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 June 30, 1996
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 10 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
June 30, December 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearings deposits of $142,821 at June 30
and $125,830 at December 31 $ 143,321 $ 126,330
Accounts receivable - oil and gas sales 117,385 104,938
---------- ----------
Total current assets 260,706 231,268
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,114,292 7,114,609
Accumulated depletion (4,484,937) (4,375,388)
---------- ----------
Net oil and gas properties 2,629,355 2,739,221
---------- ----------
$ 2,890,061 $ 2,970,489
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 38,691 $ 52,562
Partners' capital:
Limited partners (8,954 interests) 2,822,888 2,888,779
Managing general partner 28,482 29,148
---------- ----------
2,851,370 2,917,927
---------- ----------
$ 2,890,061 $ 2,970,489
========== ==========
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.
2
PARKER & PARSLEY 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
Revenues:
Oil and gas sales $ 251,186 $ 221,407 $ 482,932 $ 460,445
Interest income 1,960 2,019 3,572 3,714
-------- -------- -------- --------
Total revenues 253,146 223,426 486,504 464,159
Costs and expenses:
Production costs 96,860 104,643 197,290 216,999
General and administrative
expenses 7,536 6,642 14,488 13,813
Depletion 53,911 83,696 110,182 175,868
Loss on abandoned property 951 - 951 -
Abandoned property costs 331 - 331 -
-------- -------- -------- --------
Total costs and expenses 159,589 194,981 323,242 406,680
-------- -------- -------- --------
Net income $ 93,557 $ 28,445 $ 163,262 $ 57,479
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 935 $ 285 $ 1,632 $ 575
======== ======== ======== ========
Limited partners $ 92,622 $ 28,160 $ 161,630 $ 56,904
======== ======== ======== ========
Net income per limited
partnership interest $ 10.34 $ 3.15 $ 18.05 $ 6.36
======== ======== ======== ========
Distributions per limited
partnership interest $ 13.80 $ 12.69 $ 25.41 $ 26.49
======== ======== ======== ========
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.
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, 1995 $ 37,530 $3,718,508 $3,756,038
Distributions (2,397) (237,225) (239,622)
Net income 575 56,904 57,479
---------- --------- ---------
Balance at June 30, 1995 $ 35,708 $3,538,187 $3,573,895
========== ========= =========
Balance at January 1, 1996 $ 29,148 $2,888,779 $2,917,927
Distributions (2,298) (227,521) (229,819)
Net income 1,632 161,630 163,262
---------- --------- ---------
Balance at June 30, 1996 $ 28,482 $2,822,888 $2,851,370
========== ========= =========
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 88-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended
June 30,
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 163,262 $ 57,479
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 110,182 175,868
Loss on abandoned property 951 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (12,447) 5,249
Increase (decrease) in accounts payable (13,109) 16,215
-------- --------
Net cash provided by operating activities 248,839 254,811
Cash flows from investing activities:
Additions to oil and gas properties (2,071) (6,974)
Proceeds from equipment salvage on abandoned
property 42 -
-------- --------
Net cash used in investing activities (2,029) (6,974)
Cash flows from financing activities:
Cash distributions to partners (229,819) (239,622)
-------- --------
Net increase in cash and cash equivalents 16,991 8,215
Cash and cash equivalents at beginning of period 126,330 99,212
-------- --------
Cash and cash equivalents at end of period $ 143,321 $ 107,427
======== ========
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 88-B, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1.
Parker & Parsley 88-B, L.P. (the "Registrant") is a limited partnership
organized in 1988 under the laws of the State of Delaware.
The Registrant 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.
In the opinion of management, the Registrant's unaudited financial statements as
of June 30, 1996 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 Registrant's Report on Form
10-K for the year ended December 31, 1995, 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
Six months ended June 30, 1996 compared with six months ended
June 30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $482,932 from $460,445 for
the six months ended June 30, 1996 and 1995, respectively, an increase of 5%.
The increase in revenues resulted from higher average prices received per barrel
of oil and mcf of gas, offset by a 10% decrease in barrels of oil produced and
sold and a 15% decrease in mcf of gas produced and sold. For the six months
ended June 30, 1996, 18,337 barrels of oil were sold compared to 20,465 for the
same period in 1995, a decrease of 2,128 barrels. For the six months ended June
30, 1996, 48,232 mcf of gas were sold compared to 57,042 for the same period in
1995, a decrease of 8,810 mcf. The production volume decreases were due to the
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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 $2.69, or 15%, from
$17.58 for the six months ended June 30, 1995 to $20.27 for the same period in
1996 while the average price received per mcf of gas increased 31% from $1.77
during the six months ended June 30, 1995 to $2.31 in 1996. 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 six months ended June 30,
1996.
Costs and Expenses:
Total costs and expenses decreased to $323,242 for the six months ended June 30,
1996 as compared to $406,680 for the same period in 1995, a decrease of $83,438,
or 21%. This decrease was due to declines in production costs and depletion,
offset by increases in general and administrative expenses ("G&A"), loss on
abandoned property and abandoned property costs.
Production costs were $197,290 for the six months ended June 30, 1996 and
$216,999 for the same period in 1995 resulting in a $19,709 decrease, or 9%. The
decrease was due to reductions in well repair and maintenance costs 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 increased 5% from $13,813 for the six months ended June 30, 1995 to
$14,488 for the same period in 1996. The Partnership agreement limits G&A to 3%
of gross oil and gas revenues.
Depletion was $110,182 for the six months ended June 30, 1996 compared to
$175,868 for the same period in 1995. This represented a decrease in depletion
of $65,686, or 37%, primarily attributable to the adoption of the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("FAS 121") effective the fourth quarter of 1995 and the reduction of net
depletable basis resulting from the charge taken upon such adoption. Depletion
was computed property-by-property utilizing the unit-of-production method based
upon the dominant mineral produced, generally oil. Oil production decreased
2,128 barrels for the six months ended June 30, 1996 from the same period in
1995, while oil reserves of barrels were revised upward by 22,324 barrels, or
4%.
A loss on abandoned property of $951 was recognized during the six months ended
June 30, 1996. This loss resulted from the abandonment of a saltwater disposal
well and the write-off of associated capitalized well costs of $993, less
proceeds from the salvage of equipment of $42. There was no abandonment activity
during the six months ended June 30, 1995.
7
Three months ended June 30, 1996 compared with three months ended
June 30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $251,186 from $221,407 for
the three months ended June 30, 1996 and 1995, respectively, a increase of 13%.
The increase in revenues resulted from higher average prices received per barrel
of oil and mcf of gas, offset by an 8% decrease in barrels of oil and a 15%
decrease in mcf of gas. For the three months ended June 30, 1996, 8,942 barrels
of oil were sold compared to 9,767 for the same period in 1995, a decrease of
825 barrels. For the three months ended June 30, 1996, 23,954 mcf of gas were
sold compared to 28,273 for the same period in 1996, a decrease of 4,319 mcf.
The production volume decreases were due to the decline characteristics of the
Registrant's oil and gas properties.
The average price received per barrel of oil increased $3.60, or 20%, from
$18.04 for the three months ended June 30, 1995 to $21.64 for the same period in
1996 while the average price received per mcf increased 51% from $1.60 during
the three months ended June 30, 1995 to $2.41 for the same period in 1996.
Costs and Expenses:
Total costs and expenses decreased to $159,589 for the three months ended June
30, 1996 as compared to $194,981 for the same period in 1995, a decrease of
$35,392, or 18%. This decrease was due to declines in production costs and
depletion, offset by increases in G&A, loss on abandoned property and abandoned
property costs.
Production costs were $96,860 for the three months ended June 30, 1995 and
$104,643 for the same period in 1995 resulting in a $7,783 decrease, or 7%. The
decrease was due to declines in well repair and maintenance costs and ad valorem
taxes, offset by an increase in production 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 increased, in aggregate, 13% from $6,642 for the three months ended
June 30, 1995 to $7,536 for the same period in 1996.
Depletion was $53,911 for the three months ended June 30, 1996 compared to
$83,696 for the same period in 1995, a decrease of $29,785, or 36%, primarily
due to the adoption of FAS 121 the fourth quarter of 1995, as discussed
previously. Oil production decreased 825 barrels for the three months ended June
30, 1996 from the same period in 1995.
A loss on abandoned property of $951 was recognized during the three months
ended June 30, 1996. This loss resulted from the abandonment of a saltwater
disposal well and the write-off of associated capitalized well costs of $993,
less proceeds from the salvage of equipment of $42. There was no abandonment
activity during the three months ended June 30, 1995.
8
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased during the six months ended
June 30, 1996 $5,972 from the same period ended June 30, 1995. This decrease was
primarily due to an increase in production costs paid, offset by an increase in
oil and gas sales.
Net Cash Used in Investing Activities
The Registrant's principal investing activities during the six months ended June
30, 1996 and 1995 were related to expenditures for equipment replacement on
various oil and gas properties.
Net Cash Used in Financing Activities
Cash was sufficient for the six months ended June 30, 1996 to cover
distributions to the partners of $229,819 of which $227,521 was distributed to
the limited partners and $2,298 to the managing general partner. For the same
period ended June 30, 1995, cash was sufficient for distributions to the
partners of $239,622 of which $237,225 was distributed to the limited partners
and $2,397 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 - none
(b) Reports on Form 8-K - none
9
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: August 8, 1996 By: /s/ Steven L. Beal
------------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
10