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. 33-19659-02
PARKER & PARSLEY 88-B, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 75-2240121
--------------------------------- ---------------------
(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 88-B, L.P.
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 88-B, L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
2001 2000
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 139,057 $ 144,763
Accounts receivable - oil and gas sales 159,140 198,467
---------- ----------
Total current assets 298,197 343,230
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 6,955,501 6,954,545
Accumulated depletion (5,985,549) (5,969,972)
---------- ----------
Net oil and gas properties 969,952 984,573
---------- ----------
$ 1,268,149 $ 1,327,803
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 17,198 $ 16,350
Partners' capital:
Managing general partner 12,478 13,083
Limited partners (8,954 interests) 1,238,473 1,298,370
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1,250,951 1,311,453
---------- ----------
$ 1,268,149 $ 1,327,803
========== ==========
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 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
-------------------------
2001 2000
---------- ----------
Revenues:
Oil and gas $ 326,397 $ 288,612
Interest 2,721 2,092
--------- ---------
329,118 290,704
--------- ---------
Costs and expenses:
Oil and gas production 104,442 90,211
General and administrative 8,160 8,938
Depletion 15,577 19,708
--------- ---------
128,179 118,857
--------- ---------
Net income $ 200,939 $ 171,847
========= =========
Allocation of net income
Managing general partner $ 2,009 $ 1,718
========= =========
Limited partners $ 198,930 $ 170,129
========= =========
Net income per limited partnership interest $ 22.22 $ 19.00
========= =========
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 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 2001 $ 13,083 $1,298,370 $1,311,453
Distributions (2,614) (258,827) (261,441)
Net income 2,009 198,930 200,939
-------- --------- ---------
Balance at March 31, 2001 $ 12,478 $1,238,473 $1,250,951
======== ========= =========
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 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
-------------------------
2001 2000
---------- ----------
Cash flows from operating activities:
Net income $ 200,939 $ 171,847
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 15,577 19,708
Changes in assets and liabilities:
Accounts receivable 39,327 811
Accounts payable 848 3,189
--------- ---------
Net cash provided by operating activities 256,691 195,555
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (1,480) (1,883)
Proceeds from disposition of assets 524 -
--------- ---------
Net cash used in investing activities (956) (1,883)
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (261,441) (164,763)
--------- ---------
Net increase (decrease) in cash (5,706) 28,909
Cash at beginning of period 144,763 129,430
--------- ---------
Cash at end of period $ 139,057 $ 158,339
========= =========
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 88-B, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 2001
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 88-B, L.P. (the "Partnership") is a limited partnership
organized in 1988 under the laws of the State of Delaware.
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 13% to $326,397 for the three
months ended March 31, 2001 as compared to $288,612 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, 6,753
barrels of oil, 2,315 barrels of natural gas liquids ("NGLs") and 8,631 mcf of
gas were sold, or 10,507 barrel of oil equivalents ("BOEs"). For the three
months ended March 31, 2000, 8,236 barrels of oil, 3,267 barrels of NGLs and
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14,019 mcf of gas were sold, or 13,840 BOEs. Of the decrease, 2,758 BOEs are
attributable to three wells reaching payout pursuant to the terms of the farmout
agreements which reduced the Partnership's net revenue interest in the wells.
The average price received per barrel of oil increased $3.39, or 13%, from
$26.41 for the three months ended March 31, 2000 to $29.80 for the same period
in 2001. The average price received per barrel of NGLs increased $5.63, or 39%,
from $14.34 for the three months ended March 31, 2000 to $19.97 for the same
period in 2001. The average price received per mcf of gas increased 428% from
$1.73 during the three months ended March 31, 2000 to $9.14 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.
Costs and Expenses:
Total costs and expenses increased to $128,179 for the three months ended March
31, 2001 as compared to $118,857 for the same period in 2000, an increase of
$9,322, or 8%. The increase was primarily due to an increase in production
costs, offset by decreases in depletion and general and administrative expenses
("G&A").
Production costs were $104,442 for the three months ended March 31, 2001 and
$90,211 for the same period in 2000, resulting in a $14,231 increase, or 16%.
The increase in production costs was primarily due to higher production taxes
associated with higher oil and gas prices and additional workover and well
maintenance costs incurred to stimulate well production, offset by a decline in
lease operating and production taxes attributable to the wells that reached
payout pursuant to the terms of the farmout agreements as noted above.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and administrative costs. During this period, G&A
decreased 9% from $8,938 for the three months ended March 31, 2000 to $8,160 for
the same period in 2001.
Depletion was $15,577 for the three months ended March 31, 2001 as compared to
$19,708 for the same period in 2000, a decrease of $4,131, or 21%. This decrease
was primarily due to a decrease in oil production of 1,483 barrels for the three
months ended March 31, 2001 compared to the same period in 2000 and positive
revisions to proved reserves during the three months ended March 31, 2001 as a
result of higher commodity prices.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $61,136 during the three
months ended March 31, 2001 from the same period in 2000. The increase was
primarily attributable to an increase of $38,414 in oil and gas sales receipts
and reductions of $778 in G&A expenses and $36,175 in working capital, offset by
an increase in production costs of $14,231. The increase in oil and gas receipts
resulted from the increase in commodity prices during 2001 which contributed an
additional $150,881 to oil and gas receipts, offset by $112,467 resulting from
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the decline in production during 2001 as compared to the same period in 2000.
The increase in production costs was primarily due to increased production taxes
associated with higher oil and gas prices and additional workover and well
maintenance costs incurred to stimulate well production.
Net Cash Used in Investing Activities
The Partnership's principal investing activities during the three months ended
March 31, 2001 and 2000 were for equipment upgrades on active oil and gas
properties.
Proceeds from disposition of assets of $524 recognized during the three months
ended March 31, 2001 were due to equipment credits received on active
properties.
Net Cash Used in Financing Activities
For the three months ended March 31, 2001, cash distributions to the partners
were $261,441, of which $2,614 was distributed to the managing general partner
and $258,827 to the limited partners. For the same period ended March 31, 2000,
cash distributions to the partners were $164,763, of which $1,648 was
distributed to the managing general partner and $163,115 to the limited
partners.
Proposal to acquire partnerships
On April 18, 2001, Pioneer Natural Resources Company ("Pioneer") filed a
preliminary proxy statement with the SEC 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. Pioneer USA is the sole or managing general
partner of the partnerships. The preliminary proxy statement 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
partners in each partnership and the resolution of SEC review comments. If
approved, Pioneer anticipates closing the mergers during the third quarter of
2001.
- ---------------
(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.
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PARKER & PARSLEY 88-B, 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 88-B, L.P.
By: Pioneer Natural Resources USA, Inc.
Managing General Partner
Dated: May 9, 2001 By: /s/ Rich Dealy
----------------------------------
Rich Dealy, Vice President
and Chief Accounting Officer
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