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, 1997
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. 33-3353C
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)
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-
PARKER & PARSLEY 86-C, LTD.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 1997 and
December 31, 1996....................................... 3
Statements of Operations for the three months
ended March 31, 1997 and 1996........................... 4
Statement of Partners' Capital for the three months
ended March 31, 1997.................................... 5
Statements of Cash Flows for the three months
ended March 31, 1997 and 1996........................... 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
27. Financial Data Schedule
Signatures................................................ 10
2
PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $247,171 at March 31
and $193,384 at December 31 $ 247,678 $ 205,207
Accounts receivable - oil and gas sales 196,893 265,255
----------- -----------
Total current assets 444,571 470,462
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 14,552,023 14,551,413
Accumulated depletion (10,921,660) (10,828,428)
----------- -----------
Net oil and gas properties 3,630,363 3,722,985
----------- -----------
$ 4,074,934 $ 4,193,447
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 93,502 $ 104,535
Partners' capital:
Managing general partner 38,506 39,581
Limited partners (19,317 interests) 3,942,926 4,049,331
----------- -----------
3,981,432 4,088,912
----------- -----------
$ 4,074,934 $ 4,193,447
=========== ===========
The financial information included as of March 31, 1997 has been prepared by
management 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
March 31,
--------------------------
1997 1996
---------- ----------
Revenues:
Oil and gas $ 423,075 $ 390,535
Interest 3,039 1,306
Salvage income from equipment disposals 14,656 28,740
--------- ---------
440,770 420,581
--------- ---------
Costs and expenses:
Oil and gas production 188,198 227,200
General and administrative 12,692 11,716
Depletion 93,232 97,143
Abandoned property - 21,351
--------- ---------
294,122 357,410
--------- ---------
Net income $ 146,648 $ 63,171
========= =========
Allocation of net income:
Managing general partner $ 1,466 $ 632
========= =========
Limited partners $ 145,182 $ 62,539
========= =========
Net income per limited partnership interest $ 7.52 $ 3.24
========= =========
Distributions per limited partnership interest $ 13,02 $ 5.98
========= =========
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
PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ----------- -----------
Balance at January 1, 1997 $ 39,581 $ 4,049,331 $ 4,088,912
Distributions (2,541) (251,587) (254,128)
Net income 1,466 145,182 146,648
-------- ---------- ----------
Balance at March 31, 1997 $ 38,506 $ 3,942,926 $ 3,981,432
======== ========== ==========
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
PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
--------------------------
1997 1996
----------- -----------
Cash flows from operating activities:
Net income $ 146,648 $ 63,171
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 93,232 97,143
Salvage income from equipment disposals (14,656) (28,740)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 68,362 (24,646)
Increase (decrease) in accounts payable (9,619) 22,229
---------- ----------
Net cash provided by operating activities 283,967 129,157
---------- ----------
Cash flows from investing activities:
Proceeds from salvage income on equipment
disposals 14,656 28,740
Additions to oil and gas properties (2,024) (27,103)
---------- ----------
Net cash provided by investing activities 12,632 1,637
---------- ----------
Cash flows from financing activities:
Cash distributions to partners (254,128) (116,676)
---------- ----------
Net increase in cash and cash equivalents 42,471 14,118
Cash and cash equivalents at beginning of period 205,207 73,796
---------- ----------
Cash and cash equivalents at end of period $ 247,678 $ 87,914
========== ==========
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.
6
PARKER & PARSLEY 86-C, LTD.
(A Texas Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(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 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. Basis of presentation
In the opinion of management, the unaudited financial statements as of March 31,
1997 of the Partnership 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 Partnership's Report on Form
10-K for the year ended December 31, 1996, 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)
Results of Operations
Revenues:
The Partnership's oil and gas revenues increased to $423,075 from $390,535 for
the three months ended March 31, 1997 and 1996, an increase of 8%. The increase
in revenues resulted from a 16% increase in the average price received per
barrel of oil and a 37% increase in the average price received per mcf of gas,
offset by an 8% decline in barrels of oil produced and sold and an 18% decline
in mcf of gas produced and sold. For the three months ended March 31, 1997,
12,391 barrels of oil were sold compared to 13,477 for the same period in 1996,
a decrease of 1,086 barrels. For the three months ended March 31, 1997, 53,097
mcf of gas were sold compared to 64,863 for the same period in 1996, a decrease
of 11,766 mcf. The decreases in production volumes were primarily due to the
decline characteristics of the Partnership's oil and gas properties. Because of
these characteristics, management expects a certain amount of decline in
production to continue in the future until the Partnership's economically
recoverable reserves are fully depleted.
7
The average price received per barrel of oil increased $2.95 from $18.97 for the
three months ended March 31, 1996 to $21.92 for the same period in 1997, while
the average price received per mcf of gas increased from $2.08 during the three
months ended March 31, 1996 to $2.85 for the same period in 1997. 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, 1997.
Salvage income of $14,656 and $28,740 was received during the three months ended
March 31, 1997 and 1996, respectively, from the disposal of oil and gas
equipment on two fully depleted wells.
Costs and Expenses:
Total costs and expenses decreased to $294,122 for the three months ended March
31, 1997 as compared to $357,410 for the same period in 1996, a decrease of
$63,288, or 18%. This decrease was due to declines in production costs,
depletion and abandoned property costs, offset by an increase in general and
administrative expenses ("G&A").
Production costs were $188,198 for the three months ended March 31, 1997 and
$227,200 for the same period in 1996, resulting in a $39,002 decrease, or 17%.
This decrease was due to a decline in well repair and maintenance costs.
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, 8% from $11,716 for the three months ended March 31,
1996 to $12,692 for the same period in 1997. The Partnership agreement limits
G&A to 3% of gross oil and gas revenues.
Depletion was $93,232 for the three months ended March 31, 1997 compared to
$97,143 for the same period in 1996. This represented a decrease in depletion of
$3,911, or 4%.
Abandoned property costs during the three months ended March 31, 1996 totaled
$21,351. These costs were incurred in association with the plugging and
abandonment of two uneconomical wells.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities:
Net cash provided by operating activities increased $154,810 for the three
months ended March 31, 1997 from the same period in 1996. This increase was due
to an increase in oil and gas sales receipts and decreases in expenditures for
production costs and abandoned property costs paid, offset by an increase in G&A
expenses paid.
8
Net Cash Provided by Investing Activities
The Partnership's investing activities during the three months ended March 31,
1997 and 1996 were related to additions of oil and gas equipment on active
properties.
Proceeds of $14,656 and $28,740 received from salvage income during the three
months ended March 31, 1997 and 1996, respectively, resulted from the sale of
oil and gas equipment on fully depleted wells.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1997 to cover
distributions to the partners of $254,128 of which $251,587 was distributed to
the limited partners and $2,541 to the managing general partner. For the same
period ended March 31, 1996, cash was sufficient for distributions to the
partners of $116,676 of which $115,509 was distributed to the limited partners
and $1,167 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 the 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.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K - none
9
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: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: May 12, 1997 By: /s/ Steven L. Beal
--------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
10