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. 33-26097-10
PARKER & PARSLEY 90-C CONV., L.P.
-----------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 75-2347264
----------------------------------------- ---------------------
(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-C CONV., 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-C CONV., 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 $ 219,883 $ 106,593
Accounts receivable - oil and gas sales 66,471 119,396
---------- ----------
Total current assets 286,354 225,989
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 5,801,749 5,798,493
Accumulated depletion (5,051,593) (5,000,618)
---------- ----------
Net oil and gas properties 750,156 797,875
---------- ----------
$ 1,036,510 $ 1,023,864
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 34,540 $ 14,074
Partners' capital:
Managing general partner 9,989 10,067
Limited partners (7,531 interests) 991,981 999,723
---------- ----------
1,001,970 1,009,790
---------- ----------
$ 1,036,510 $ 1,023,864
========== ==========
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-C CONV., 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 $ 175,857 $ 256,283 $ 619,975 $ 671,181
Interest 1,352 2,546 4,764 5,989
-------- -------- -------- --------
177,209 258,829 624,739 677,170
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 91,284 84,096 284,567 245,244
General and administrative 5,380 8,742 20,059 21,832
Impairment of oil and gas properties 8,163 - 8,163 -
Depletion 14,944 12,341 42,812 38,657
-------- -------- -------- --------
119,771 105,179 355,601 305,733
-------- -------- -------- --------
Net income $ 57,438 $ 153,650 $ 269,138 $ 371,437
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 575 $ 1,536 $ 2,692 $ 3,714
======== ======== ======== ========
Limited partners $ 56,863 $ 152,114 $ 266,446 $ 367,723
======== ======== ======== ========
Net income per limited
partnership interest $ 7.55 $ 20.20 $ 35.38 $ 48.83
======== ======== ======== ========
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.
4
PARKER & PARSLEY 90-C CONV., L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
--------- ---------- ----------
Balance at January 1, 2001 $ 10,067 $ 999,723 $1,009,790
Distributions (2,770) (274,188) (276,958)
Net income 2,692 266,446 269,138
-------- --------- ---------
Balance at September 30, 2001 $ 9,989 $ 991,981 $1,001,970
======== ========= =========
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.
5
PARKER & PARSLEY 90-C CONV., 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 $ 269,138 $ 371,437
Adjustments to reconcile net income to net
cash provided by operating activities:
Impairment of oil and gas properties 8,163 -
Depletion 42,812 38,657
Changes in assets and liabilities:
Accounts receivable 52,925 (31,185)
Accounts payable 20,466 13,580
--------- ---------
Net cash provided by operating activities 393,504 392,489
--------- ---------
Cash flows used in investing activities:
Additions to oil and gas properties (3,256) (15,801)
Cash flows used in financing activities:
Cash distributions to partners (276,958) (361,535)
--------- ---------
Net increase in cash 113,290 15,153
Cash at beginning of period 106,593 107,295
--------- ---------
Cash at end of period $ 219,883 $ 122,448
========= =========
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-C CONV., L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 2001
(Unaudited)
Note 1. Organization and nature of operations
Parker & Parsley 90-C Conv., L.P. (the "Partnership") was organized as a general
partnership in 1990 under the laws of the State of Texas and was converted to a
Delaware limited partnership on August 1, 1991.
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
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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 $8,163 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
materials to the limited partners of the Partnership soliciting their approval
of an agreement and plan of merger among Pioneer, Pioneer Natural Resources USA,
Inc. ("Pioneer USA"), a wholly-owned subsidiary of Pioneer, and the Partnership.
Pioneer has valued the Partnership interest at $1,884,667 of which $1,858,388 is
attributable to the limited partners, excluding Pioneer USA in its capacity as a
general partner or a limited partner. If a majority of the limited partners
approve the transaction, each limited partner will receive their proportionate
share of the 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 8% to $619,975 for the nine
months ended September 30, 2001 as compared to $671,181 for the same period in
2000. The decrease in revenues resulted from a decrease in production and lower
average prices received for oil and natural gas liquids ("NGLs"), offset by
higher average prices received for gas. For the nine months ended September 30,
2001, 16,610 barrels of oil, 4,687 barrels of NGLs and 25,888 mcf of gas were
sold, or 25,612 barrel of oil equivalents ("BOEs"). For the nine months ended
September 30, 2000, 17,723 barrels of oil, 7,280 barrels of NGLs and 25,305 mcf
of gas were sold, or 29,221 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 $1.23, or 4%, from $28.39
for the nine months ended September 30, 2000 to $27.16 for the same period in
2001. The average price received per barrel of NGLs decreased $.31, or 2%, from
$14.08 during the nine months ended September 30, 2000 to $13.77 for the same
period in 2001. The average price received per mcf of gas increased 55% from
$2.59 during the nine months ended September 30, 2000 to $4.02 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.
8
Costs and Expenses:
Total costs and expenses increased to $355,601 for the nine months ended
September 30, 2001 as compared to $305,733 for the same period in 2000, an
increase of $49,868, or 16%. This increase was due to increases in production
costs, the impairment of oil and gas properties and depletion, offset by a
decline in general and administrative expenses ("G&A").
Production costs were $284,567 for the nine months ended September 30, 2001 and
$245,244 for the same period in 2000, resulting in an increase of $39,323, or
16%. The increase was primarily due to additional well maintenance and workover
costs incurred to stimulate production and higher ad valorem taxes.
G&A's components are independent accounting and engineering fees and managing
general partner personnel and operating costs. During this period, G&A decreased
8% from $21,832 for the nine months ended September 30, 2000 to $20,059 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 $8,163 related to its proved oil and gas properties during the nine
months ended September 30, 2001.
Depletion was $42,812 for the nine months ended September 30, 2001 as compared
to $38,657 for the same period in 2000, representing an increase of $4,155, or
11%. This increase was the result of a reduction in proved reserves during the
period ended September 30, 2001 due to lower commodity prices, offset by a
decrease in oil production of 1,113 barrels for the nine months ended September
30, 2001 as compared to the same period in 2000.
Three months ended September 30, 2001 compared with three months ended September
30, 2000
Revenues:
The Partnership's oil and gas revenues decreased 31% to $175,857 for the three
months ended September 30, 2001 as compared to $256,283 for the same period in
2000. The decrease in revenues resulted from a decline in production and lower
average prices received. For the three months ended September 30, 2001, 5,105
barrels of oil, 2,210 barrels of NGLs and 8,083 mcf of gas were sold, or 8,662
9
BOEs. For the three months ended September 30, 2000, 5,764 barrels of oil, 2,853
barrels of NGLs and 11,213 mcf of gas were sold, or 10,486 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 $4.00, or 13%, from
$30.30 for the three months ended September 30, 2000 to $26.30 for the same
period in 2001. The average price received per barrel of NGLs decreased $4.84,
or 30%, from $16.07 during the three months ended September 30, 2000 to $11.23
for the same period in 2001. The average price received per mcf of gas decreased
35% from $3.19 during the three months ended September 30, 2000 to $2.07 for the
same period in 2001.
Costs and Expenses:
Total costs and expenses increased to $119,771 for the three months ended
September 30, 2001 as compared to $105,179 for the same period in 2000, an
increase of $14,592, or 14%. This increase was due to increases in the
impairment of oil and gas properties, production costs and depletion, offset by
a decline in G&A.
Production costs were $91,284 for the three months ended September 30, 2001 and
$84,096 for the same period in 2000, resulting in a $7,188 increase, or 9%. The
increase was primarily due to higher ad valorem taxes and additional well
maintenance costs incurred to stimulate well production, offset by lower
production taxes.
During this period, G&A decreased 38% from $8,742 for the three months ended
September 30, 2000 to $5,380 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 $8,163 related to
its proved oil and gas properties during the three months ended September 30,
2001.
Depletion was $14,944 for the three months ended September 30, 2001 as compared
to $12,341 for the same period in 2000, representing an increase of $2,603, or
21%. This increase was the result of a reduction in proved reserves during the
period ended September 30, 2001 as a result of lower commodity prices, offset by
a decline in oil production of 659 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 $1,015 during the nine
months ended September 30, 2001 from the same period ended September 30, 2000.
This increase was due to a reduction in working capital of $90,996 and a
decrease of $1,773 in G&A expenses, offset by an increase in production costs of
$39,323 and a decrease in oil and gas sales receipts of $52,431. The decrease in
oil and gas receipts resulted from the decline in production of $63,623 during
2001 as compared to the same period in 2000 and a decrease in the average prices
received for oil and NGLs of $25,167, offset by an increase in average prices
10
received for gas of $36,359. The increase in production costs was primarily due
to additional well maintenance and workover costs incurred to stimulate well
production and higher ad valorem taxes. 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 Used in Investing Activities
The Partnership's investing activities during the nine months ended September
30, 2001 and 2000 were for expenditures related to equipment upgrades on various
oil and gas properties.
Net Cash Used in Financing Activities
For the nine months ended September 30, 2001, cash distributions to the partners
were $276,958, of which $2,770 was distributed to the managing general partner
and $274,188 to the limited partners. For the same period ended September 30,
2000, cash distributions to the partners were $361,535, of which $3,615 was
distributed to the managing general partner and $357,920 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
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
11
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-C CONV., 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-C CONV., 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