UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 14, 1996
PARKER & PARSLEY 86-A, LTD.
(Exact name of Registrant as specified in its charter)
Texas 33-3353A 75-2124884
(State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization) File Number 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)
Page 1 of 9 pages.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) Description
On June 14, 1996, Parker & Parsley 86-A, Ltd. (the "Registrant") sold
its interests in four oil and gas properties to Costilla Energy,
L.L.C. ("Costilla"), an unrelated party. The Registrant's interests
in the wells were sold for net proceeds, after post closing
adjustments, of $397,224. At December 31, 1995, the properties sold
to Costilla contained proved reserves of 62,757 barrels of oil and
292,022 mcf of gas and had an aggregate SEC 10 value of $393,885.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The accompanying unaudited pro forma financial information of the
Registrant is presented to reflect the sale of oil and gas properties
on June 14, 1996. The unaudited pro forma balance sheet is presented
as if the sale of the oil and gas properties occurred at the balance
sheet date and the unaudited pro forma statements of operations are
presented as if the sale of properties occurred on January 1, 1995.
(c) Exhibits
None
2
Unaudited Pro Forma Financial Statements
The Unaudited Pro Forma Financial Statements have been prepared to give
effect to the sale of oil and gas properties on June 14, 1996. The Unaudited Pro
Forma Financial Statements of the Registrant are not necessarily indicative of
the financial results for the periods presented had the sale of properties taken
place on January 1, 1995. In addition, future results may vary significantly
from the results reflected in the accompanying Unaudited Pro Forma Financial
Statements because of normal production declines and changes in product prices,
among other factors. This information should be read in conjunction with the
Financial Statements of the Registrant (and the related notes) included in the
Annual Report on Form 10-K for the year ended December 31, 1995 and in the
Quarterly Report on Form 10-Q for the three months ended March 31, 1996.
3
PARKER & PARSLEY 86-A, LTD.
UNAUDITED PRO FORMA BALANCE SHEET
as of March 31, 1996
Pro Forma Pro
Historical Entries Forma
----------- ---------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 94,038 $ 397,224 (a) $ 491,262
Accounts receivable - oil and
gas sales 107,541 107,541
---------- ----------
Total current assets 201,579 598,803
Oil and gas properties - at cost,
based on the successful efforts
accounting method 8,008,263 (803,716)(a) 7,204,547
Accumulated depletion (6,209,349) 562,570 (a) (5,646,779)
---------- ----------
Net oil and gas properties 1,798,914 1,557,768
---------- ----------
$ 2,000,493 $ 2,156,571
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 59,662 $ 59,662
Partners' capital:
Limited partners (10,131
interests) 1,922,728 154,517 (a) 2,077,245
Managing general partner 18,103 1,561 (a) 19,664
---------- ----------
1,940,831 2,096,909
---------- ----------
$ 2,000,493 $ 2,156,571
========== ==========
See accompanying notes to unaudited pro forma financial statements.
4
PARKER & PARSLEY 86-A, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
Three months ended March 31, 1996
Assets Pro
Historical Sold Forma
---------- --------- ----------
Revenues:
Oil and gas sales $ 216,043 $ (46,739) $ 169,304
Interest income 1,117 - 1,117
Salvage income from equipment
disposals 14,605 - 14,605
--------- -------- ---------
Total revenues 231,765 (46,739) 185,026
Cost and expenses:
Production costs 116,875 (14,692) 102,183
General and administrative expenses 6,481 (1,402) 5,079
Depletion 44,179 (7,017) 37,162
--------- -------- ---------
Total costs and expenses 167,535 (23,111) 144,424
--------- -------- ---------
Net income $ 64,230 $ (23,628) $ 40,602
========= ======== =========
Allocation of net income:
General partners $ 642 $ 406
========= =========
Limited partners $ 63,588 $ 40,196
========= =========
Net income per limited partnership
interest $ 6.28 $ 3.97
========= =========
See accompanying notes to unaudited pro forma financial statements.
5
PARKER & PARSLEY 86-A, LTD.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the year ended December 31, 1995
Assets Pro
Historical Sold Forma
---------- ---------- ----------
Revenues:
Oil and gas sales $ 791,896 $ (165,330) $ 626,566
Interest income 4,199 - 4,199
Salvage income from equipment
disposals 11,463 - 11,463
--------- --------- ---------
Total revenues 807,558 (165,330) 642,228
Cost and expenses:
Production costs 472,456 (93,627) 378,829
General and administrative
expenses 23,757 (4,960) 18,797
Depletion 295,420 (33,423) 261,997
Impairment of oil and gas
properties 548,293 - 548,293
--------- --------- ---------
Total costs and expenses 1,339,926 (132,010) 1,207,916
--------- --------- ---------
Net loss $ (532,368) $ (33,320) $ (565,688)
========= ========= =========
Allocation of net loss:
General partners $ (5,323) $ (5,656)
========= =========
Limited partners $ (527,045) $ (560,032)
========= =========
Net loss per limited partnership
interest $ (52.02) $ (55.28)
========= =========
See accompanying notes to unaudited pro forma financial statements.
6
PARKER & PARSLEY 86-A, LTD.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
December 31, 1995 and March 31, 1996
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited pro forma financial information of Parker &
Parsley 86-A, Ltd. (the "Registrant") is presented to reflect the sale of oil
and gas properties to Costilla Energy, L.L.C. on June 14, 1996 (the "Assets
Sold"). The unaudited pro forma balance sheet is presented as if the sale of the
Assets Sold occurred at the balance sheet date and the unaudited pro forma
statements of operations are presented as if the sale of the Assets Sold
occurred on January 1, 1995.
Historical - Represents the Registrant's balance sheet for March 31,
1996 and the Registrant's statements of operations for the three months
ended March 31, 1996 and the year ended December 31, 1995.
Assets Sold - Reflects the results of operations for the three months
ended March 31, 1996 and the year ended December 31, 1995 from the oil and
gas properties prior to their sale in 1996.
NOTE 2. PRO FORMA ENTRIES
(a) To record the sale of the Assets Sold as if such sale had occurred on
March 31, 1996. The aggregate cash proceeds of $397,224 were initially
utilized to increase cash and cash equivalents and subsequently
distributed to the partners.
NOTE 3. OIL AND GAS INFORMATION
The following unaudited pro forma supplemental information regarding the
oil and gas activities of the Registrant is presented pursuant to the disclosure
requirements promulgated by the Securities and Exchange Commission and Statement
of Financial Accounting Standards No. 69, "Disclosures About Oil and Gas
Producing Activities". The pro forma combined reserve information is presented
as if the sale of the Assets Sold had occurred on January 1, 1995. Information
for oil is presented in barrels (bbls) and for gas in thousands of cubic feet
(mcf).
The Registrant emphasizes that reserve estimates are inherently imprecise
and subject to revision. Accordingly, the estimates are expected to change as
future information becomes available.
7
Set forth below is a pro forma summary of the changes in the net
quantities of oil and natural gas reserves for the year ended December 31, 1995.
Oil (bbls) Gas (mcf)
---------- ---------
Net proved reserves at January 1, 1995 281,022 1,235,039
Revisions of previous estimates 3,519 43,121
Production (25,325) (115,159)
------- ---------
Net proved reserves at December 31, 1995 259,216 1,163,001
======= =========
The pro forma estimated present value of future net revenues of proved
reserves, calculated using December 31, 1995 prices of $19.36 per barrel of oil
and $1.76 per mcf of gas, discounted at 10%, was approximately $1,424,000 and
undiscounted was $2,437,000 at December 31, 1995.
8
PARKER & PARSLEY 86-A, LTD.
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: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: August 6, 1996 By: /s/ Steven L. Beal
---------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
9