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 September 30, 1995, 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. 33-19659-02
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)
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 11 pages.
There are no exhibits.
PARKER & PARSLEY 88-B, L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $118,327 at September 30
and $98,712 at December 31 $ 118,827 $ 99,212
Accounts receivable - oil and gas sales 92,374 109,649
--------- ---------
Total current assets 211,201 208,861
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,110,412 7,102,206
Accumulated depletion (3,790,354) (3,529,153)
--------- ---------
Net oil and gas properties 3,320,058 3,573,053
--------- ---------
$3,531,259 $3,781,914
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 43,587 $ 25,876
Partners' capital:
Limited partners (8,954 interests) 3,452,827 3,718,508
Managing general partner 34,845 37,530
--------- ---------
3,487,672 3,756,038
--------- ---------
$3,531,259 $3,781,914
========= =========
The financial information included as of September 30, 1995 has been
prepared by management without audit by independent public accountants.
The accompanying notes are an integral part of these statements.
2
PARKER & PARSLEY 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1995 1994 1995 1994
--------- --------- --------- ---------
Revenues:
Oil and gas sales $ 212,774 $ 256,838 $ 673,219 $ 711,157
Interest income 2,258 1,584 5,972 3,290
-------- -------- -------- --------
Total revenues 215,032 258,422 679,191 714,447
Costs and expenses:
Production costs 100,904 110,321 317,903 347,736
General and administrative
expenses 6,354 7,301 20,167 20,931
Depletion 85,333 86,897 261,201 283,065
-------- -------- -------- --------
Total costs and expenses 192,591 204,519 599,271 651,732
-------- -------- -------- --------
Net income $ 22,441 $ 53,903 $ 79,920 $ 62,715
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 224 $ 539 $ 799 $ 627
======== ======== ======== ========
Limited partners $ 22,217 $ 53,364 $ 79,121 $ 62,088
======== ======== ======== ========
Net income per limited
partnership interest $ 2.48 $ 5.96 $ 8.84 $ 6.93
======== ======== ======== ========
Distributions per limited
partnership interest $ 12.02 $ 15.00 $ 38.51 $ 38.50
======== ======== ======== ========
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 statements.
3
PARKER & PARSLEY 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
Balance at January 1, 1994 $ 42,228 $4,183,621 $4,225,849
Distributions (3,483) (344,740) (348,223)
Net income 627 62,088 62,715
-------- --------- ---------
Balance at September 30, 1994 $ 39,372 $3,900,969 $3,940,341
======== ========= =========
Balance at January 1, 1995 $ 37,530 $3,718,508 $3,756,038
Distributions (3,484) (344,802) (348,286)
Net income 799 79,121 79,920
-------- --------- ---------
Balance at September 30, 1995 $ 34,845 $3,452,827 $3,487,672
======== ========= =========
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 statements.
4
PARKER & PARSLEY 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
1995 1994
Cash flows from operating activities:
Net income $ 79,920 $ 62,715
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 261,201 283,065
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 17,275 (6,946)
Increase in accounts payable 17,711 25,187
-------- --------
Net cash provided by operating activities 376,107 364,021
Cash flows from investing activities:
Additions to oil and gas properties (8,206) (3,594)
Cash flows from financing activities:
Cash distributions to partners (348,286) (348,223)
-------- --------
Net increase in cash and cash equivalents 19,615 12,204
Cash and cash equivalents at beginning of period 99,212 109,852
-------- --------
Cash and cash equivalents at end of period $ 118,827 $ 122,056
======== ========
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 statements.
5
PARKER & PARSLEY 88-B, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1.
In the opinion of management, the unaudited financial statements as of September
30, 1995 of Parker & Parsley 88-B, L.P. (the "Registrant") 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, the results of operations for the nine months ended September
30, 1995 are not necessarily indicative of the results for the full year ending
December 31, 1995.
The financial statements should be read in conjunction with the financial
statements and the notes thereto contained in the Registrant's Report on Form
10-K for the year ended December 31, 1994, 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
The Registrant was formed November 18, 1988. The managing general partner of the
Registrant at December 31, 1994 was Parker & Parsley Development Company
("PPDC") which was merged into Parker & Parsley Development L.P. ("PPDLP") on
January 1, 1995. On January 1, 1995, PPDLP, a Texas limited partnership, became
the sole managing general partner of the Registrant, by acquiring the rights and
assuming the obligations of PPDC. PPDLP acquired PPDC's rights and obligations
as managing general partner of the Registrant in connection with the merger of
PPDC, P&P Producing, Inc. and Spraberry Development Corporation into MidPar LP.,
which survived the merger with a change of name to PPDLP. The sole general
partner of PPDLP is Parker & Parsley Petroleum USA, Inc. PPDLP has the power and
authority to manage, control and administer all Registrant affairs. The limited
partners contributed $8,954,000 representing 8,954 interests ($1,000 per
interest) sold to a total of 715 limited partners.
Since its formation, the Registrant invested $7,295,690 in various prospects
that were drilled in Texas. At September 30, 1995, the Registrant had 42
producing oil and gas wells with one well plugged and abandoned in 1992.
6
RESULTS OF OPERATIONSs
Nine months ended September 30, 1995 compared with nine months ended
September 30, 1994
REVENUES:
The Registrant's oil and gas revenues decreased to $673,219 from $711,157 for
the nine months ended September 30, 1995 and 1994, respectively, a decrease of
5%. The decrease in revenues resulted from an 11% decline in barrels of oil
produced and sold, an 11% decline in mcf of gas produced and sold and a decrease
in the average price received per mcf of gas, offset by an increase in the
average price received per barrel of oil. For the nine months ended September
30, 1995, 30,297 barrels of oil were sold compared to 34,144 for the same period
in 1994, a decrease of 3,847 barrels. For the nine months ended September 30,
1995, 86,576 mcf of gas were sold compared to 97,444 for the same period in
1994, a decrease of 10,868 mcf. The decreases are primarily due to the decline
characteristics of the Registrant'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 Registrant's economically recoverable reserves
are fully depleted.
The average price received per barrel of oil increased $1.44, or 9%, from $15.81
for the nine months ended September 30, 1994 to $17.25 for the same period in
1995 while the average price received per mcf of gas decreased from $1.76 during
the nine months ended September 30, 1994 to $1.74 in 1995. 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 Registrant 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, 1995.
COSTS AND EXPENSES:
Total costs and expenses decreased to $599,271 for the nine months ended
September 30, 1995 as compared to $651,732 for the same period in 1994, a
decrease of $52,461, or 8%. This decrease was due to declines in production
costs, general and administrative expenses ("G&A") and depletion.
Production costs were $317,903 for the nine months ended September 30, 1995 and
$347,736 for the same period in 1994, resulting in a $29,833 decrease, or 9%.
The decrease was due to declines in well repair and maintenance costs,
production and ad valorem taxes.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
period, G&A decreased, in aggregate, 4% from $20,931 for the nine months ended
September 30, 1994 to $20,167 for the same period in 1995. The Partnership
agreement limits G&A to 3% of gross oil and gas revenues.
Depletion was $261,201 for the nine months ended September 30, 1995 compared to
$283,065 for the same period in 1994. This represented a decrease in depletion
of $21,864, or 8%. Depletion was computed quarterly on a property-by-property
basis utilizing the unit-of-production
7
method based upon the dominant mineral produced, generally oil. Oil production
decreased 3,847 barrels for the nine months ended September 30, 1995 from the
same period in 1994. Depletion expense for the nine months ended September 30,
1995 was calculated based on reserves computed utilizing an oil price of $16.40
per barrel. Comparatively, depletion expense for the three months ended
September 30, 1994 and June 30, 1994 was calculated based on reserves computed
utilizing an oil price of $18.34 per barrel while depletion expense for the
three months ended March 31, 1994 was calculated based on reserves computed
utilizing an oil price of $12.84 per barrel.
Three months ended September 30, 1995 compared with three months ended
September 30, 1994
REVENUES:
The Registrant's oil and gas revenues decreased to $212,774 from $256,838 for
the three months ended September 30, 1995 and 1994, respectively, a decrease of
17%. The decrease in revenues resulted from a 13% decline in barrels of oil
produced and sold, an 18% decline in mcf of gas produced and sold and a decrease
in the average price received per barrel of oil and mcf of gas. For the three
months ended September 30, 1995, 9,832 barrels of oil were sold compared to
11,329 for the same period in 1994, a decrease of 1,497 barrels. For the three
months ended September 30, 1995, 29,534 mcf of gas were sold compared to 35,804
for the same period in 1994, a decrease of 6,270 mcf. The decreases in oil and
gas produced and sold were due to the decline characteristics of the
Registrant's oil and gas properties.
The average price received per barrel of oil decreased $.74, or 4%, from $17.29
for the three months ended September 30, 1994 to $16.55 for the same period in
1995, while the average price received per mcf of gas decreased from $1.70
during the three months ended September 30, 1994 to $1.69 in 1995.
COSTS AND EXPENSES:
Total costs and expenses decreased to $192,591 for the three months ended
September 30, 1995 as compared to $204,519 for the same period in 1994, a
decrease of $11,928, or 6%. This decrease was due to declines in production
costs, G&A and depletion.
Production costs were $100,904 for the three months ended September 30, 1995 and
$110,321 for the same period in 1994 resulting in a $9,417 decrease, or 9%. The
decrease was primarily due to a decline in well repair and maintenance costs.
G&A's components are independent accounting and engineering fees, computer
services, postage and managing general partner personnel costs. During this
period, G&A decreased, in aggregate, 13% from $7,301 for the three months ended
September 30, 1994 to $6,354 for the same period in 1995.
8
Depletion was $85,333 for the three months ended September 30, 1995 compared to
$86,897 for the same period in 1994. This represented a decrease in depletion of
$1,564. Depletion was computed quarterly on a property-by-property basis
utilizing the unit-of-production method based upon the dominant mineral
produced, generally oil. Oil production decreased 1,497 barrels for the three
months ended September 30, 1995 from the same period in 1994. Depletion expense
for the three months ended September 30, 1995 was calculated based on reserves
computed utilizing an oil price of $16.40 per barrel while depletion expense for
the three months ended September 30, 1994 was calculated based on reserves
computed utilizing an oil price of $18.34 per barrel.
LIQUIDITY AND CAPITAL RESOURCES
NET CASH PROVIDED BY OPERATING ACTIVITIES
Net cash provided by operating activities increased to $376,107 during the nine
months ended September 30, 1995, a 3% increase from the same period ended
September 30, 1994. This increase was due to a decrease in production costs and
G&A, offset by a decline in oil and gas sales. The decline in production costs
was due to less well repair and maintenance costs and the decline in G&A was due
to less allocated expenses by the managing general partner. The decline in oil
and gas sales was due to a decline in barrels of oil and mcf of gas produced and
sold and a decline in the average price received for oil.
NET CASH USED IN INVESTING ACTIVITIES
The Registrant's principal investing activities during the nine months ended
September 30, 1995 was for repair and maintenance activity on various oil and
gas properties.
NET CASH USED IN FINANCING ACTIVITIES
Cash was sufficient for the nine months ended September 30, 1995 to cover
distributions to the partners of $348,286 of which $344,802 was distributed to
the limited partners and $3,484 to the managing general partner. For the same
period ended September 30, 1994, cash was sufficient for distributions to the
partners of $348,223 of which $344,740 was distributed to the limited partners
and $3,483 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.
ACCOUNTING STANDARD ON IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 - Accounting for Impairment of Long-lived
Assets and for Long-lived Assets to Be Disposed Of ("FAS 121") regarding the
impairment of long-lived assets, identifiable intangibles and goodwill related
to those assets. FAS 121 is effective for financial statements for fiscal years
beginning after December 15, 1995, although earlier adoption is encouraged. The
application of
9
FAS 121 to oil and gas companies utilizing the successful efforts method (such
as the Registrant) will require periodic determination of whether the book value
of long-lived assets exceeds the future cash flows expected to result from the
use of such assets and, if so, will require reduction of the carrying amount of
the "impaired" assets to their estimated fair values. There is currently a great
deal of uncertainty as to how FAS 121 will apply to oil and gas companies using
the successful efforts method, including uncertainty regarding the determination
of expected future cash flows from the relevant assets and, if an impairment is
determined to exist, their estimated fair value. There is also uncertainty
regarding the level at which the test might be applied. Given this uncertainty,
the Registrant is currently unable to estimate the effect that FAS 121 will have
on the Registrant's results of operations for the period in which it is adopted.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
10
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: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: November 9, 1995 By: /s/ Steven L. Beal
--------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
11