UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/ x / Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
or
/ / Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______ to _______
Commission File No. 33-26097-08
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)
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-B CONV., L.P.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 1998 and
December 31, 1997.......................................... 3
Statements of Operations for the three months
ended March 31, 1998 and 1997............................... 4
Statement of Partners' Capital for the three months
ended March 31, 1998........................................ 5
Statements of Cash Flows for the three months
ended March 31, 1998 and 1997............................... 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.............................. 10
27.1 Financial Data Schedule
Signatures.................................................... 11
2
PARKER & PARSLEY 90-B CONV., L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
March 31, December 31,
1998 1997
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $88,929 at March 31
and $118,425 at December 31 $ 89,216 $ 118,712
Accounts receivable - oil and gas sales 93,683 126,770
---------- ----------
Total current assets 182,899 245,482
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 9,587,150 9,582,125
Accumulated depletion (7,152,877) (7,100,097)
---------- ----------
Net oil and gas properties 2,434,273 2,482,028
---------- ----------
$ 2,617,172 $ 2,727,510
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 33,844 $ 34,538
Partners' capital:
Managing general partner 25,833 26,929
Limited partners (11,897 interests) 2,557,495 2,666,043
---------- ----------
2,583,328 2,692,972
---------- ----------
$ 2,617,172 $ 2,727,510
========== ==========
The financial information included as of March 31, 1998 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-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended
March 31,
------------------------
1998 1997
---------- ----------
Revenues:
Oil and gas $ 207,043 $ 325,204
Interest 1,917 2,192
Gain on disposition of assets 123 -
--------- ---------
209,083 327,396
--------- ---------
Costs and expenses:
Oil and gas production 139,603 127,127
General and administrative 6,995 10,632
Depletion 52,780 61,895
--------- ---------
199,378 199,654
--------- ---------
Net income $ 9,705 $ 127,742
========= =========
Allocation of net income:
Managing general partner $ 97 $ 1,277
========= =========
Limited partners $ 9,608 $ 126,465
========= =========
Net income per limited partnership interest $ .81 $ 10.63
========= =========
Distributions per limited partnership interest $ 9.93 $ 19.32
========= =========
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-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
Managing
general Limited
partner partners Total
---------- ---------- ----------
Balance at January 1, 1998 $ 26,929 $2,666,043 $2,692,972
Distributions (1,193) (118,156) (119,349)
Net income 97 9,608 9,705
--------- --------- ---------
Balance at March 31, 1998 $ 25,833 $2,557,495 $2,583,328
========= ========= =========
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-B CONV., L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
March 31,
------------------------
1998 1997
---------- ----------
Cash flows from operating activities:
Net income $ 9,705 $ 127,742
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 52,780 61,895
Gain on disposition of assets (123) -
Changes in assets and liabilities:
Accounts receivable 33,087 70,806
Accounts payable (694) 2,195
--------- ---------
Net cash provided by operating activities 94,755 262,638
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (5,025) (4,747)
Proceeds from asset dispositions 123 -
--------- ---------
Net cash used in investing activities (4,902) (4,747)
--------- ---------
Cash flows used in financing activities:
Cash distributions to partners (119,349) (232,201)
--------- ---------
Net increase (decrease) in cash and cash equivalents (29,496) 25,690
Cash and cash equivalents at beginning of period 118,712 123,797
--------- ---------
Cash and cash equivalents at end of period $ 89,216 $ 149,487
========= =========
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-B CONV., L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
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 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 as of March 31,
1998 of the Partnership include all adjustments and accruals consisting only of
normal recurring accrual adjustments which are necessary for a fair presentation
of the results for the interim period. However, these interim results are not
necessarily indicative of results for a full year.
The financial statements should be read in conjunction with the financial
statements and the notes thereto contained in the Partnership's Report on Form
10-K for the year ended December 31, 1997, 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 36% to $207,043 from $325,204
for the three months ended March 31, 1998 and 1997, respectively. The decrease
in revenues resulted from lower average prices received, offset by an increase
in production. For the three months ended March 31, 1998, 10,469 barrels of oil,
3,681 barrels of natural gas liquids ("NGLs") and 18,363 mcf of gas were sold,
or 17,211 barrel of oil equivalents ("BOEs"). For the three months ended March
31, 1997, 11,217 barrels of oil and 29,910 mcf of gas were sold, or 16,202 BOEs.
As of September 30, 1997, the Partnership began accounting for processed natural
gas production as processed natural gas liquids and dry residue gas.
Consequently, separate product volumes will not be comparable for periods prior
to September 30, 1997. Also, prices for gas products will not be comparable as
the price per mcf for natural gas for the three months ended March 31, 1998 is
the price received for dry residue gas and the price per mcf for natural gas for
the three months ended March 31, 1997 is a price for wet gas (i.e., natural gas
liquids combined with dry residue gas).
7
The average price received per barrel of oil decreased $7.23, or 33%, from
$21.97 for the three months ended March 31, 1997 to $14.74 for the same period
in 1998. The average price received per barrel of NGLs during the three months
ended March 31, 1998 was $6.85. The average price received per mcf of gas
decreased 43% from $2.63 during the three months ended March 31, 1997 to $1.50
for the same period in 1998. 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, 1998.
During most of 1997, the Partnership benefitted from higher oil prices as
compared to previous years. However, during the fourth quarter of 1997, oil
prices began a downward trend that has continued into March 1998. On April 23,
1998, the market price for West Texas intermediate crude was $13.80 per barrel.
A continuation of the oil price environment experienced during the first quarter
of 1998 will have an adverse effect on the Partnership's revenues and operating
cash flow and could result in additional decreases in the carrying value of the
Partnership's oil and gas properties.
A gain on disposition of assets of $123 was received during the three months
ended March 31, 1998 from the sale of equipment on one saltwater disposal well
plugged and abandoned in a prior year.
Costs and Expenses:
Total costs and expenses decreased to $199,378 for the three months ended March
31, 1998 as compared to $199,654 for the same period in 1997, a decrease of
$276. The decrease was due to declines in depletion and general and
administrative expenses ("G&A"), offset by an increase in production costs.
Production costs were $139,603 for the three months ended March 31, 1998 and
$127,127 for the same period in 1997, resulting in a $12,476 increase, or 10%.
The increase was due to additional well maintenance costs and workover expenses
incurred in an effort to stimulate well production, offset by 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, 34% from $10,632 for the three months ended March 31,
1997 to $6,995 for the same period in 1998.
Depletion was $52,780 for the three months ended March 31, 1998 compared to
$61,895 for the same period in 1997. This represented a decrease in depletion of
$9,115, or 15%. This decrease was primarily attributable to 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 1997 and a reduction in oil production
of 748 barrels for the period ended March 31, 1998 compared to the same period
in 1997, offset by a decline in oil reserves during the three months ended March
31, 1998 as a result of lower commodity prices.
8
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $167,883 during the three
months ended March 31, 1998 from the same period in 1997. This decrease resulted
from a decrease in oil and gas sales receipts and an increase in production
costs paid, offset by a decline in G&A expenses paid.
Net Cash Used in Investing Activities
The Partnership's principal investing activities for the three months ended
March 31, 1998 and 1997 were related to expenditures for oil and gas equipment
on active properties.
Proceeds from asset dispositions of $123 were received during the three months
ended March 31, 1998 from the sale of equipment on one saltwater disposal well
abandoned in a prior year.
Net Cash Used in Financing Activities
Cash was sufficient for the three months ended March 31, 1998 to cover
distributions to the partners of $119,349 of which $1,193 was distributed to the
managing general partner and $118,156 to the limited partners. For the same
period ended March 31, 1997, cash was sufficient for distributions to the
partners of $232,201 of which $2,322 was distributed to the managing general
partner and $229,879 to the limited partners.
It is expected that future net cash provided by operating activities will be
sufficient for any capital expenditures and any distributions. As the production
from the properties declines, distributions are also expected to decrease.
Information systems for the year 2000
The managing general partner will be required to modify its information systems
in order to accurately process Partnership data referencing the year 2000.
Because of the importance of occurrence dates in the oil and gas industry, the
consequences of not pursuing these modifications could be very significant to
the Partnership's ability to manage and report operating activities. Currently,
the managing general partner plans to contract with third parties to perform the
software programming changes necessary to correct any existing deficiencies.
Such programming changes are anticipated to be completed and tested by March 1,
1999. The managing general partner will allocate a portion of the costs of the
year 2000 programming charges to the Partnership when they are incurred, along
with recurring general and administrative expenses. Although the costs are not
estimable at this time, they should not be significant to the Partnership.
- ---------------
(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.
9
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
(1) On April 2, 1998, the Partnership filed a Current Report on Form
8-K dated March 31, 1998, reporting under Item 4 (Changes in
Registrant's Certifying Accountants) the engagement of Ernst &
Young LLP as the Partnership's independent auditors and the
dismissal of KPMG Peat Marwick LLP effective upon the completion of
the audit of the Partnership for the fiscal year ending December
31, 1997.
10
PARKER & PARSLEY 90-B 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-B CONV., L.P.
By: Pioneer Natural Resources USA, Inc.
Managing General Partner
Dated: May 5, 1998 By: /s/ Rich Dealy
--------------------------------
Rich Dealy, Vice President
and Chief Accounting Officer
11