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 March 31, 1999
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)
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 / /
PARKER & PARSLEY 90-C CONV., L.P.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 1999 and
December 31, 1998....................................... 3
Statements of Operations for the three months
ended March 31, 1999 and 1998............................ 4
Statement of Partners' Capital for the three months
ended March 31, 1999..................................... 5
Statements of Cash Flows for the three months
ended March 31, 1999 and 1998............................ 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
Item 6. Exhibits and Reports on Form 8-K........................... 11
27.1 Financial Data Schedule
Signatures................................................. 12
2
PARKER & PARSLEY 90-C CONV., L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1999 1998
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 66,520 $ 66,221
Accounts receivable - oil and gas sales 54,110 41,400
---------- ----------
Total current assets 120,630 107,621
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 5,769,917 5,765,217
Accumulated depletion (4,901,572) (4,861,804)
---------- ----------
Net oil and gas properties 868,345 903,413
---------- ----------
$ 988,975 $ 1,011,034
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 19,209 $ 13,398
Partners' capital:
Managing general partner 9,668 9,946
Limited partners (7,531 interests) 960,098 987,690
---------- ----------
969,766 997,636
---------- ----------
$ 988,975 $ 1,011,034
========== ==========
The financial information included as of March 31, 1999 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 90-C CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
-------------------------
1999 1998
---------- ----------
Revenues:
Oil and gas $ 91,146 $ 119,959
Interest 698 1,284
--------- ---------
91,844 121,243
--------- ---------
Costs and expenses:
Oil and gas production 69,251 80,969
General and administrative 3,450 3,985
Depletion 39,768 27,897
--------- ---------
112,469 112,851
--------- ---------
Net income (loss) $ (20,625) $ 8,392
========= =========
Allocation of net income (loss):
Managing general partner $ (206) $ 84
========= =========
Limited partners $ (20,419) $ 8,308
========= =========
Net income (loss) per limited partnership interest $ (2.71) $ 1.10
========= =========
Distributions per limited partnership interest $ .95 $ 7.68
========= =========
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 90-C CONV., L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ---------- ----------
Balance at January 1, 1999 $ 9,946 $ 987,690 $ 997,636
Distributions (72) (7,173) (7,245)
Net loss (206) (20,419) (20,625)
--------- --------- ---------
Balance at March 31, 1999 $ 9,668 $ 960,098 $ 969,766
========= ========= =========
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 90-C CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
-------------------------
1999 1998
---------- ----------
Cash flows from operating activities:
Net income (loss) $ (20,625) $ 8,392
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depletion 39,768 27,897
Changes in assets and liabilities:
Accounts receivable (12,710) 21,257
Accounts payable 5,811 (5,013)
--------- ---------
Net cash provided by operating activities 12,244 52,533
--------- ---------
Cash flows used in investing activities:
Additions to oil and gas properties (4,700) (4,833)
Cash flows used in financing activities:
Cash distributions to partners (7,245) (58,397)
--------- ---------
Net increase (decrease) in cash 299 (10,697)
Cash at beginning of period 66,221 87,423
--------- ---------
Cash at end of period $ 66,520 $ 76,726
========= =========
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 90-C CONV., L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(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 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. Basis of presentation
In the opinion of management, the unaudited financial statements of the
Partnership as of March 31, 1999 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 Partnership's Report on Form 10-K for the year ended
December 31, 1998, 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, 1400 Williams Square
West, Irving, Texas 75039-3746.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations(1)
Results of Operations
Revenues:
The Partnership's oil and gas revenues decreased 24% to $91,146 from $119,959
for the three months ended March 31, 1999 and 1998, respectively. The decrease
in revenues resulted from lower average prices received and declines in
production. For the three months ended March 31, 1999, 6,021 barrels of oil,
1,905 barrels of natural gas liquids ("NGLs") and 7,316 mcf of gas were sold, or
9,145 barrel of oil equivalents ("BOEs"). For the three months ended March 31,
1998, 6,439 barrels of oil, 1,823 barrels of NGLs and 7,827 mcf of gas were
sold, or 9,567 BOEs.
The average price received per barrel of oil decreased $2.95, or 20%, from
$14.80 for the three months ended March 31, 1998 to $11.85 for the same period
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in 1999. The average price received per barrel of NGLs decreased $1.97, or 28%,
from $7.03 for the three months ended March 31, 1998 to $5.06 for the same
period in 1999. The average price received per mcf of gas decreased 8% from
$1.51 during the three months ended March 31, 1998 to $1.39 for the same period
in 1999. 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
three months ended March 31, 1999.
A continuation of the oil price environment experienced during the first quarter
of 1999 will have an adverse effect on the Partnership's revenues and operating
cash flow and could result in additional decreases to the carrying value of the
Partnership's oil and gas properties.
Costs and Expenses:
Total costs and expenses decreased to $112,469 for the three months ended March
31, 1999 as compared to $112,851 for the same period in 1998, a decrease of
$382. This decrease was due to declines in production costs and general and
administrative expenses ("G&A"), offset by an increase in depletion.
Production costs were $69,251 for the three months ended March 31, 1999 and
$80,969 for the same period in 1998, resulting in a decrease of $11,718, or 14%.
The decrease was due to less well maintenance costs and a decline in production
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, in aggregate, 13% from $3,985 for the three months ended March 31,
1998 to $3,450 for the same period in 1999.
Depletion was $39,768 for the three months ended March 31, 1999 compared to
$27,897 for the same period in 1998. This represented an increase in depletion
of $11,871, or 43%, primarily the result of a combination of factors that
included a decline in proved reserves during the three months ended March 31,
1999 as a result of lower commodity prices, offset by a reduction in the
Partnership's net depletable basis from charges taken 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") during the fourth quarter of 1998 and a reduction in oil production
of 418 barrels for the period ended March 31, 1999 compared to the same period
in 1998.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $40,289 during the three
months ended March 31, 1999 from the same period in 1998. This decrease was
primarily due to a decline in oil and gas sales receipts, offset by declines in
production costs and G&A expenses paid.
8
Net Cash Used in Investing Activities
The Partnership's principal investing activities during the three months ended
March 31, 1999 and 1998 related to expenditures for replacement of oil and gas
equipment on active properties.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1999 to cover
distributions to the partners of $7,245 of which $72 was distributed to the
managing general partner and $7,173 to the limited partners. For the same period
ended March 31, 1998, cash was sufficient for distributions to the partners of
$58,397 of which $584 was distributed to the managing general partner and
$57,813 to the limited partners.
During the first quarter of 1999, the Organization of Petroleum Exporting
Countries and certain other crude oil exporting nations announced reductions in
their planned export volumes. These announcements, together with early
indications that the nations have initiated their planned reductions, have had
some stabilizing effect on commodity prices during the later part of the first
quarter of 1999 and into April 1999. However, no assurances can be given that
the stabilizing effect of these actions, or the planned reductions in export
volumes, will be sustained for an extended period of time. As a result, future
commodity prices will have a direct impact on the amount of future distributions
and could result in limited or no distributions to the partners.
Year 2000 Project Readiness
Historically, many computer programs have been developed that use only the last
two digits in a date to refer to a year. As the year 2000 nears, the inability
of such computer programs and embedded technologies to distinguish between
"1900" and "2000" has given rise to the "Year 2000" problem. Theoretically, such
computer programs and related technology could fail outright, or communicate
inaccurate data, if not remediated or replaced. With the proliferation of
electronic data interchange, the Year 2000 problem represents a significant
exposure to the entire global community, the full extent of which cannot be
accurately assessed.
In proactive response to the Year 2000 problem, the managing general partner
established a "Year 2000" project to assess, to the extent possible, the
Partnership's and the managing general partner's internal Year 2000 problem; to
take remedial actions necessary to minimize the Year 2000 risk exposure to the
managing general partner and significant third parties with whom it has data
interchange; and, to test its systems and processes once remedial actions have
been taken. The managing general partner has contracted with IBM Global Services
to perform the assessment and remedial phases of its Year 2000 project.
As of March 31, 1999, the managing general partner estimates that the assessment
phase is approximately 99% complete and has included, but is not limited to, the
following procedures:
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o the identification of necessary remediation, upgrade and/or replacement
of existing information technology applications and systems;
o the assessment of non-information technology exposures, such as
telecommunications systems, security systems, elevators and process
control equipment;
o the initiation of inquiry and dialogue with significant third party
business partners, customers and suppliers in an effort to understand and
assess their Year 2000 problems, readiness and potential impact on the
managing general partner and its Year 2000 problem;
o the implementation of processes designed to reduce the risk of
reintroduction of Year 2000 problems into the managing general partner's
systems and business processes; and,
o the formulation of contingency plans for mission-critical information
technology systems.
The managing general partner expects to complete the assessment phase of its
Year 2000 project by the end of the second quarter of 1999. Through March 31,
1999, the managing general partner had distributed Year 2000 problem inquiries
to over 500 entities and has received responses to approximately 48% of the
inquiries.
The remedial phase of the managing general partner's Year 2000 project is in
varying stages of completion as it pertains to the remediation of information
technology and non-information technology applications and systems in the United
States, Canada and Argentina. As of March 31, 1999, the managing general partner
estimates that the remedial phase is approximately 79% complete, on a worldwide
basis, subject to continuing evaluations of the responses to third party
inquiries and to the testing phase results. The remedial phase has included the
upgrade and/or replacement of certain application and hardware systems. The
managing general partner has upgraded its Artesia general ledger accounting
systems through remedial coding and has completed the testing of the system for
Year 2000 compliance. The remediation of non-information technology is expected
to be completed by mid-1999. The managing general partner's Year 2000 remedial
actions have not delayed other information technology projects or upgrades.
The testing phase of the managing general partner's Year 2000 project is on
schedule. The managing general partner expects to complete the testing of
information technology systems by October 1999. The testing of the
non-information technology remediation is scheduled to be completed by the end
of June 1999.
The managing general partner expects that its total costs related to the Year
2000 problem will approximate $3.6 million, of which approximately $500 thousand
will have been incurred to replace non-compliant information technology systems.
As of March 31, 1999, the managing general partner's total costs incurred on the
Year 2000 problem were $2.4 million, of which approximately $200 thousand were
incurred to replace non-compliant systems.
10
The risks associated with the Year 2000 problem are significant. A failure to
remedy a critical Year 2000 problem could have a materially adverse affect on
the Partnership's results of operations and financial condition. The most likely
worst case scenario which may be encountered as a result of a Year 2000 problem
could include information and non-information system failures, the receipt or
transmission of erroneous data, lost data or a combination of similar problems
of a magnitude that cannot be accurately assessed at this time.
In the assessment phase of the managing general partner's Year 2000 project,
contingency plans were designed to mitigate the exposures to mission critical
information technology systems, such as oil and gas sales receipts, vendor and
royalty cash distributions, debt compliance, accounting, and employee
compensation. Such contingency plans anticipate the extensive utilization of
third-party data processing services, personal computer applications and the
substitution of courier and mail services in place of electronic data
interchange. Given the uncertainties regarding the scope of the Year 2000
problem and the compliance of significant third parties, there can be no
assurance that contingency plans will have anticipated all Year 2000 scenarios.
- ---------------
(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
27.1 Financial Data Schedule
(b) Reports on Form 8-K - none.
11
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: May 11, 1999 By: /s/ Rich Dealy
--------------------------------
Rich Dealy, Vice President
and Chief Accounting Officer
12