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 June 30, 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 June 30, 1998 and
December 31, 1997 ...................................... 3
Statements of Operations for the three and six
months ended June 30, 1998 and 1997....................... 4
Statement of Partners' Capital for the six months
ended June 30, 1998....................................... 5
Statements of Cash Flows for the six months ended
June 30, 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............................ 11
27.1 Financial Data Schedule
Signatures.................................................. 12
2
PARKER & PARSLEY 90-B CONV., L.P.
(A Delaware Limited Partnership)
Part I. Financial Information
Item 1. Financial Statements
BALANCE SHEETS
June 30, December 31,
1998 1997
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents, including interest
bearing deposits of $98,757 at June 30
and $118,425 at December 31 $ 99,044 $ 118,712
Accounts receivable - oil and gas sales 95,070 126,770
---------- ----------
Total current assets 194,114 245,482
---------- ----------
Oil and gas properties - at cost, based on the
successful efforts accounting method 9,590,013 9,582,125
Accumulated depletion (7,214,301) (7,100,097)
---------- ----------
Net oil and gas properties 2,375,712 2,482,028
---------- ----------
$ 2,569,826 $ 2,727,510
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable - affiliate $ 41,340 $ 34,538
Partners' capital:
Managing general partner 25,284 26,929
Limited partners (11,897 interests) 2,503,202 2,666,043
---------- ----------
2,528,486 2,692,972
---------- ----------
$ 2,569,826 $ 2,727,510
========== ==========
The financial information included as of June 30, 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 Six months ended
June 30, June 30,
--------------------- ---------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Revenues:
Oil and gas $ 203,398 $ 263,377 $ 410,441 $ 588,581
Interest 1,558 2,430 3,475 4,622
Gain on disposition of assets - - 123 -
-------- -------- -------- --------
204,956 265,807 414,039 593,203
-------- -------- -------- --------
Costs and expenses:
Oil and gas production 134,541 130,858 274,144 257,985
General and administrative 6,706 8,187 13,701 18,819
Depletion 61,424 61,046 114,204 122,941
-------- -------- -------- --------
202,671 200,091 402,049 399,745
-------- -------- -------- --------
Net income $ 2,285 $ 65,716 $ 11,990 $ 193,458
======== ======== ======== ========
Allocation of net income:
Managing general partner $ 23 $ 658 $ 120 $ 1,935
======== ======== ======== ========
Limited partners $ 2,262 $ 65,058 $ 11,870 $ 191,523
======== ======== ======== ========
Net income per limited
partnership interest $ .19 $ 5.47 $ 1.00 $ 16.10
======== ======== ======== ========
Distributions per limited
partnership interest $ 4.76 $ 14.45 $ 14.69 $ 33.77
======== ======== ======== ========
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 (1,765) (174,711) (176,476)
Net income 120 11,870 11,990
-------- --------- ---------
Balance at June 30, 1998 $ 25,284 $2,503,202 $2,528,486
======== ========= =========
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)
Six months ended
June 30,
------------------------
1998 1997
---------- ----------
Cash flows from operating activities:
Net income $ 11,990 $ 193,458
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion 114,204 122,941
Gain on disposition of assets (123) -
Changes in assets and liabilities:
Accounts receivable 31,700 87,332
Accounts payable 6,802 8,383
--------- ---------
Net cash provided by operating activities 164,573 412,114
--------- ---------
Cash flows from investing activities:
Additions to oil and gas properties (7,888) (6,028)
Proceeds from asset dispositions 123 -
--------- ---------
Net cash used in investing activities (7,765) (6,028)
--------- ---------
Cash flows from financing activities:
Cash distributions to partners (176,476) (405,833)
--------- ---------
Net increase (decrease) in cash and cash equivalents (19,668) 253
Cash and cash equivalents at beginning of period 118,712 123,797
--------- ---------
Cash and cash equivalents at end of period $ 99,044 $ 124,050
========= =========
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
June 30, 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 of the
Partnership as of June 30, 1998 and for the three and six months ended June 30,
1998 and 1997 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, 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
Six months ended June 30, 1998 compared with six months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 30% to $410,441 from $588,581
for the six months ended June 30, 1998 and 1997, respectively. The decrease in
revenues resulted from lower average prices received, offset by an increase in
production. For the six months ended June 30, 1998, 21,153 barrels of oil, 8,110
barrels of natural gas liquids ("NGLs") and 36,722 mcf of gas were sold, or
7
35,383 barrel of oil equivalents ("BOEs"). For the six months ended June 30,
1997, 21,770 barrels of oil and 59,429 mcf of gas were sold, or 31,675 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 to 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 and six months ended June 30,
1998 is the price received for dry residue gas and the price per mcf for natural
gas for the three and six months ended June 30, 1997 is a price for wet gas
(i.e., natural gas liquids combined with dry residue gas).
The average price received per barrel of oil decreased $6.41, or 31%, from
$20.40 for the six months ended June 30, 1997 to $13.99 for the same period in
1998. The average price received per barrel of NGLs during the six months ended
June 30, 1998 was $7.27. The average price received per mcf of gas decreased 38%
from $2.43 for the six months ended June 30, 1997 to $1.51 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
six months ended June 30, 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 1998. On July 29, 1998,
the market price for West Texas intermediate crude was $11.58 per barrel. A
continuation of the oil price environment experienced during the first half 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 six months ended
June 30, 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 increased to $402,049 for the six months ended June 30,
1998 as compared to $399,745 for the same period in 1997, an increase of $2,304.
This increase was due to an increase in production costs, offset by decreases in
depletion and general and administrative expenses ("G&A").
Production costs were $274,144 for the six months ended June 30, 1998 and
$257,985 for the same period in 1997, resulting in a $16,159 increase, or 6%.
This increase was due to additional well maintenance costs, offset by a decrease
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, 27% from $18,819 for the six months ended June 30, 1997
to $13,701 for the same period in 1998.
8
Depletion was $114,204 for the six months ended June 30, 1998 compared to
$122,941 for the same period in 1997. This represented a decrease in depletion
of $8,737, or 7%. 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 617 barrels for the period ended June 30, 1998 compared to the same period in
1997, offset by a decrease in oil reserves during the six months ended June 30,
1998 as a result of lower commodity prices.
Three months ended June 30, 1998 compared with three months ended
June 30, 1997
Revenues:
The Partnership's oil and gas revenues decreased 23% to $203,398 from $263,377
for the three months ended June 30, 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 June 30, 1998, 10,684 barrels of oil,
4,429 barrels of NGLs and 18,359 mcf of gas were sold, or 18,173 BOEs. For the
three months ended June 30, 1997, 10,553 barrels of oil and 29,519 mcf of gas
were sold, or 15,473 BOEs.
The average price received per barrel of oil decreased $5.49, or 29%, from
$18.74 for the three months ended June 30, 1997 to $13.25 for the same period in
1998. The average price received per barrel of NGLs during the three months
ended June 30, 1998 was $7.62. The average price received per mcf of gas
decreased 31% from $2.22 during the three months ended June 30, 1997 to $1.53
for the same period in 1998.
Costs and Expenses:
Total costs and expenses increased to $202,671 for the three months ended June
30, 1998 as compared to $200,091 for the same period in 1997, an increase of
$2,580. This increase was due to increases in production costs and depletion,
offset by a decrease in G&A.
Production costs were $134,541 for the three months ended June 30, 1998 and
$130,858 for the same period in 1997, resulting in a $3,683 increase, or 3%. The
increase was due to additional well maintenance costs, offset by declines in
workover costs and 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, 18% from $8,187 for the three months ended June 30,
1997 to $6,706 for the same period in 1998.
Depletion was $61,424 for the three months ended June 30, 1998 compared to
$61,046 for the same period in 1997. This represented an increase in depletion
of $378. This increase was primarily attributable to a decrease in oil reserves
9
during the three months ended June 30, 1998 as a result of lower commodity
prices and an increase in oil production of 131 barrels for the period ended
June 30, 1998 compared to the same period in 1997.
Liquidity and Capital Resources
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased $247,541 during the six
months ended June 30, 1998 from the same period ended June 30, 1997. This
decrease was primarily due to a decline 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 six months ended June
30, 1998 and 1997 included expenditures related to equipment replacement on
various oil and gas properties.
Proceeds from asset dispositions of $123 were received during the six months
ended June 30, 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 six months ended June 30, 1998 to cover
distributions to the partners of $176,476 of which $1,765 was distributed to the
managing general partner and $174,711 to the limited partners. For the same
period ended June 30, 1997, cash was sufficient for distributions to the
partners of $405,833 of which $4,059 was distributed to the managing general
partner and $401,774 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 June
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.
10
- ---------------
(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) Form 8-K - none
11
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: August 5, 1998 By: /s/ Rich Dealy
----------------------------------
Rich Dealy, Vice President and
Chief Accounting Officer
12