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, 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. 33-26097-02
PARKER & PARSLEY 89-B, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 75-2301810
(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 89-B, L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $88,774 at March 31
and $98,911 at December 31 $ 88,807 $ 98,944
Accounts receivable - oil and gas sales 80,887 75,959
----------- -----------
Total current assets 169,694 174,903
Oil and gas properties - at cost, based on the
successful efforts accounting method 5,812,422 5,813,260
Accumulated depletion (3,469,188) (3,422,315)
----------- -----------
Net oil and gas properties 2,343,234 2,390,945
----------- -----------
$ 2,512,928 $ 2,565,848
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 28,283 $ 53,955
Partners' capital:
Limited partners (6,949 interests) 2,459,671 2,486,533
Managing general partner 24,974 25,360
----------- -----------
2,484,645 2,511,893
----------- -----------
$ 2,512,928 $ 2,565,848
=========== ===========
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 89-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
1996 1995
----------- -----------
Revenues:
Oil and gas sales $ 195,081 $ 197,739
Interest income 1,179 1,167
---------- ----------
Total revenues 196,260 198,906
Costs and expenses:
Production costs 93,384 94,749
General and administrative expenses 5,852 6,661
Depletion 46,873 72,068
---------- ----------
Total costs and expenses 146,109 173,478
---------- ----------
Net income $ 50,151 $ 25,428
========== ==========
Allocation of net income:
Managing general partner $ 501 $ 254
========== ==========
Limited partners $ 49,650 $ 25,174
========== ==========
Net income per limited partnership interest $ 7.14 $ 3.62
========== ==========
Distributions per limited partnership interest $ 11.01 $ 14.57
========== ==========
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 89-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
----------- ----------- -----------
Balance at January 1, 1995 $ 34,146 $ 3,356,176 $ 3,390,322
Distributions (1,023) (101,261) (102,284)
Net income 254 25,174 25,428
---------- ---------- ----------
Balance at March 31, 1995 $ 33,377 $ 3,280,089 $ 3,313,466
========== ========== ==========
Balance at January 1, 1996 $ 25,360 $ 2,486,533 $ 2,511,893
Distributions (887) (76,512) (77,399)
Net income 501 49,650 50,151
---------- ---------- ----------
Balance at March 31, 1996 $ 24,974 $ 2,459,671 $ 2,484,645
========== ========== ==========
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.
4
PARKER & PARSLEY 89-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income $ 50,151 $ 25,428
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 46,873 72,068
Changes in assets and liabilities:
Increase in accounts receivable (4,928) (2,865)
Increase (decrease) in accounts payable (25,672) 7,029
--------- ---------
Net cash provided by operating activities 66,424 101,660
Cash flows from investing activities:
(Additions) disposals to oil and gas properties 838 (3,423)
Cash flows from financing activities:
Cash distributions to partners (77,399) (102,284)
--------- ---------
Net decrease in cash and cash equivalents (10,137) (4,047)
Cash and cash equivalents at beginning of period 98,944 68,082
--------- ---------
Cash and cash equivalents at end of period $ 88,807 $ 64,035
========= =========
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 89-B, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
Note 1.
Parker & Parsley 89-B, L.P. (the "Registrant") is a limited partnership
organized in 1989 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 unaudited financial statements as of March 31,
1996 of 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, 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)
The Registrant was formed December 30, 1989. On January 1, 1995, Parker &
Parsley Development L.P. ("PPDLP"), a Texas limited partnership, became the sole
managing general partner of the Registrant, by acquiring the rights and assuming
the obligations of Parker & Parsley Development Company ("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 L.P., which survived the merger with a
change of name to PPDLP. The managing general partner has the power and
authority to manage, control and administer all Registrant affairs. The limited
partners contributed $6,949,000 representing 6,949 interests ($1,000 per
interest) sold to a total of 463 limited partners.
Since its formation, the Registrant invested $5,812,422 in various prospects
drilled in Texas. At March 31, 1996, the Registrant had 33 producing oil and gas
wells.
6
Results of Operations
Revenues:
The Registrant's oil and gas revenues decreased to $195,081 from $197,739 for
the three months ended March 31, 1996 and 1995, respectively, a decrease of
$2,658. The decrease in revenues was the result of a 14% decline in barrels of
oil produced and sold and a 9% decline in mcf of gas produced and sold, offset
by higher average prices received per barrel of oil and mcf of gas. For the
three months ended March 31, 1996, 7,212 barrels of oil were sold compared to
8,358 for the same period in 1995, a decrease of 1,146 barrels. For the three
months ended March 31, 1996, 25,636 mcf of gas were sold compared to 28,038 mcf
for the same period in 1995, a decrease of 2,402 mcf. The decrease in production
volumes was primarily due to the decline characteristics of the Registrant's oil
and gas properties. 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 $1.81, or 11%, from
$17.23 for the three months ended March 31, 1995 to $19.04 for the same period
in 1996 while the average price received per mcf of gas increased 17% from $1.92
during the three months ended March 31, 1995 to $2.25 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 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 three months ended March 31, 1996.
Costs and Expenses:
Total costs and expenses decreased to $146,109 for the three months ended March
31, 1996 as compared to $173,478 for the same period in 1995, a decrease of
$27,369, or 16%. This decrease was due to declines in production costs, general
and administrative expenses ("G&A") and depletion.
Production costs were $93,384 for the three months ended March 31, 1996 and
$94,749 for the same period in 1995 resulting in a $1,365 decrease. 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 decreased, in aggregate, 12% from $6,661 for the three months ended
March 31, 1995 to $5,852 for the same period in 1996. The Partnership agreement
limits G&A to 3% of gross oil and gas revenue.
Depletion was $46,873 for the three months ended March 31, 1996 compared to
$72,068 for the same period in 1995. This represented a decrease in depletion of
$25,195, or 35%, 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"
effective for 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.
7
Oil production decreased 1,146 barrels for the three months ended March 31, 1996
from 1995, while oil reserves of barrels were revised downward by 2,428 barrels.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased to $66,424 during the three
months ended March 31, 1996, a $35,236, or 35%, decrease from the same period
ended March 31, 1995. This decrease was due to a decline in oil and gas sales
receipts and an increase in expenditures for production costs. The decline in
oil and gas sales receipts was the result of decreases in barrels of oil and mcf
of gas produced and sold, offset by higher average prices received for both oil
and gas. The increase in production cost expenditures was due to additional well
repair and maintenance costs.
Net Cash Provided by (Used in) Investing Activities
The Registrant's investing activities during the three months ended March 31,
1996 yielded $838 in proceeds received from the disposal of oil and gas
equipment on active properties. For the three months ended March 31, 1995,
investing activities included expenditures of $3,423 related to repair and
maintenance activity on various oil and gas properties.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1996 to cover
distributions to the partners of $77,399 of which $76,512 was distributed to the
limited partners and $887 to the managing general partner. For the same period
ended March 31, 1995, cash was sufficient for distributions of $102,284 to the
partners of which $101,261 was distributed to the limited partners and $1,023 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 these 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.
8
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 89-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 89-B, L.P.
By: Parker & Parsley Development L.P.,
Managing General Partner
By: Parker & Parsley Petroleum USA, Inc.
("PPUSA"), General Partner
Dated: May 13, 1996 By: /s/ Steven L. Beal
-------------------------------------
Steven L. Beal, Senior Vice President
and Chief Financial Officer of PPUSA
10