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, 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 11 pages.
-There are no exhibits-
PARKER & PARSLEY 88-B, L.P.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 1996 and
December 31, 1995 ................................. 3
Statements of Operations for the three and nine
months ended September 30, 1996 and 1995.............. 4
Statement of Partners' Capital for the nine months
ended September 30, 1996.............................. 5
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995........................... 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....................................... 10
Signatures.......................................... 11
2
PARKER & PARSLEY 88-B, L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
1996 1995
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $112,405 at September 30
and $125,830 at December 31 $ 159,973 $ 126,330
Accounts receivable - oil and gas sales 118,678 104,938
---------- ----------
Total current assets 278,651 231,268
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 7,108,417 7,114,609
Accumulated depletion (4,531,111) (4,375,388)
---------- ----------
Net oil and gas properties 2,577,306 2,739,221
---------- ----------
$ 2,855,957 $ 2,970,489
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 42,312 $ 52,562
Partners' capital:
Limited partners (8,954 interests) 2,785,540 2,888,779
Managing general partner 28,105 29,148
---------- ----------
2,813,645 2,917,927
---------- ----------
$ 2,855,957 $ 2,970,489
========== ==========
The financial information included as of September 30, 1996 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 OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
Revenues:
Oil and gas $ 251,519 $ 212,774 $ 734,451 $ 673,219
Interest 2,250 2,258 5,822 5,972
-------- -------- -------- --------
253,769 215,032 740,273 679,191
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 109,127 100,904 306,417 317,903
General and administrative 7,546 6,354 22,034 20,167
Depletion 46,174 85,333 156,356 261,201
Loss on abandoned property - - 951 -
Abandoned property 17 - 348 -
-------- -------- -------- ------
162,864 192,591 486,106 599,271
-------- -------- -------- --------
Net income $ 90,905 $ 22,441 $ 254,167 $ 79,920
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 910 $ 224 $ 2,542 $ 799
======== ======== ======== ========
Limited partners $ 89,995 $ 22,217 $ 251,625 $ 79,121
======== ======== ======== ========
Net income per limited
partnership interest $ 10.05 $ 2.48 $ 28.10 $ 8.84
======== ======== ======== ========
Distributions per limited
partnership interest $ 14.22 $ 12.02 $ 39.63 $ 38.51
======== ======== ======== ========
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)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ----------- -----------
Balance at January 1, 1996 $ 29,148 $ 2,888,779 $ 2,917,927
Distributions (3,585) (354,864) (358,449)
Net income 2,542 251,625 254,167
-------- ---------- ----------
Balance at September 30, 1996 $ 28,105 $ 2,785,540 $ 2,813,645
======== ========== ==========
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)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
----------------------
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 254,167 $ 79,920
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 156,356 261,201
Loss on abandoned property 951 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (13,740) 17,275
Increase (decrease) in accounts payable (9,489) 17,711
-------- --------
Net cash provided by operating activities 388,245 376,107
-------- --------
Cash flows from investing activities:
(Additions) deletions to oil and gas properties 3,805 (8,206)
Proceeds from equipment salvage on abandoned
property 42 -
-------- ------
Net cash provided by (used in) investing
activities 3,847 (8,206)
-------- --------
Cash flows from financing activities:
Cash distributions to partners (358,449) (348,286)
-------- --------
Net increase in cash and cash equivalents 33,643 19,615
Cash and cash equivalents at beginning of period 126,330 99,212
-------- --------
Cash and cash equivalents at end of period $ 159,973 $ 118,827
======== ========
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 88-B, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 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 September 30, 1996 and for the three and nine months ended September 30, 1996
and 1995 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 information and footnote disclosure 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 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
Nine months ended September 30, 1996 compared with nine months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $734,451 from $673,219 for
the nine months ended September 30, 1996 and 1995, respectively, an increase of
9%. The increase in revenues resulted from higher average prices received per
barrel of oil and mcf of gas, offset by a 9% decrease in barrels of oil produced
and sold and a 14% decrease in mcf of gas produced and sold. For the nine months
ended September 30, 1996, 27,480 barrels of oil were sold compared to 30,297 for
the same period in 1995, a decrease of 2,817 barrels. For the nine months ended
September 30, 1996, 74,685 mcf of gas were sold compared to 86,576 for the same
7
period in 1995, a decrease of 11,891 mcf. The production volume decreases were
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 $3.40, or 20%, from
$17.25 for the nine months ended September 30, 1995 to $20.65 for the same
period in 1996 while the average price received per mcf of gas increased 29%
from $1.74 during the nine months ended September 30, 1995 to $2.23 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 nine months ended
September 30, 1996.
Costs and Expenses:
Total costs and expenses decreased to $486,106 for the nine months ended
September 30, 1996 as compared to $599,271 for the same period in 1995, a
decrease of $113,165, or 19%. 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 $306,417 for the nine months ended September 30, 1996 and
$317,903 for the same period in 1995, resulting in a $11,486 decrease, or 4%.
The decrease was primarily due to reductions 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 increased, in aggregate, 9% from $20,167 for the nine months ended
September 30, 1995 to $22,034 for the same period in 1996. The Partnership
agreement limits G&A to 3% of gross oil and gas revenues.
Depletion was $156,356 for the nine months ended September 30, 1996 compared to
$261,201 for the same period in 1995, representing a decrease of $104,845, or
40%. This decrease was primarily attributable to the following factors: (i) a
reduction in the Registrant's net depletable basis from charges taken in
accordance with Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("FAS 121"), (ii) a reduction in oil production of 2,817 barrels for the nine
months ended September 30, 1996 as compared to the same period in 1995, and
(iii) an increase in oil and gas reserves during the third quarter of 1996 as a
result of higher commodity prices.
A loss on abandoned property of $951 was recognized during the nine months ended
September 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 salvage of equipment of $42. Costs associated with this
8
abandonment totaled $348 during the nine months ended September 30, 1996. There
was no abandonment activity during the nine months ended September 30, 1995.
Three months ended September 30, 1996 compared with three months ended September
30, 1995
Revenues:
The Registrant's oil and gas revenues increased to $251,519 from $212,774 for
the three months ended September 30, 1996 and 1995, respectively, an increase of
18%. The increase in revenues resulted from higher average prices received per
barrel of oil and mcf of gas, offset by a 7% decrease in barrels of oil produced
and sold and a 10% decrease in mcf of gas produced and sold. For the three
months ended September 30, 1996, 9,143 barrels of oil were sold compared to
9,832 for the same period in 1995, a decrease of 689 barrels. For the three
months ended September 30, 1996, 26,453 mcf of gas were sold compared to 29,534
for the same period in 1995, a decrease of 3,081 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 increased $4.88, or 29%, from
$16.55 for the three months ended September 30, 1995 to $21.43 for the same
period in 1996, while the average price received per mcf of gas increased 24%
from $1.69 during the three months ended September 30, 1995 to $2.10 in 1996.
Costs and Expenses:
Total costs and expenses decreased to $162,864 for the three months ended
September 30, 1996 as compared to $192,591 for the same period in 1995, a
decrease of $29,727, or 15%. This decrease was due to a decline in depletion,
offset by increases in production costs, G&A and abandoned property costs.
Production costs were $109,127 for the three months ended September 30, 1996 and
$100,904 for the same period in 1995 resulting in a $8,223 increase, or 8%. The
increase was primarily due to additional 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 increased, in aggregate, 19% from $6,354 for the three months ended
September 30, 1995 to $7,546 for the same period in 1996.
Depletion was $46,174 for the three months ended September 30, 1996 compared to
$85,333 for the same period in 1995, representing a decrease of $39,159, or 46%,
primarily attributable to the following factors: (i) a reduction in the
Registrant's net depletable basis from charges taken in accordance with FAS 121,
(ii) a reduction in oil production of 689 barrels for the three months ended
September 30, 1996 as compared to the same period in 1995, and (iii) an increase
in oil and gas reserves during the third quarter of 1996 as a result of higher
commodity prices.
Abandoned property costs of $17 for the three months ended September 30, 1996
resulted from the abandonment of one saltwater disposal well. There was no
abandonment activity during the three months ended September 30, 1996.
9
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $12,138 during the nine
months ended September 30, 1996 from the same period ended September 30, 1995.
This increase was due to an increase in oil and gas sales, offset by an increase
in production costs paid.
Net Cash Provided by (Used in) Investing Activities
The Registrant's investing activities during the nine months ended September 30,
1996 included $3,805 in proceeds received from the disposal of oil and gas
equipment on active properties. The nine months ended September 30, 1995
included expenditures of $8,206 related to equipment replacement on various oil
and gas properties.
Net Cash Used in Financing Activities
Cash was sufficient for the nine months ended September 30, 1996 to cover
distributions to the partners of $358,449 of which $354,864 was distributed to
the limited partners and $3,585 to the managing general partner. For the same
period ended September 30, 1995, cash was sufficient for 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.
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
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 11, 1996 By: /s/ Steven L. Beal
--------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
11