UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000
Commission File No. 33-26097-08
PARKER & PARSLEY 90-B CONV., L.P.
(Exact name of Registrant as specified in its charter)
Delaware 75-2329284
-------------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1400 Williams Square West, 5205 N. O'Connor Blvd., Irving, Texas 75039
- ---------------------------------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, including area code : (972) 444-9001
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited partnership interests ($1,000 per unit)
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / x /
No market currently exists for the limited partnership interests of the
Registrant. Based on the original purchase price, the aggregate market value of
limited partnership interests owned by non- affiliates of the Registrant is
$11,817,000.
As of March 8, 2001, the number of outstanding limited partnership
interests was 11,897.
The following documents are incorporated by reference into the indicated parts
of this Annual Report on Form 10-K: None
Parts I and II of this annual report on Form 10-K (the "Report") contain 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. See "Item 1. Business" for a description of various factors
that could materially affect the ability of the Partnership to achieve the
anticipated results described in the forward looking statements.
PART I
ITEM 1. Business
Parker & Parsley 90-B Conv., L.P. (the "Partnership") was organized in 1990 as a
general partnership under the laws of the State of Texas. The Partnership
converted to a Delaware limited partnership on August 1, 1991. The Partnership's
managing general partner is Pioneer Natural Resources USA, Inc. ("Pioneer USA").
Pioneer USA is a wholly-owned subsidiary of Pioneer Natural Resources Company
("Pioneer"). As of March 8, 2001, the Partnership had 11,897 limited partnership
interests outstanding.
The Partnership does not have any employees of its own. Pioneer USA employs 701
persons, many of whom dedicated a part of their time to the conduct of the
Partnership's business during the period for which this Report is filed. Pioneer
USA supplies all management functions.
The Partnership engages in oil and gas development and production and is not
involved in any industry segment other than oil and gas. The Partnership's
production is geographically concentrated in West Texas.
The principal markets during 2000 for the oil produced by the Partnership were
refineries and oil transmission companies that have facilities near the
Partnership's oil producing properties. During 2000, Pioneer USA marketed the
Partnership's gas to a variety of purchasers, none of which accounted for 10% or
more of the Partnership's oil and gas revenues. Of the Partnership's total oil
and gas revenues for 2000, approximately 48% was attributable to sales made to
Plains Marketing, L.P., 10% to TEPPCO Crude Oil LLC and 10% to Phillips
Petroleum Company. Pioneer USA is of the opinion that the loss of any one
purchaser would not have an adverse effect on its ability to sell its oil,
natural gas liquids ("NGLs") and gas production.
The Partnership's revenues, profitability, cash flow and future rate of growth
are highly dependent on the prevailing prices of oil and gas, which are affected
by numerous factors beyond the Partnership's control. Oil and gas prices
historically have been very volatile. A substantial or extended decline in the
prices of oil or gas could have a material adverse effect on the Partnership's
revenues, profitability and cash flow and could, under certain circumstances,
result in a reduction in the carrying value of the Partnership's oil and gas
properties.
Oil and gas production operations are subject to various types of regulations by
local, state and federal agencies. The Partnership's operations are also subject
to state conservation laws and regulations, including the establishment of
maximum rates of production from wells and the regulation of spacing, plugging
and abandonment of wells. Each state generally imposes a production or severance
tax with respect to production and sale of oil and gas within their respective
2
jurisdictions. Noncompliance with the laws and regulations may subject the
Partnership to penalties, damages or other liabilities and compliance may
increase the cost of the Partnership's operations.
The oil and gas business is also subject to environmental hazards such as oil
spills, gas leaks and ruptures and discharges of toxic substances or gases that
could expose the Partnership to substantial liability due to pollution and other
environmental damages. Although the Partnership believes that its business
operations do not impair environmental quality and that its costs of complying
with any applicable environmental regulations are not currently significant, the
Partnership cannot predict what, if any, effect these environmental regulations
may have on its current or future operations.
Numerous uncertainties exist in estimating quantities of proved reserves and
future net revenues therefrom. The estimates of proved reserves and related
future net revenues set forth in this Report are based on various assumptions,
which may ultimately prove to be inaccurate. Therefore, such estimates should
not be construed as estimates of the current market value of the Partnership's
proved reserves.
No material part of the Partnership's business is seasonal and the Partnership
conducts no foreign operations.
ITEM 2. Properties
The Partnership's properties consist of leasehold interests in properties on
which oil and gas wells are located. Such property interests are often subject
to landowner royalties, overriding royalties and other oil and gas leasehold
interests.
Fractional working interests in developmental oil and gas prospects located
primarily in the Spraberry Trend Area of West Texas were acquired by the
Partnership, resulting in the Partnership's participation in the drilling of 104
oil and gas wells. One well has been plugged and abandoned. At December 31,
2000, the Partnership had 103 producing oil and gas wells.
For information relating to the Partnership's estimated proved oil and gas
reserves at December 31, 2000, 1999 and 1998 and changes in such quantities for
the years then ended, see Note 7 of Notes to Financial Statements included in
"Item 8. Financial Statements and Supplementary Data" below. Such reserves have
been evaluated by Williamson Petroleum Consultants, Inc., an independent
petroleum consultant.
ITEM 3. Legal Proceedings
The Partnership from time to time is a party to various legal proceedings
incidental to its business involving claims in oil and gas leases or interests,
other claims for damages in amounts not in excess of 10% of its current assets
and other matters, none of which Pioneer USA believes to be material to the
Partnership.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the partners during the fourth
quarter of 2000.
3
PART II
ITEM 5. Market for Limited Partnership Interests and Limited Partnership
Distributions
At March 8, 2001, the Partnership had 11,897 outstanding limited partnership
interests held of record by 665 subscribers. There is no established public
trading market for the limited partnership interests. Under the limited
partnership agreement, Pioneer USA has made certain commitments to purchase
partnership interests at a computed value.
Revenues which, in the sole judgement of the managing general partner, are not
required to meet the Partnership's obligations are distributed to the partners
at least quarterly in accordance with the limited partnership agreement. During
the years ended December 31, 2000 and 1999, $825,165 and $271,636, respectively,
of such revenue-related distributions were made to the limited partners.
ITEM 6. Selected Financial Data
The following table sets forth selected financial data for the years ended
December 31:
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
Operating results:
Oil and gas sales $1,513,122 $ 907,791 $ 764,787 $1,118,628 $1,382,265
========= ========= ========= ========= =========
Impairment of oil and gas
properties $ 31,774 $ 88,497 $ 275,430 $ 328,594 $ 22,474
========= ========= ========= ========= =========
Net income (loss) $ 787,438 $ 164,414 $ (373,956) $ (55,191) $ 544,919
========= ========= ========= ========= =========
Allocation of net income
(loss):
Managing general partner $ 7,874 $ 1,644 $ (3,740) $ (552) $ 5,449
========= ========= ========= ========= =========
Limited partners $ 779,564 $ 162,770 $ (370,216) $ (54,639) $ 539,470
========= ========= ========= ========= =========
Limited partners' net income
(loss) per limited
partnership interest $ 65.53 $ 13.68 $ (31.12) $ (4.59) $ 45.35
========= ========= ========= ========= =========
Limited partners' cash
distributions per limited
partnership interest $ 69.36 $ 22.83 $ 23.66 $ 52.38 $ 56.21
========= ========= ========= ========= =========
At year end:
Identifiable assets $1,894,220 $1,949,209 $2,057,408 $2,727,510 $3,402,932
========= ========= ========= ========= =========
4
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
2000 compared to 1999
The Partnership's oil and gas revenues increased 67% to $1,513,122 for 2000 as
compared to $907,791 in 1999. The increase in revenues resulted from higher
average prices received, offset by a decline in production. In 2000, 36,592
barrels of oil, 16,796 barrels of natural gas liquids ("NGLs") and 64,786 mcf of
gas were sold, or 64,186 barrel of oil equivalents ("BOEs"). In 1999, 36,383
barrels of oil, 17,481 barrels of NGLs and 70,803 mcf of gas were sold, or
65,665 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 increased $12.00, or 70%, from
$17.23 in 1999 to $29.23 in 2000. The average price received per barrel of NGLs
increased $5.96, or 63%, from $9.49 in 1999 to $15.45 in 2000. The average price
received per mcf of gas increased 75% from $1.62 in 1999 to $2.84 in 2000. 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 in 2000.
A gain on disposition of assets of $2,023 recognized in 2000 was due to
equipment credits received on one fully depleted well.
Total costs and expenses decreased to $739,327 in 2000 as compared to $749,072
in 1999, a decrease of $9,745, or 1%. The decrease was due to declines in the
impairment of oil and gas properties and depletion, offset by increases in
production costs and general and administrative expenses ("G&A").
Production costs were $557,245 in 2000 and $478,183 in 1999, resulting in an
increase of $79,062, or 17%. The increase was primarily due to higher production
taxes associated with higher oil and gas prices and additional well maintenance
and workover 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 increased
30% from $35,038 in 1999 to $45,379 in 2000 primarily due to a higher percentage
of the managing general partner's G&A being allocated (limited to 3% of oil and
gas revenues) as a result of increased oil and gas revenues. The Partnership
paid the managing general partner $40,368 in 2000 and $27,181 in 1999 for G&A
incurred on behalf of the Partnership. The remaining G&A was paid directly by
the Partnership. The managing general partner determines the allocated expenses
based upon the level of activity of the Partnership relative to the
non-partnership activities of the managing general partner. The method of
allocation has been consistent over the past several years with certain
modifications incorporated to reflect changes in Pioneer USA's overall business
activities.
5
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 managing general partner reviews the
Partnership's oil and gas properties for impairment whenever events or
circumstances indicate a decline in the recoverability of the carrying value of
the Partnership's assets may have occurred. As a result of the review and
evaluation of its long-lived assets for impairment, the Partnership recognized
non-cash charges of $31,774 and $88,497 related to its oil and gas properties
during 2000 and 1999, respectively.
Depletion was $104,929 in 2000 compared to $147,354 in 1999, representing a
decrease of $42,425, or 29%. The decrease was primarily due to a 27,994 barrels
of oil increase in proved reserves during 2000 as a result of higher commodity
prices and a reduction in the Partnership's net depletable basis from charges
taken in accordance with SFAS 121 during the fourth quarter of 1999.
1999 compared to 1998
The Partnership's 1999 oil and gas revenues increased 19% to $907,791 from
$764,787 in 1998. The increase in revenues resulted from higher average prices
received, offset by a decline in production. In 1999, 36,383 barrels of oil,
17,481 barrels of NGLs and 70,803 mcf of gas were sold, or 65,665 BOEs. In 1998,
41,140 barrels of oil, 17,403 barrels of NGLs and 73,460 mcf of gas were sold,
or 70,786 BOEs.
The average price received per barrel of oil increased $4.11, or 31%, from
$13.12 in 1998 to $17.23 in 1999. The average price received per barrel of NGLs
increased $2.89, or 44%, from $6.60 in 1998 to $9.49 in 1999. The average price
received per mcf of gas increased 8% from $1.50 in 1998 to $1.62 in 1999.
Gain on disposition of assets of $1,669 for 1998 was attributable to credits
received from the disposal of oil and gas equipment on a fully depleted well and
on one well that was plugged and abandoned in a prior year.
Total costs and expenses decreased to $749,072 in 1999 as compared to $1,147,349
in 1998, a decrease of $398,277, or 35%. The decrease was due to declines in the
impairment of oil and gas properties, depletion and production costs, offset by
an increase in G&A.
Production costs were $478,183 in 1999 and $517,526 in 1998, resulting in a
$39,343 decrease, or 8%. The decrease was due to declines in well maintenance
costs, ad valorem taxes and workover costs, offset by an increase in production
taxes due to increased oil and gas sales.
During this period, G&A increased 31% from $26,722 in 1998 to $35,038 in 1999
primarily due to a higher percentage of the managing general partner's G&A being
allocated (limited to 3% of oil and gas revenues) as a result of increased oil
and gas revenues. The Partnership paid the managing general partner $27,181 in
1999 and $22,923 in 1998 for G&A incurred on behalf of the Partnership.
The Partnership recognized non-cash SFAS 121 charges of $88,497 and $275,430
related to its oil and gas properties during 1999 and 1998, respectively.
6
Depletion was $147,354 in 1999 compared to $327,671 in 1998. This represented a
decrease of $180,317, or 55%. The decrease was primarily due to an increase in
proved reserves of 280,631 barrels of oil during 1999 as a result of higher
commodity prices, a reduction in the Partnership's net depletable basis from
charges taken in accordance with SFAS 121 during the fourth quarter of 1998 and
a decline in oil production of 4,757 barrels for the period ended December 31,
1999 compared to the same period in 1998.
Petroleum industry
The petroleum industry has been characterized by volatile oil, NGL and natural
gas commodity prices and relatively stable supplier costs during the three years
ended December 31, 2000. During 1998, weather patterns, regional economic
recessions and political matters combined to cause worldwide oil supplies to
exceed demand resulting in a substantial decline in oil prices. Also during
1998, but to a lesser extent, market prices for natural gas declined. During
1999 and 2000, the Organization of Petroleum Exporting Countries ("OPEC") and
certain other crude oil exporting nations announced reductions in their planned
export volumes. Those announcements, together with the enactment of the
announced reductions in export volumes, had a positive impact on world oil
prices, as have overall natural gas supply and demand fundamentals on North
American natural gas prices. Although the favorable commodity price environment
and stable field service cost environment is expected to continue during 2001,
there is no assurance that commodity prices will not return to a less favorable
level or that field service costs will not escalate in the future, both of which
could negatively impact the Partnership's future results of operations and cash
distributions.
Liquidity and capital resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities increased $504,622 during the year
ended December 31, 2000 from 1999. This increase was due to an increase in oil
and gas sales receipts of $611,256, offset by increases in production costs paid
of $79,062, G&A expenses paid of $10,341 and working capital of $17,231. The
increase in oil and gas receipts resulted from the increase in commodity prices
during 2000 which contributed an additional $632,790 to oil and gas receipts,
offset by $21,534 resulting from the decline in production during 2000. The
increase in production costs was primarily due to increased production taxes
associated with higher oil and gas prices and additional well maintenance and
workover costs incurred to stimulate well production. The increase in G&A was
primarily due to higher percentage of the managing general partner's G&A being
allocated (limited to 3% of oil and gas revenues) as a result of increased oil
and gas revenues.
Net Cash Used in Investing Activities
The Partnership's principal investing activities during 2000 and 1999 included
expenditures related to equipment upgrades on active oil and gas properties.
Proceeds from disposition of assets of $2,023 recognized in 2000 were due to
equipment credits received on one fully depleted well.
7
Net Cash Used in Financing Activities
In 2000, cash distributions to the partners were $833,500, of which $8,335 was
distributed to the managing general partner and $825,165 to the limited
partners. In 1999, cash distributions to the partners were $274,380, of which
$2,744 was distributed to the managing general partner and $271,636 to the
limited partners.
8
ITEM 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
Financial Statements of Parker & Parsley 90-B Conv., L.P.:
Independent Auditors' Report...................................... 10
Balance Sheets as of December 31, 2000 and 1999................... 11
Statements of Operations for the Years Ended December 31,
2000, 1999 and 1998............................................. 12
Statements of Partners' Capital for the Years Ended
December 31, 2000, 1999 and 1998................................ 13
Statements of Cash Flows for the Years Ended December 31,
2000, 1999 and 1998............................................. 14
Notes to Financial Statements..................................... 15
9
INDEPENDENT AUDITORS' REPORT
The Partners
Parker & Parsley 90-B Conv., L.P.
(A Delaware Limited Partnership):
We have audited the balance sheets of Parker & Parsley 90-B Conv., L.P. as of
December 31, 2000 and 1999, and the related statements of operations, partners'
capital and cash flows for each of the three years in the period ended December
31, 2000. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Parker & Parsley 90-B Conv.,
L.P. as of December 31, 2000 and 1999, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.
Ernst & Young LLP
Dallas, Texas
March 9, 2001
10
PARKER & PARSLEY 90-B CONV., L.P.
(A Delaware Limited Partnership)
BALANCE SHEETS
December 31
2000 1999
----------- -----------
ASSETS
Current assets:
Cash $ 132,300 $ 132,031
Accounts receivable - oil and gas sales 209,552 143,411
---------- ----------
Total current assets 341,852 275,442
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 9,628,120 9,612,816
Accumulated depletion (8,075,752) (7,939,049)
---------- ----------
Net oil and gas properties 1,552,368 1,673,767
---------- ----------
$ 1,894,220 $ 1,949,209
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 15,580 $ 24,507
Partners' capital:
Managing general partner 18,785 19,246
Limited partners (11,897 interests) 1,859,855 1,905,456
---------- ----------
1,878,640 1,924,702
---------- ----------
$ 1,894,220 $ 1,949,209
========== ==========
The accompanying notes are an integral part of these financial statements.
11
PARKER & PARSLEY 90-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31
2000 1999 1998
---------- ---------- ----------
Revenues:
Oil and gas $1,513,122 $ 907,791 $ 764,787
Interest 11,620 5,695 6,937
Gain on disposition of assets 2,023 - 1,669
--------- --------- ---------
1,526,765 913,486 773,393
--------- --------- ---------
Costs and expenses:
Oil and gas production 557,245 478,183 517,526
General and administrative 45,379 35,038 26,722
Impairment of oil and gas properties 31,774 88,497 275,430
Depletion 104,929 147,354 327,671
--------- --------- ---------
739,327 749,072 1,147,349
--------- --------- ---------
Net income (loss) $ 787,438 $ 164,414 $ (373,956)
========= ========= =========
Allocation of net income (loss):
Managing general partner $ 7,874 $ 1,644 $ (3,740)
========= ========= =========
Limited partners $ 779,564 $ 162,770 $ (370,216)
========= ========= =========
Net income (loss) per limited
partnership interest $ 65.53 $ 13.68 $ (31.12)
========= ========= =========
The accompanying notes are an integral part of these financial statements.
12
PARKER & PARSLEY 90-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Managing
general Limited
partner partners Total
--------- ---------- ----------
Partners' capital at January 1, 1998 $ 26,929 $2,666,043 $2,692,972
Distributions (2,843) (281,505) (284,348)
Net loss (3,740) (370,216) (373,956)
-------- --------- ---------
Partners' capital at December 31, 1998 20,346 2,014,322 2,034,668
Distributions (2,744) (271,636) (274,380)
Net income 1,644 162,770 164,414
-------- --------- ---------
Partners' capital at December 31, 1999 19,246 1,905,456 1,924,702
Distributions (8,335) (825,165) (833,500)
Net income 7,874 779,564 787,438
-------- --------- ---------
Partners' capital at December 31, 2000 $ 18,785 $1,859,855 $1,878,640
======== ========= =========
The accompanying notes are an integral part of these financial statements.
13
PARKER & PARSLEY 90-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
For the years ended December 31
2000 1999 1998
---------- ---------- ----------
Cash flows from operating activities:
Net income (loss) $ 787,438 $ 164,414 $ (373,956)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Impairment of oil and gas properties 31,774 88,497 275,430
Depletion 104,929 147,354 327,671
Gain on disposition of assets (2,023) - (1,669)
Changes in assets and liabilities:
Accounts receivable (66,141) (59,604) 42,963
Accounts payable (8,927) 1,767 (11,798)
--------- --------- ---------
Net cash provided by operating activities 847,050 342,428 258,641
--------- --------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (15,304) (12,347) (18,344)
Proceeds from disposition of assets 2,023 - 1,669
--------- --------- ---------
Net cash used in investing activities (13,281) (12,347) (16,675)
--------- --------- ---------
Cash flows used in financing activities:
Cash distributions to partners (833,500) (274,380) (284,348)
--------- --------- ---------
Net increase (decrease) in cash 269 55,701 (42,382)
Cash at beginning of year 132,031 76,330 118,712
--------- --------- ---------
Cash at end of year $ 132,300 $ 132,031 $ 76,330
========= ========= =========
The accompanying notes are an integral part of these financial statements.
14
PARKER & PARSLEY 90-B CONV., L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998
Note 1. Organization and nature of operations
Parker & Parsley 90-B 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's
managing general partner is Pioneer Natural Resources USA, Inc. ("Pioneer USA").
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. Summary of significant accounting policies
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
Oil and gas properties - The Partnership utilizes the successful efforts
method of accounting for its oil and gas properties and equipment. Under this
method, all costs associated with productive wells and nonproductive development
wells are capitalized while nonproductive exploration costs are expensed.
Capitalized costs relating to proved properties are depleted using the unit-of-
production method on a property-by-property basis based on proved oil (dominant
mineral) reserves as evaluated by independent petroleum consultants. The
carrying amounts of properties sold or otherwise disposed of and the related
allowances for depletion are eliminated from the accounts and any gain or loss
is included in results of operations.
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 long-lived assets to be held and used on an individual
property basis, including oil and gas properties accounted for under the
successful efforts method of accounting, whenever events or circumstances
indicate that the carrying value of those assets may not be recoverable. An
impairment loss is indicated if the sum of the expected future cash flows is
less than the carrying amount of the assets. In this circumstance, the
Partnership recognizes an impairment loss for the amount by which the carrying
amount of the asset exceeds the estimated fair value of the asset.
Use of estimates in the preparation of financial statements - Preparation
of the accompanying financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
15
Net income (loss) per limited partnership interest - The net income
(loss) per limited partnership interest is calculated by using the number of
outstanding limited partnership interests.
Income taxes - A Federal income tax provision has not been included in
the financial statements as the income of the Partnership is included in the
individual Federal income tax returns of the respective partners.
Statements of cash flows - For purposes of reporting cash flows, cash
includes depository accounts held by banks.
General and administrative expenses - General and administrative expenses
are allocated in part to the Partnership by the managing general partner.
Allocated expenses are determined by the managing general partner based upon the
level of activity of the Partnership relative to the non- partnership activities
of the managing general partner. The method of allocation has been consistent
over the past several years with certain modifications incorporated to reflect
changes in Pioneer USA's overall business activities.
Reclassifications - Certain reclassifications may have been made to the
1999 and 1998 financial statements to conform to the 2000 financial statement
presentations.
Environmental - The Partnership is subject to extensive federal, state
and local environmental laws and regulations. These laws, which are constantly
changing, regulate the discharge of materials into the environment and may
require the Partnership to remove or mitigate the environmental effects of the
disposal or release of petroleum or chemical substances at various sites.
Environmental expenditures are expensed or capitalized depending on their future
economic benefit. Expenditures that relate to an existing condition caused by
past operations and that have no future economic benefits are expensed.
Liabilities for expenditures of a noncapital nature are recorded when
environmental assessment and/or remediation is probable, and the costs can be
reasonably estimated. Such liabilities are generally undiscounted unless the
timing of cash payments for the liability or component are fixed or reliably
determinable. No such liabilities have been accrued as of December 31, 2000.
Revenue recognition - The Partnership uses the entitlements method of
accounting for oil, natural gas liquids ("NGLs") and natural gas revenues.
Note 3. Impairment of long-lived assets
In accordance with 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 December 31, 2000, 1999 and 1998, 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
16
Partnership recognized non-cash impairment provisions of $31,774, $88,497 and
$275,430 related to its proved oil and gas properties during 2000, 1999 and
1998, respectively.
Note 4. Income taxes
The financial statement basis of the Partnership's net assets and
liabilities was $233,211 greater than the tax basis at December 31, 2000.
The following is a reconciliation of net income (loss) per statements of
operations with the net income per Federal income tax returns for the years
ended December 31:
2000 1999 1998
--------- --------- ---------
Net income (loss) per statements of operations $ 787,438 $ 164,414 $(373,956)
Depletion and depreciation provisions for tax
reporting purposes less than amounts for
financial reporting purposes 90,499 132,570 175,500
Impairment of oil and gas properties for financial
reporting purposes 31,774 88,497 275,430
Other, net (1,742) (4,660) 3,987
-------- -------- --------
Net income per Federal income tax
returns $ 907,969 $ 380,821 $ 80,961
======== ======== ========
Note 5. Oil and gas producing activities
The following is a summary of the costs incurred, whether capitalized or
expensed, related to the Partnership's oil and gas producing activities for the
years ended December 31:
2000 1999 1998
--------- --------- ---------
Development costs $ 15,304 $ 12,347 $ 18,344
======== ======== ========
Capitalized oil and gas properties consist of the following:
2000 1999
----------- -----------
Proved properties:
Property acquisition costs $ 369,498 $ 369,498
Completed wells and equipment 9,258,622 9,243,318
---------- ----------
9,628,120 9,612,816
Accumulated depletion (8,075,752) (7,939,049)
---------- ----------
Net oil and gas properties $ 1,552,368 $ 1,673,767
========== ==========
Note 6. Related party transactions
Pursuant to the limited partnership agreement, the Partnership had the
following related party transactions with the managing general partner during
the years ended December 31:
17
2000 1999 1998
--------- --------- ---------
Payment of lease operating and supervision
charges in accordance with standard
industry operating agreements $ 211,037 $ 214,306 $ 209,549
Reimbursement of general and administrative
expenses $ 40,368 $ 27,181 $ 22,923
The Partnership participates in oil and gas activities through an income
tax partnership (the "Program") pursuant to the Program agreement. Pioneer USA,
P&P Employees 90-B Conv., L.P. ("EMPL"), Parker & Parsley 90-B, L.P. and the
Partnership (the "Partnerships") are parties to the Program agreement. EMPL is a
limited partnership organized for the benefit of certain employees of Pioneer
USA. EMPL was merged with Pioneer USA on December 28, 2000.
The costs and revenues of the Program are allocated to Pioneer USA and
the Partnerships as follows:
Pioneer USA(1) Partnerships(2)
-------------- ---------------
Revenues:
Proceeds from disposition of depreciable and
depletable properties:
First three years 14.141414% 85.858586%
After first three years 19.191919% 80.808081%
All other revenues
First three years 14.141414% 85.858586%
After first three years 19.191919% 80.808081%
Costs and expenses:
Lease acquisition costs, drilling and completion
costs and all other costs 9.090909% 90.909091%
Operating costs, reporting and legal expenses and
general and administrative expenses:
First three years 14.141414% 85.858586%
After first three years 19.191919% 80.808081%
(1) Excludes Pioneer USA's 1% general partner ownership which is allocated
at the Partnership level and 80 limited partner interests owned by
Pioneer USA.
(2) The allocation between the Partnership and Parker & Parsley 90-B, L.P.
is 26.94006% and 73.05994%, respectively.
Note 7. Oil and gas information (unaudited)
The following table presents information relating to the Partnership's
estimated proved oil and gas reserves at December 31, 2000, 1999 and 1998 and
changes in such quantities during the years then ended. All of the Partnership's
reserves are proved developed and located within the United States. The
Partnership's reserves are based on an evaluation prepared by Williamson
Petroleum Consultants, Inc., an independent petroleum consultant, using criteria
established by the Securities and Exchange Commission.
18
Oil and NGLs Gas
(bbls) (mcf)
------------ ---------
Net proved reserves at January 1, 1998 914,930 864,646
Revisions (446,456) (190,771)
Production (58,543) (73,460)
---------- ---------
Net proved reserves at December 31, 1998 409,931 600,415
Revisions 435,645 666,249
Production (53,864) (70,803)
---------- ---------
Net proved reserves at December 31, 1999 791,712 1,195,861
Revisions 15,019 (155,368)
Production (53,388) (64,786)
---------- ---------
Net proved reserves at December 31, 2000 753,343 975,707
========== =========
As of December 31, 2000, the estimated present value of future net
revenues of proved reserves, calculated using December 31, 2000 prices of $26.64
per barrel of oil, $13.19 per barrel of NGLs and $7.66 per mcf of gas,
discounted at 10% was approximately $5,752,000 and undiscounted was $11,644,000.
Numerous uncertainties exist in estimating quantities of proved reserves
and future net revenues therefrom. The estimates of proved reserves and related
future net revenues set forth in this Report are based on various assumptions,
which may ultimately prove to be inaccurate. Therefore, such estimates should
not be construed as estimates of the current market value of the Partnership's
proved reserves. The Partnership emphasizes that reserve estimates are
inherently imprecise and, accordingly, the estimates are expected to change as
future information becomes available.
Disclosures about Oil & Gas Producing Activities
Standardized Measure of Discounted Future Net Cash Flows
The standardized measure of discounted future net cash flows is computed
by applying year-end prices of oil and gas (with consideration of price changes
only to the extent provided by contractual arrangements) to the estimated future
production of proved oil and gas reserves less estimated future expenditures
(based on year-end costs) to be incurred in developing and producing the proved
reserves, discounted using a rate of 10% per year to reflect the estimated
timing of the future cash flows. A Federal income tax provision has not been
calculated as the income of the Partnership is included in the individual
Federal income tax returns of the respective partners.
Discounted future cash flow estimates like those shown below are not
intended to represent estimates of the fair value of oil and gas properties.
Estimates of fair value should also consider anticipated future oil and gas
prices, interest rates, changes in development and production costs and risks
associated with future production. Because of these and other considerations,
any estimate of fair value is necessarily subjective and imprecise.
19
For the years ended December 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
(in thousands)
Oil and gas producing activities:
Future cash inflows $ 24,248 $ 19,527 $ 4,449
Future production costs (12,604) (10,978) (3,339)
-------- -------- --------
11,644 8,549 1,110
10% annual discount factor (5,892) (4,165) (375)
-------- -------- --------
Standardized measure of discounted future
net cash flows $ 5,752 $ 4,384 $ 735
======== ======== ========
For the years ended December 31,
-----------------------------------
2000 1999 1998
--------- --------- ---------
(in thousands)
Oil and Gas Producing Activities:
Oil and gas sales, net of production costs $ (956) $ (430) $ (247)
Net changes in prices and production costs 2,152 2,137 (2,389)
Revisions of previous quantity estimates (71) 3,126 (518)
Accretion of discount 438 74 362
Changes in production rates, timing and other (195) (1,258) (94)
-------- -------- --------
Change in present value of future net revenues 1,368 3,649 (2,886)
-------- -------- --------
Balance, beginning of year 4,384 735 3,621
-------- -------- --------
Balance, end of year $ 5,752 $ 4,384 $ 735
======== ======== ========
Note 8. Major customers
The following table reflects the major customers of the Partnership's oil and
gas sales (a major customer is defined as a customer whose sales exceed 10% of
total sales) during the years ended December 31:
2000 1999 1998
------ ------ ------
Plains Marketing, L.P. 48% 46% -
TEPPCO Crude Oil LLC 10% 11% -
Genesis Crude Oil, L.P. - - 58%
Western Gas Resources, Inc. 4% 5% 21%
Phillips Petroleum Company 10% 5% 5%
At December 31, 2000, the amounts receivable from Plains Marketing, L.P.,
TEPPCO Crude Oil LLC and Phillips Petroleum Company were $65,440, $13,643 and
$7,386, respectively, which are included in the caption "Accounts receivable -
oil and gas sales" in the accompanying Balance Sheet.
Pioneer USA is of the opinion that the loss of any one purchaser would
not have an adverse effect on the ability of the Partnership to sell its oil,
NGLs and gas production.
20
Note 9. Partnership agreement
The following is a brief summary of the more significant provisions of
the Partnership agreement:
Managing general partner - The managing general partner of the
Partnership is Pioneer USA. Pioneer USA has the power and authority to
manage, control and administer all Program and Partnership affairs. As
managing general partner and operator of the Partnership's properties,
all production expenses are incurred by Pioneer USA and billed to the
Partnership. The majority of the Partnership's oil and gas revenues are
received directly by the Partnership, however, a portion of the oil and
gas revenue is initially received by Pioneer USA prior to being paid to
the Partnership. Under the Partnership agreement, the managing general
partner pays 1% of the Partnership's acquisition, drilling and completion
costs and 1% of its operating and general and administrative expenses. In
return, it is allocated 1% of the Partnership's revenues.
Limited partner liability - The maximum amount of liability of any
limited partner is the total contributions of such partner plus his share
of any undistributed profits.
Initial capital contributions - The partners entered into subscription
agreements for aggregate capital contributions of $11,897,000. The
managing general partner is required to contribute amounts equal to 1% of
initial Partnership capital less commission and organization and offering
costs allocated to the limited partners and to contribute amounts
necessary to pay costs and expenses allocated to it under the Partnership
agreement to the extent its share of revenues does not cover such costs.
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
21
PART III
ITEM 10. Directors and Executive Officers of the Partnership
The Partnership does not have any officers or directors. Under the limited
partnership agreement, the Partnership's managing general partner, Pioneer USA,
is granted the exclusive right and full authority to manage, control and
administer the Partnership's business.
Set forth below are the names, ages and positions of the directors and executive
officers of Pioneer USA. Directors of Pioneer USA are elected to serve until the
next annual meeting of stockholders or until their successors are elected and
qualified.
Age at
December 31,
Name 2000 Position
- -------------------- ------------ --------
Scott D. Sheffield 48 President
Timothy L. Dove 44 Executive Vice President, Chief
Financial Officer and Director
Dennis E. Fagerstone 51 Executive Vice President and Director
Mark L. Withrow 53 Executive Vice President, General
Counsel and Director
Danny Kellum 46 Executive Vice President - Domestic
Operations and Director
Rich Dealy 34 Vice President and Chief Accounting
Officer
Scott D. Sheffield. Mr. Sheffield is a graduate of The University of
Texas with a B.S. in Petroleum Engineering. Since August 1997, he has served as
President, Chief Executive Officer and a director of Pioneer and President of
Pioneer USA. Mr. Sheffield assumed the position of Chairman of the Board of
Pioneer in August 1999. He served as a director of Pioneer USA from August 1997
until his resignation from the board in June 1999. Mr. Sheffield was the
President and a director of Parker & Parsley Petroleum Company ("Parker &
Parsley") from May 1990 until August 1997 and was the Chairman of the Board and
Chief Executive Officer of Parker & Parsley from October 1990 until August 1997.
He was the sole director of Parker & Parsley from May 1990 until October 1990.
Mr. Sheffield joined Parker & Parsley Development Company ("PPDC"), a
predecessor of Parker & Parsley, as a petroleum engineer in 1979. He served as
Vice President - Engineering of PPDC from September 1981 until April 1985 when
he was elected President and a director. In March 1989, Mr. Sheffield was
elected Chairman of the Board and Chief Executive Officer of PPDC. Before
joining PPDC's predecessor, Mr. Sheffield was employed as a production and
reservoir engineer for Amoco Production Company.
22
Timothy L. Dove. Mr. Dove earned a B.S. in Mechanical Engineering from
Massachusetts Institute of Technology in 1979 and received his M.B.A. in 1981
from the University of Chicago. He became Executive Vice President - Business
Development of Pioneer and Pioneer USA in August 1997 and was also appointed a
director of Pioneer USA in August 1997. Mr. Dove assumed the position of Chief
Financial Officer of Pioneer and Pioneer USA effective February 1, 2000. Mr.
Dove joined Parker & Parsley in May 1994 as Vice President - International and
was promoted to Senior Vice President - Business Development in October 1996, in
which position he served until August 1997. Prior to joining Parker & Parsley,
Mr. Dove was employed with Diamond Shamrock Corp., and its successor, Maxus
Energy Corp, in various capacities in international exploration and production,
marketing, refining and marketing and planning and development.
Dennis E. Fagerstone. Mr. Fagerstone, a graduate of the Colorado School
of Mines with a B.S. in Petroleum Engineering, became an Executive Vice
President of Pioneer and Pioneer USA in August 1997. He was also appointed a
director of Pioneer USA in August 1997. He served as Executive Vice President
and Chief Operating Officer of MESA Inc. ("Mesa") from March 1, 1997 until
August 1997. From October 1996 to February 1997, Mr. Fagerstone served as Senior
Vice President and Chief Operating Officer of Mesa and from May 1991 to October
1996, he served as Vice President - Exploration and Production of Mesa. From
June 1988 to May 1991, Mr. Fagerstone served as Vice President - Operations of
Mesa.
Mark L. Withrow. Mr. Withrow, a graduate of Abilene Christian University
with a B. S. in Accounting and Texas Tech University with a Juris Doctorate
degree, became Executive Vice President, General Counsel and Secretary of
Pioneer and Pioneer USA in August 1997. He was also appointed a director of
Pioneer USA in August 1997. Mr. Withrow was Vice President - General Counsel of
Parker & Parsley from January 1991, when he joined Parker & Parsley, to January
1995, when he was appointed Senior Vice President - General Counsel. He was
Parker & Parsley's Secretary from August 1992 until August 1997. Prior to
joining Parker & Parsley, Mr. Withrow was the managing partner of the law firm
of Turpin, Smith, Dyer, Saxe & MacDonald, Midland, Texas.
Danny Kellum. Mr. Kellum, who received a Bachelor of Science degree in
Petroleum Engineering from Texas Tech University in 1979, was elected Executive
Vice President - Domestic Operations of Pioneer and Pioneer USA on May 18, 2000
and Director of Pioneer USA on February 1, 2000. From January 2000 until May
2000, Mr. Kellum served as Vice President - Domestic Operations of Pioneer and
Pioneer USA. Mr. Kellum served as Vice President Permian Division of Pioneer and
Pioneer USA from April 1998 until December 1999. From 1989 until 1994 he served
as Spraberry District Manager and as Vice President of the Spraberry and Permian
Division for Parker & Parsley until August of 1997. Mr. Kellum joined Parker &
Parsley as an operations engineer in 1981 after a brief career with Mobil Oil
Corporation.
Rich Dealy. Mr. Dealy is a graduate of Eastern New Mexico University with
a B.B.A. in Accounting and Finance and is a Certified Public Accountant. He
became Vice President and Chief Accounting Officer of Pioneer and Pioneer USA in
February 1998. Mr. Dealy served as Controller of Pioneer USA from August 1997 to
February 1998. He served as Controller of Parker & Parsley from August 1995 to
August 1997. Mr. Dealy joined Parker & Parsley as an Accounting Manager in July,
1992. He was previously employed with KPMG Peat Marwick as an Audit Senior, in
charge of Parker & Parsley's audit.
23
ITEM 11. Executive Compensation
The Partnership does not have any directors or officers. Management of the
Partnership is performed by Pioneer USA, the managing general partner. The
Partnership participates in oil and gas activities through an income tax
partnership (the "Program") pursuant to the Program agreement. Under the Program
agreement, Pioneer USA pays approximately 10% of the Program's acquisition,
drilling and completion costs and approximately 15% during the first three years
and approximately 20% after three years of its operating and general and
administrative expenses. In return, they are allocated approximately 15% during
the first three years and approximately 20% after three years of the Program's
revenues.
The Partnership does not directly pay any salaries of the executive officers of
Pioneer USA, but does pay a portion of Pioneer USA's general and administrative
expenses of which these salaries are a part.
See Notes 6 and 9 of Notes to Financial Statements included in "Item 8.
Financial Statements and Supplementary Data" for information regarding fees and
reimbursements paid to the managing general partner by the Partnership.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) Beneficial owners of more than five percent
The Partnership is not aware of any person who beneficially owns 5% or more of
the outstanding limited partnership interests of the Partnership. Pioneer USA
owned 80 limited partnership interests at January 1, 2001.
(b) Security ownership of management
The Partnership does not have any officers or directors. The managing general
partner of the Partnership, Pioneer USA, has the exclusive right and full
authority to manage, control and administer the Partnership's business. Under
the limited partnership agreement, limited partners holding a majority of the
outstanding limited partnership interests have the right to take certain
actions, including the removal of the managing general partner or any other
general partner. The Partnership is not aware of any current arrangement or
activity which may lead to such removal. The Partnership is not aware of any
officer or director of Pioneer USA who beneficially owns limited partnership
interests in the Partnership.
ITEM 13. Certain Relationships and Related Transactions
Transactions with the managing general partner
Pursuant to the limited partnership agreement, the Partnership had the following
related party transactions with the managing general partner during the years
ended December 31:
24
2000 1999 1998
--------- --------- ---------
Payment of lease operating and supervision
charges in accordance with standard
industry operating agreements $ 211,037 $ 214,306 $ 209,549
Reimbursement of general and administrative
expenses $ 40,368 $ 27,181 $ 22,923
Under the limited partnership agreement, the managing general partner pays 1% of
the Partnership's acquisition, drilling and completion costs and 1% of its
operating and general and administrative expenses. In return, it is allocated 1%
of the Partnership's revenues. Also, see Notes 6 and 9 of Notes to Financial
Statements included in "Item 8. Financial Statements and Supplementary Data",
regarding the Partnership's participation with the managing general partner in
oil and gas activities of the Program.
25
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial statements
The following are filed as part of this Report:
Independent Auditors' Report
Balance sheets as of December 31, 2000 and 1999
Statements of operations for the years ended December 31, 2000,
1999 and 1998
Statements of partners' capital for the years ended December 31,
2000, 1999 and 1998
Statements of cash flows for the years ended December 31, 2000,
1999 and 1998
Notes to financial statements
2. Financial statement schedules
All financial statement schedules have been omitted since the
required information is in the financial statements or notes
thereto, or is not applicable nor required.
(b) Reports on Form 8-K
None.
(c) Exhibits
The exhibits listed on the accompanying index to exhibits are filed or
incorporated by reference as part of this Report.
26
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 CONV., L.P.
Dated: March 28, 2001 By: Pioneer Natural Resources USA, Inc.
Managing General Partner
By: /s/ Scott D. Sheffield
-----------------------------
Scott D. Sheffield, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
/s/ Scott D. Sheffield President of Pioneer USA March 28, 2001
- ------------------------
Scott D. Sheffield
/s/ Timothy L. Dove Executive Vice President, Chief March 28, 2001
- ------------------------ Financial Officer and Director of
Timothy L. Dove Pioneer USA
/s/ Dennis E. Fagerstone Executive Vice President and March 28, 2001
- ------------------------ Director of Pioneer USA
Dennis E. Fagerstone
/s/ Mark L. Withrow Executive Vice President, General March 28, 2001
- ------------------------ Counsel and Director of Pioneer USA
Mark L. Withrow
/s/ Danny Kellum Executive Vice President - Domestic March 28, 2001
- ------------------------ Operations and Director of Pioneer
Danny Kellum USA
/s/ Rich Dealy Vice President and Chief Accounting March 28, 2001
- ------------------------ Officer of Pioneer USA
Rich Dealy
27
PARKER & PARSLEY 90-B CONV., L.P.
INDEX TO EXHIBITS
The following documents are incorporated by reference in response to Item
14(c):
Exhibit No. Description Page
3(a) Form of Agreement of Limited Partnership -
of Parker & Parsley 90-B Conv., L.P.
incorporated by reference to Exhibit A of
the Post-Effective Amendment No. 1 of
the Partnership's Registration Statement
on Form S-1 (Registration No. 33-26097)
4(b) Form of Limited Partner Subscription Agreement -
incorporated by reference to Exhibit C of the
Post-Effective Amendment No. 1 of the
Partnership's Registration Statement on Form
S-1 (Registration No. 33-26097)
4(b) Form of General Partner Subscription Agreement -
incorporated by reference to Exhibit D of the
Post-Effective Amendment No. 1 of the
Partnership's Registration Statement on Form
S-1 (Registration No. 33-26097)
4(b) Power of Attorney incorporated by reference to -
Exhibit B of Amendment No. 1 of the Partnership's
Registration Statement on Form S-1
(Registration No. 33-26097)
4(c) Specimen Certificate of Limited Partnership -
Interest incorporated by reference to Exhibit 4c
of the Partnership's Registration Statement on
Form S-1 (Registration No. 33-26097)
10(b) Form of Development Drilling Program -
Agreement incorporated by reference to Exhibit
B of the Post-Effective Amendment No. 1 of
the Partnership's Registration Statement on
Form S-1 (Registration No. 33-26097)
28