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 September 30, 2001
Commission File No. 33-26097-07
PARKER & PARSLEY 90-B, L.P.
-----------------------------
(Exact name of Registrant as specified in its charter)
Delaware 75-2329287
----------------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5205 N. O'Connor Blvd., Suite 1400, Irving, Texas 75039
------------------------------------------------- -------------
(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 90-B, L.P.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 2001 and
December 31, 2000...................................... 3
Statements of Operations for the three and nine
months ended September 30, 2001 and 2000................ 4
Statement of Partners' Capital for the nine months
ended September 30, 2001................................ 5
Statements of Cash Flows for the nine months ended
September 30, 2001 and 2000............................. 6
Notes to Financial Statements............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.......................... 12
Signatures................................................ 13
2
PARKER & PARSLEY 90-B, L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
September 30, December 31,
2001 2000
------------- ------------
(Unaudited)
ASSETS
Current assets:
Cash $ 798,150 $ 364,895
Accounts receivable - oil and gas sales 393,565 568,283
----------- -----------
Total current assets 1,191,715 933,178
----------- -----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 25,946,724 26,110,930
Accumulated depletion (21,988,768) (21,899,717)
----------- -----------
Net oil and gas properties 3,957,956 4,211,213
----------- -----------
$ 5,149,671 $ 5,144,391
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 137,433 $ 42,091
Partners' capital:
Managing general partner 50,126 51,027
Limited partners (32,264 interests) 4,962,112 5,051,273
----------- -----------
5,012,238 5,102,300
----------- -----------
$ 5,149,671 $ 5,144,391
=========== ===========
The financial information included as of September 30, 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 90-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------ ------------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
Revenues:
Oil and gas $ 814,193 $1,098,786 $2,883,717 $2,962,304
Interest 5,341 9,281 19,499 22,423
Gain on disposition of assets 11,959 - 20,242 5,487
--------- --------- --------- ---------
831,493 1,108,067 2,923,458 2,990,214
--------- --------- --------- ---------
Costs and expenses:
Oil and gas production 456,072 368,259 1,221,395 1,120,284
General and administrative 22,471 37,886 84,405 96,797
Impairment of oil and gas properties 30,575 - 30,575 -
Depletion 85,177 67,785 232,270 210,132
Abandoned property 213 - 8,509 -
--------- --------- --------- ---------
594,508 473,930 1,577,154 1,427,213
--------- --------- --------- ---------
Net income $ 236,985 $ 634,137 $1,346,304 $1,563,001
========= ========= ========= =========
Allocation of net income:
Managing general partner $ 2,370 $ 6,341 $ 13,463 $ 15,630
========= ========= ========= =========
Limited partners $ 234,615 $ 627,796 $1,332,841 $1,547,371
========= ========= ========= =========
Net income per limited
partnership interest $ 7.27 $ 19.46 $ 41.31 $ 47.96
========= ========= ========= =========
The financial information included herein has been prepared by
managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
4
PARKER & PARSLEY 90-B, L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ----------- -----------
Balance at January 1, 2001 $ 51,027 $ 5,051,273 $ 5,102,300
Distributions (14,364) (1,422,002) (1,436,366)
Net income 13,463 1,332,841 1,346,304
--------- ---------- ----------
Balance at September 30, 2001 $ 50,126 $ 4,962,112 $ 5,012,238
========= ========== ==========
The financial information included herein has been prepared by
managing general partner without audit by independent public accountants.
The accompanying notes are an integral part of these financial statements.
5
PARKER & PARSLEY 90-B, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended
September 30,
--------------------------
2001 2000
----------- -----------
Cash flows from operating activities:
Net income $ 1,346,304 $ 1,563,001
Adjustments to reconcile net income to net
cash provided by operating activities:
Impairment of oil and gas properties 30,575 -
Depletion 232,270 210,132
Gain on disposition of assets (20,242) (5,487)
Changes in assets and liabilities:
Accounts receivable 174,718 (98,986)
Accounts payable 95,342 54,488
---------- ----------
Net cash provided by operating activities 1,858,967 1,723,148
---------- ----------
Cash flows from investing activities:
Additions to oil and gas properties (9,898) (38,547)
Proceeds from asset dispositions 20,552 5,487
---------- ----------
Net cash provided by (used in) investing
activities 10,654 (33,060)
---------- ----------
Cash flows used in financing activities:
Cash distributions to partners (1,436,366) (1,619,198)
---------- ----------
Net increase in cash 433,255 70,890
Cash at beginning of period 364,895 311,017
---------- ----------
Cash at end of period $ 798,150 $ 381,907
========== ==========
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 90-B, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 90-B, L.P. (the "Partnership") is a limited partnership
organized in 1990 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 September 30, 2001 and for the three and nine months ended
September 30, 2001 and 2000 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 September 30, 2000 financial statements to conform to
the September 30, 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, Suite 1400, Irving,
Texas 75039-3746.
Note 3. Impairment of long-lived assets
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" ("SFAS 121"), the Partnership reviews its proved oil and gas
properties for impairment whenever events and circumstances indicate a decline
in the recoverability of the carrying value of the Partnership's oil and gas
properties. The Partnership has estimated the expected future cash flows of its
oil and gas properties as of September 30, 2001, based on proved reserves, and
compared such estimated future cash flows to the respective carrying amount of
the oil and gas properties to determine if the carrying amounts were likely to
be recoverable. For those proved oil and gas properties for which the carrying
amount exceeded the estimated future cash flows, an impairment was determined to
exist; therefore, the Partnership adjusted the carrying amount of those oil and
gas properties to their fair value as determined by discounting their expected
7
future cash flows at a discount rate commensurate with the risks involved in the
industry. As a result, the Partnership recognized a non-cash impairment
provision of $30,575 related to its proved oil and gas properties during the
nine months ended September 30, 2001.
Note 4. Proposal to acquire Partnership
On October 22, 2001, Pioneer Natural Resources Company ("Pioneer") mailed
definitive materials (the "proxy statement/prospectus") to solicit the approval
of the limited partners of the Partnership. Pioneer has valued the Partnership
interest at $8,900,613 of which $8,788,939 is allocated to the non-affiliated
limited partners. If a majority of the limited partners approve the transaction,
the limited partners will receive their value in the form of Pioneer common
stock.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (1)
Results of Operations
Nine months ended September 30, 2001 compared with nine months ended September
30, 2000
Revenues:
The Partnership's oil and gas revenues decreased 3% to $2,883,717 for the nine
months ended September 30, 2001 as compared to $2,962,304 for the same period in
2000. The decrease in revenues resulted from lower average prices received for
oil and natural gas liquids ("NGLs") and a decline in production, offset by
higher average prices received for gas. For the nine months ended September 30,
2001, 69,840 barrels of oil, 27,890 barrels of NGLs and 140,294 mcf of gas were
sold, or 121,112 barrel of oil equivalents ("BOEs"). For the nine months ended
September 30, 2000, 73,699 barrels of oil, 35,181 barrels of NGLs and 135,699
mcf of gas were sold, or 131,497 BOEs. Due to the decline characteristics of the
Partnership's oil and gas properties, management expects a certain amount of
decline in production in the future until the Partnership's economically
recoverable reserves are fully depleted.
The average price received per barrel of oil decreased $1.07, or 4%, from $28.68
for the nine months ended September 30, 2000 to $27.61 for the same period in
2001. The average price received per barrel of NGLs decreased $.33, or 2%, from
$14.66 during the nine months ended September 30, 2000 to $14.33 for the same
period in 2001. The average price received per mcf of gas increased 62% from
$2.45 for the nine months ended September 30, 2000 to $3.96 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 nine
months ended September 30, 2001.
Gains on disposition of assets of $20,242 and $5,487 were recognized during the
nine months ended September 30, 2001 and 2000, respectively. The gain recognized
during the period ended September 30, 2001 consisted of $19,074 salvage income
from one well plugged and abandoned in the current period and $1,168 from
8
equipment credits received on one fully depleted well. The gain recognized
during the period ended September 30, 2000 was derived from the sale of
equipment on one fully depleted well. Abandoned property costs of $8,509 were
incurred during the nine months ended September 30, 2001 to plug one well in the
current period.
Costs and Expenses:
Total costs and expenses increased to $1,577,154 for the nine months ended
September 30, 2001 as compared to $1,427,213 for the same period in 2000, an
increase of $149,941, or 11%. The increase was due to increases in production
costs, the impairment of oil and gas properties, depletion and abandoned
property costs, offset by a decline in general and administrative expenses
("G&A").
Production costs were $1,221,395 for the nine months ended September 30, 2001
and $1,120,284 for the same period in 2000, resulting in an increase of
$101,111, or 9%. The increase was primarily due to higher ad valorem taxes and
additional workover and well maintenance costs incurred to stimulate well
production.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A decreased
13% from $96,797 for the nine months ended September 30, 2000 to $84,405 for the
same period in 2001, primarily due to a lower percentage of the managing general
partner's G&A being allocated (limited to 3% of oil and gas revenues) as a
result of decreased oil and gas revenues.
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" ("SFAS 121"), the Partnership reviews its proved oil and gas
properties for impairment whenever events and circumstances indicate a decline
in the recoverability of the carrying value of the Partnership's oil and gas
properties. The Partnership has estimated the expected future cash flows of its
oil and gas properties as of September 30, 2001, based on proved reserves, and
compared such estimated future cash flows to the respective carrying amount of
the oil and gas properties to determine if the carrying amounts were likely to
be recoverable. For those proved oil and gas properties for which the carrying
amount exceeded the estimated future cash flows, an impairment was determined to
exist; therefore, the Partnership adjusted the carrying amount of those oil and
gas properties to their fair value as determined by discounting their expected
future cash flows at a discount rate commensurate with the risks involved in the
industry. As a result, the Partnership recognized a non-cash impairment
provision of $30,575 related to its proved oil and gas properties during the
nine months ended September 30, 2001.
Depletion was $232,270 for the nine months ended September 30, 2001 as compared
to $210,132 for the same period in 2000, representing an increase of $22,138, or
11%. This increase was primarily due to a decline in proved reserves during the
period ended September 30, 2001 due to lower commodity prices as compared to the
same period in 2000, offset by a reduction in the Partnership's net depletable
basis from charges taken in accordance with SFAS 121 during the fourth quarter
of 2000 and by a decrease in oil production of 3,859 barrels for the nine months
ended September 30, 2001 as compared to the same period in 2000.
9
Three months ended September 30, 2001 compared with three months ended September
30, 2000
Revenues:
The Partnership's oil and gas revenues decreased 26% to $814,193 for the three
months ended September 30, 2001 as compared to $1,098,786 for the same period in
2000. The decrease in revenues resulted from lower average prices received and a
decline in production. For the three months ended September 30, 2001, 22,788
barrels of oil, 10,478 barrels of NGLs and 44,376 mcf of gas were sold, or
40,662 BOEs. For the three months ended September 30, 2000, 25,000 barrels of
oil, 11,842 barrels of NGLs and 46,163 mcf of gas were sold, or 44,536 BOEs. Due
to the decline characteristics of the Partnership's oil and gas properties,
management expects a certain amount of decline in production in the future until
the Partnership's economically recoverable reserves are fully depleted.
The average price received per barrel of oil decreased $4.26, or 14%, from
$30.54 for the three months ended September 30, 2000 to $26.28 for the same
period in 2001. The average price received per barrel of NGLs decreased $4.53,
or 28%, from $15.94 during the three months ended September 30, 2000 to $11.41
for the same period in 2001. The average price received per mcf of gas decreased
32% from $3.17 during the three months ended September 30, 2000 to $2.16 for the
same period in 2001.
A gain on disposition of assets of $11,959 recognized during the three months
ended September 30, 2001 was due to $10,791 salvage income from one well plugged
and abandoned in the current period and $1,168 from equipment credits received
on one fully depleted well. Abandoned property costs of $213 were incurred
during the three months ended September 30, 2001 to plug this well.
Costs and Expenses:
Total costs and expenses increased to $594,508 for the three months ended
September 30, 2001 as compared to $473,930 for the same period in 2000, an
increase of $120,578, or 25%. This increase was due to increases in production
costs, the impairment of oil and gas properties, depletion and abandoned
property costs, offset by a decline in G&A.
Production costs were $456,072 for the three months ended September 30, 2001 and
$368,259 for the same period in 2000 resulting in an $87,813 increase, or 24%.
The increase was primarily due to higher ad valorem taxes and additional
workover and well maintenance costs incurred to stimulate well production,
offset by a decrease in production taxes.
During this period, G&A decreased 41% from $37,886 for the three months ended
September 30, 2000 to $22,471 for the same period in 2001, primarily due to a
lower percentage of the managing general partner's G&A being allocated (limited
to 3% of oil and gas revenues) as a result of decreased oil and gas revenues.
The Partnership recognized a non-cash impairment provision of $30,575 related to
its proved oil and gas properties for the three months ended September 30, 2001.
10
Depletion was $85,177 for the three months ended September 30, 2001 as compared
to $67,785 for the same period in 2000, representing an increase of $17,392, or
26%. This increase was attributable to a reduction in proved reserves during the
period ended September 30, 2001 as a result of lower commodity prices as
compared to the same period in 2000, offset by a reduction in the Partnership's
net depletable basis from charges taken in accordance with SFAS 121 during the
fourth quarter of 2000 and by a decrease in oil production of 2,212 barrels for
the three months ended September 30, 2001 as compared to the same period in
2000.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $135,819 during the nine
months ended September 30, 2001 from the same period ended September 30, 2000.
This increase was due to reductions of $314,558 in working capital and $12,392
in G&A expenses, offset by increases in production costs of $101,111 and
abandoned property costs of $8,509 and a decline in oil and gas sales receipts
of $81,511. The decrease in oil and gas receipts resulted from the decline in
oil and NGL prices during 2001 which resulted in a $90,026 decline to oil and
gas receipts and $192,845 resulting from the decline in production during 2001
as compared to the same period in 2000, offset by an increase in gas prices
which contributed an additional $201,360 to oil and gas receipts. The increase
in production costs was primarily due to higher ad valorem taxes and additional
workover and well maintenance costs incurred to stimulate well production. The
decrease in G&A was primarily due to a lower percentage of the managing general
partner's G&A being allocated (limited to 3% of oil and gas revenues) as a
result of decreased oil and gas revenues.
Net Cash Provided by (Used in) Investing Activities
The Partnership's investing activities during the nine months ended September
30, 2001 and 2000 included expenditures related to equipment upgrades on various
oil and gas properties.
Proceeds from asset dispositions of $20,552 and $5,487 were recognized during
the nine months ended September 30, 2001 and 2000, respectively. The proceeds
recognized during the period ended September 30, 2001 were primarily due to
salvage income from one well plugged and abandoned during the current period.
The proceeds recognized during the period ended September 30, 2000 were derived
from the sale of equipment on one fully depleted well.
Net Cash Used in Financing Activities
For the nine months ended September 30, 2001, cash distributions to the partners
were $1,436,366, of which $14,364 was distributed to the managing general
partner and $1,422,002 to the limited partners. For the same period ended
September 30, 2000, cash distributions to the partners were $1,619,198, of which
$16,192 was distributed to the managing general partner and $1,603,006 to the
limited partners.
During 2001, the Partnership made distributions in March and July but no
distributions were made by the Partnership during September pending the vote of
11
the proposed merger of the Partnership into Pioneer Natural Resources USA, Inc.
("Pioneer USA"). For further information, see "Proposal to acquire partnerships"
below.
Proposal to acquire partnerships
On October 22, 2001, Pioneer Natural Resources Company ("Pioneer") mailed
definitive materials (the "proxy statement/prospectus") to solicit the approval
of limited partners of 46 Parker & Parsley limited partnerships, including the
Partnership, of an agreement and plan of merger among Pioneer, Pioneer USA, a
wholly-owned subsidiary of Pioneer, and those limited partnerships. The special
meetings of the limited partners to consider and vote on the merger proposal are
scheduled for December 20, 2001. The record date to identify the limited
partners who are entitled to notice of and to vote at the special meetings was
September 21, 2001. Each partnership that approves the agreement and plan of
merger and the other related merger proposals will merge with and into Pioneer
USA. As a result, the partnership interests of those partnerships will be
converted into the right to receive Pioneer common stock.
The proxy statement/prospectus is non-binding and is subject to, among other
things, consideration of offers from third parties to purchase any partnership
or its assets and the majority approval of the limited partnership interests in
each partnership.
A copy of the proxy statement/prospectus may be obtained without charge upon
request from Pioneer Natural Resources Company, 5205 North O'Connor Blvd., Suite
1400, Irving, Texas 75039, Attention: Investor Relations.
The limited partners are urged to read the proxy statement/prospectus of Pioneer
filed with the Securities and Exchange Commission because it contains important
information about the proposed mergers, including information about the direct
and indirect interests of Pioneer USA and Pioneer in the mergers. The limited
partners may also obtain the final proxy statement/prospectus and other relevant
documents relating to the proposed mergers free through the internet web site
that the Securities and Exchange Commission maintains at www.sec.gov.
---------------
(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
(b) Reports on Form 8-K - none
12
PARKER & PARSLEY 90-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 90-B, L.P.
By: Pioneer Natural Resources USA, Inc.,
Managing General Partner
Dated: November 7, 2001 By: /s/ Rich Dealy
----------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
13