) 444-9001
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 / /
PARKER & PARSLEY 86-A, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 2001 and
December 31, 2000....................................... 3
Statements of Operations for the three months
ended March 31, 2001 and 2000............................ 4
Statement of Partners' Capital for the three months
ended March 31, 2001..................................... 5
Statements of Cash Flows for the three months
ended March 31, 2001 and 2000............................ 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........................... 9
Signatures................................................. 10
2
PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
2001 2000
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 47,205 $ 46,169
Accounts receivable - oil and gas sales 76,358 150,881
---------- ----------
Total current assets 123,563 197,050
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,132,242 7,132,242
Accumulated depletion (6,728,128) (6,721,529)
---------- ----------
Net oil and gas properties 404,114 410,713
---------- ----------
$ 527,677 $ 607,763
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 14,635 $ 12,398
Partners' capital:
Managing general partner 3,823 4,647
Limited partners (10,131 interests) 509,219 590,718
---------- ----------
513,042 595,365
---------- ----------
$ 527,677 $ 607,763
========== ==========
The financial information included as of March 31, 2001 has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
3
PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
-------------------------
2001 2000
---------- ----------
Revenues:
Oil and gas $ 219,518 $ 196,979
Interest 1,816 1,140
Gain on disposition of assets - 10,237
--------- ---------
221,334 208,356
--------- ---------
Costs and expenses:
Oil and gas production 101,139 89,952
General and administrative 4,249 5,909
Depletion 6,599 7,063
--------- ---------
111,987 102,924
--------- ---------
Net income $ 109,347 $ 105,432
========= =========
Allocation of net income:
Managing general partner $ 1,093 $ 1,054
========= =========
Limited partners $ 108,254 $ 104,378
========= =========
Net income per limited partnership interest $ 10.69 $ 10.30
========= =========
The financial information included herein has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
4
PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 2001 $ 4,647 $ 590,718 $ 595,365
Distributions (1,917) (189,753) (191,670)
Net income 1,093 108,254 109,347
-------- --------- ---------
Balance at March 31, 2001 $ 3,823 $ 509,219 $ 513,042
======== ========= =========
The financial information included herein has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
5
PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
------------------------
2001 2000
---------- ----------
Cash flows from operating activities:
Net income $ 109,347 $ 105,432
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 6,599 7,063
Gain on disposition of assets - (10,237)
Changes in assets and liabilities:
Accounts receivable 74,523 (17,195)
Accounts payable 2,237 2,642
--------- ---------
Net cash provided by operating activities 192,706 87,705
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties - (658)
Proceeds from disposition of assets - 10,237
--------- ---------
Net cash provided by investing activities - 9,579
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (191,670) (88,643)
--------- ---------
Net increase in cash 1,036 8,641
Cash at beginning of period 46,169 76,838
--------- ---------
Cash at end of period $ 47,205 $ 85,479
========= =========
The financial information included herein has been prepared by
the managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
6
PARKER & PARSLEY 86-A, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 86-A, Ltd. (the "Partnership") is a limited partnership
organized in 1986 under the laws of the State of Texas.
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. Basis of presentation
In the opinion of management, the unaudited financial statements of the
Partnership as of March 31, 2001 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 reclassifications
may have been made to the March 31, 2000 financial statements to conform to the
March 31, 2001 financial statement presentations.
Certain information and footnote disclosures 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, 2000, as filed with the Securities and Exchange Commission, a copy
of which is available upon request by writing to Rich Dealy, Vice President and
Chief Accounting Officer, 5205 North O'Connor Boulevard, 1400 Williams Square
West, Irving, Texas 75039-3746.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Revenues:
The Partnership's oil and gas revenues increased 11% to $219,518 for the three
months ended March 31, 2001 as compared to $196,979 for the same period in 2000.
The increase in revenues resulted from higher average prices received, offset by
a decrease in production. For the three months ended March 31, 2001, 3,970
barrels of oil, 2,382 barrels of natural gas liquids ("NGLs") and 10,876 mcf of
gas were sold, or 8,165 barrel of oil equivalents ("BOEs"). For the three months
ended March 31, 2000, 4,620 barrels of oil, 3,346 barrels of NGLs and 14,461 mcf
of gas were sold, or 10,376 BOEs.
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The average price received per barrel of oil increased $.74, or 3%, from $27.46
for the three months ended March 31, 2000 to $28.20 for the same period in 2001.
The average price received per barrel of NGLs increased $4.94, or 36%, from
$13.90 for the three months ended March 31, 2000 to $18.84 for the same period
in 2001. The average price received per mcf of gas increased 253% from $1.63
during the three months ended March 31, 2000 to $5.76 for the same period in
2001. 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 three
months ended March 31, 2001.
Gain on disposition of assets of $10,237 was recognized during the three months
ended March 31, 2000 resulting from equipment credits received on one fully
depleted well.
Costs and Expenses:
Total costs and expenses increased to $111,987 for the three months ended March
31, 2001 as compared to $102,924 for the same period in 2000, an increase of
$9,063, or 9%. This increase was primarily due to an increase in production
costs, offset by decreases in general and administrative expenses ("G&A") and
depletion.
Production costs were $101,139 for the three months ended March 31, 2001 and
$89,952 for the same period in 2000 resulting in an $11,187 increase, or 12%.
This increase was primarily due to additional well maintenance and workover
costs incurred to stimulate well production and higher production taxes
associated with higher oil and gas prices.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and administrative costs. During this period, G&A
decreased 28% from $5,909 for the three months ended March 31, 2000 to $4,249
for the same period in 2001. The decrease is attributable to the Partnership
being credited for an over allocation of $2,337 by the managing general partner
for personnel and administrative costs for the year ended December 31, 2000.
Depletion was $6,599 for the three months ended March 31, 2001 as compared to
$7,063 for the same period in 2000, a decrease of $464, or 7%. This decrease was
primarily due to a decline in oil production of 650 barrels for the period ended
March 31, 2001 as compared to the same period ended March 31, 2000.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $105,001 during the three
months ended March 31, 2001 from the same period in 2000. The increase was due
to an increase of $23,215 in oil and gas sales receipts and reductions of
$91,313 in working capital and $1,660 in G&A expenses, offset by an increase in
production costs of $11,187. The increase in oil and gas receipts resulted from
the increase in commodity prices during 2001 which contributed an additional
$80,372 to oil and gas receipts, offset by $57,157 resulting from the decline in
production during 2001 as compared to the same period in 2000. The increase in
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production costs was primarily due to additional well maintenance and workover
costs incurred to stimulate well production and an increase in production taxes
associated with higher oil and gas prices.
Net Cash Provided by Investing Activities
The Partnership's investing activities during the three months ended March 31,
2000 were related to equipment upgrades on active properties.
Proceeds from disposition of assets of $10,237 during the three months ended
March 31, 2000 resulted from equipment credits received on one fully depleted
well.
Net Cash Used in Financing Activities
For the three months ended March 31, 2001, cash distributions to the partners
were $191,670, of which $1,917 was distributed to the managing general partner
and $189,753 to the limited partners. For the same period ended March 31, 2000,
cash distributions to the partners were $88,643, of which $886 was distributed
to the managing general partner and $87,757 to the limited partners.
Proposal to acquire partnerships
On April 17, 2001, Pioneer Natural Resources Company ("Pioneer") filed a
preliminary proxy statement/prospectus with the Securities and Exchange
Commission proposing an agreement and plan of merger among Pioneer, Pioneer
Natural Resources USA, Inc. ("Pioneer USA"), a wholly- owned subsidiary of
Pioneer, and the limited partners of 46 Parker & Parsley limited partnerships.
Each partnership that approves the agreement and plan of merger and the other
related merger proposals will merge with and into Pioneer USA, and the
partnership interests of each such partnership will be converted into the right
to receive cash and Pioneer common stock. Pioneer USA is the sole or managing
general partner of the partnerships. The Partnership is one of the 46 Parker &
Parsley limited partnerships being requested to approve the agreement and plan
of merger. The preliminary proxy statement/prospectus 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
partnership interests in each partnership and the resolution of Securities and
Exchange Commission review comments. No solicitation will be made using
preliminary materials.
- ---------------
(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 - none
(b) Reports on Form 8-K - none.
9
PARKER & PARSLEY 86-A, LTD.
(A Texas 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 86-A, LTD.
By: Pioneer Natural Resources USA, Inc.
Managing General Partner
Dated: May 8, 2001 By: /s/ Rich Dealy
----------------------------------
Rich Dealy, Vice President
and Chief Accounting Officer
10