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 September 30, 2000
Commission File No. 33-3353C
PARKER & PARSLEY 86-C, LTD.
-----------------------------
(Exact name of Registrant as specified in its charter)
Texas 75-2142283
-------------------------------------------- ---------------------
(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-C, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 2000 and
December 31, 1999..................................... 3
Statements of Operations for the three and nine
months ended September 30, 2000 and 1999............... 4
Statement of Partners' Capital for the nine months
ended September 30, 2000............................... 5
Statements of Cash Flows for the nine months ended
September 30, 2000 and 1999............................ 6
Notes to Financial Statements............................ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K......................... 10
27.1 Financial Data Schedule
Signatures............................................... 11
2
PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash $ 174,240 $ 142,687
Accounts receivable - oil and gas sales 262,900 194,380
----------- -----------
Total current assets 437,140 337,067
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 14,597,644 14,582,050
Accumulated depletion (13,077,167) (12,960,862)
----------- -----------
Net oil and gas properties 1,520,477 1,621,188
----------- -----------
$ 1,957,617 $ 1,958,255
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 57,001 $ 39,171
Partners' capital:
Managing general partner 17,699 17,883
Limited partners (19,317 interests) 1,882,917 1,901,201
----------- -----------
1,900,616 1,919,084
----------- -----------
$ 1,957,617 $ 1,958,255
=========== ===========
The financial information included as of September 30, 2000 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-C, LTD.
(A Texas Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ----------------------
2000 1999 2000 1999
--------- --------- ---------- ---------
Revenues:
Oil and gas $ 498,725 $ 276,755 $1,354,998 $ 712,677
Interest 4,134 2,074 9,834 5,149
-------- -------- --------- --------
502,859 278,829 1,364,832 717,826
-------- -------- --------- --------
Costs and expenses:
Oil and gas production 191,243 174,883 639,715 519,626
General and administrative 14,962 8,302 40,650 21,380
Depletion 36,399 28,014 116,305 153,841
-------- -------- --------- --------
242,604 211,199 796,670 694,847
-------- -------- --------- --------
Net income $ 260,255 $ 67,630 $ 568,162 $ 22,979
======== ======== ========= ========
Allocation of net income:
Managing general partner $ 2,603 $ 676 $ 5,682 $ 230
======== ======== ========= ========
Limited partners $ 257,652 $ 66,954 $ 562,480 $ 22,749
======== ======== ========= ========
Net income per limited
partnership interest $ 13.34 $ 3.47 $ 29.12 $ 1.18
======== ======== ========= ========
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-C, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ---------- ----------
Balance at January 1, 2000 $ 17,883 $1,901,201 $1,919,084
Distributions (5,866) (580,764) (586,630)
Net income 5,682 562,480 568,162
--------- --------- ---------
Balance at September 30, 2000 $ 17,699 $1,882,917 $1,900,616
========= ========= =========
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-C, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
------------------------
2000 1999
---------- ----------
Cash flows from operating activities:
Net income $ 568,162 $ 22,979
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 116,305 153,841
Changes in assets and liabilities:
Accounts receivable (68,520) (63,256)
Accounts payable 17,830 (14,269)
--------- ---------
Net cash provided by operating activities 633,777 99,295
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (15,594) (9,815)
Proceeds from asset dispositions - 847
--------- ---------
Net cash used in investing activities (15,594) (8,968)
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (586,630) (97,005)
--------- ---------
Net increase (decrease) in cash 31,553 (6,678)
Cash at beginning of period 142,687 126,623
--------- ---------
Cash at end of period $ 174,240 $ 119,945
========= =========
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-C, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 86-C, 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 September 30, 2000 and for the three and nine months ended
September 30, 2000 and 1999 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 September 30, 1999 financial statements to conform to
the September 30, 2000 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, 1999, 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
Nine months ended September 30, 2000 compared with nine months ended September
30, 1999
Revenues:
The Partnership's oil and gas revenues increased 90% to $1,354,998 for the nine
months ended September 30, 2000 as compared to $712,677 for the same period in
1999. The increase in revenues resulted from higher average prices received and
7
an increase in oil production. For the nine months ended September 30, 2000,
32,036 barrels of oil, 18,405 barrels of natural gas liquids ("NGLs") and 72,406
mcf of gas were sold, or 62,509 barrel of oil equivalents ("BOEs"). For the nine
months ended September 30, 1999, 28,091 barrels of oil, 20,659 barrels of NGLs
and 80,813 mcf of gas were sold, or 62,219 BOEs.
The average price received per barrel of oil increased $13.56, or 90%, from
$15.08 for the nine months ended September 30, 1999 to $28.64 for the same
period in 2000. The average price received per barrel of NGLs increased $6.17,
or 76%, from $8.09 during the nine months ended September 30, 1999 to $14.26
during the same period in 2000. The average price received per mcf of gas
increased 60% from $1.51 during the nine months ended September 30, 1999 to
$2.42 for the same period in 2000. The market price for oil and gas has been
extremely volatile in the past decade and management expects a certain amount of
volatility to continue in the foreseeable future. The Partnership may therefore
sell its future oil and gas production at average prices lower or higher than
that received during the nine months ended September 30, 2000.
Costs and Expenses:
Total costs and expenses increased to $796,670 for the nine months ended
September 30, 2000 as compared to $694,847 for the same period in 1999, an
increase of $101,823, or 15%. This increase was due to increases in production
costs and general and administrative expenses ("G&A"), offset by a decline in
depletion.
Production costs were $639,715 for the nine months ended September 30, 2000 and
$519,626 for the same period in 1999, resulting in a $120,089, or 23%, increase.
This increase was primarily due to additional well maintenance costs of $58,791
and $11,069 of workover expenses incurred to stimulate well production and
higher production taxes of $48,642 associated with higher oil and gas prices.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A
increased, in aggregate, 90% from $21,380 for the nine months ended September
30, 1999 to $40,650 for the same period in 2000 primarily due to a higher
allocation of the managing general partner's G&A being allocated (limited to 3%
of oil and gas revenues) as a result of increased oil and gas revenues.
Depletion was $116,305 for the nine months ended September 30, 2000 compared to
$153,841 for the same period in 1999, representing a decrease of $37,536, or
24%. This decrease was the result of an increase in proved reserves due to
higher commodity prices as compared to the same period in 1999 and a reduction
in the Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1999, offset by an increase in oil
production of 3,945 barrels for the nine months ended September 30, 2000
compared to the same period in 1999.
8
Three months ended September 30, 2000 compared with three months ended September
30, 1999
Revenues:
The Partnership's oil and gas revenues increased 80% to $498,725 for the three
months ended September 30, 2000 as compared to $276,755 for the same period in
1999. The increase in revenues resulted from higher average prices received and
an increase in production. For the three months ended September 30, 2000, 10,398
barrels of oil, 6,403 barrels of NGLs and 26,667 mcf of gas were sold, or 21,246
BOEs. For the three months ended September 30, 1999, 8,241 barrels of oil, 7,078
barrels of NGLs and 24,575 mcf of gas were sold, or 19,415 BOEs.
The average price received per barrel of oil increased $11.20, or 57%, from
$19.52 for the three months ended September 30, 1999 to $30.72 for the same
period in 2000. The average price received per barrel of NGLs increased $4.95,
or 48%, from $10.32 during the three months ended September 30, 1999 to $15.27
for the same period in 2000. The average price received per mcf of gas increased
75% from $1.74 during the three months ended September 30, 1999 to $3.05 for the
same period in 2000.
Costs and Expenses:
Total costs and expenses increased to $242,604 for the three months ended
September 30, 2000 as compared to $211,199 for the same period in 1999, an
increase of $31,405, or 15%. This increase consisted of increases in production
costs, depletion and G&A.
Production costs were $191,243 for the three months ended September 30, 2000 and
$174,883 for the same period in 1999, resulting in a $16,360 increase, or 9%.
This increase was primarily due to higher production taxes of $20,450 associated
with higher oil and gas prices, offset by a decline in well maintenance costs of
$6,957.
During this period, G&A increased, in aggregate, 80% from $8,302 for the three
months ended September 30, 1999 to $14,962 for the same period in 2000 primarily
due to a higher allocation of the managing general partner's G&A being allocated
(limited to 3% of oil and gas revenues) as a result of increased oil and gas
revenues.
Depletion was $36,399 for the three months ended September 30, 2000 compared to
$28,014 for the same period in 1999, representing an increase of $8,385, or 30%.
This increase was attributable to an increase in oil production of 2,157 barrels
for the three months ended September 30, 2000 compared to the same period in
1999, offset by a reduction in the Partnership's net depletable basis from
charges taken in accordance with SFAS 121 during the fourth quarter of 1999 and
an increase in proved reserves due to higher commodity prices when compared to
the respective information for the same period in 1999.
9
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $534,482 during the nine
months ended September 30, 2000 from the same period ended September 30, 1999.
This increase was due to an increase in oil and gas sales receipts of $641,742,
offset by increases in production costs paid of $63,496 and G&A expenses paid of
$43,764.
Net Cash Used in Investing Activities
The Partnership's investment activities during the nine months ended September
30, 2000 and 1999 were related to upgrades of equipment on various oil and gas
properties.
Proceeds from asset dispositions of $847 recognized during the nine months ended
September 30, 1999 were from the sale of oil and gas equipment on two wells.
Net Cash Used in Financing Activities
For the nine months ended September 30, 2000, cash distributions to the partners
were $586,630, of which $5,866 was distributed to the managing general partner
and $580,764 to the limited partners. For the same period ended September 30,
1999, cash distributions to the partners were $97,005, of which $970 was
distributed to the managing general partner and $96,035 to the limited partners.
- ---------------
(1) "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward looking statements that involve
risks and uncertainties. Accordingly, no assurances can be given that the
actual events and results will not be materially different than the
anticipated results described in the forward looking statements.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K - none
10
PARKER & PARSLEY 86-C, 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-C, LTD.
By: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 9, 2000 By: /s/ Rich Dealy
------------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
11