10-Q 1 m0187a.txt P&P 87-A MARCH 2001 10-Q 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, 2001 Commission File No. 33-12244-01 PARKER & PARSLEY 87-A, LTD. (Exact name of Registrant as specified in its charter) Texas 75-2185148 --------------------------------- ---------------------- (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 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 87-A, LTD. TABLE OF CONTENTS Page Part I. Financial Information Item 1. Financial Statements Balance Sheets as of March 31, 2001 and December 31, 2000..................................... 3 Statements of Operations for the three months ended March 31, 2001 and 2000.......................... 4 Statement of Partners' Capital for the three months ended March 31, 2001................................... 5 Statements of Cash Flows for the three months ended March 31, 2001 and 2000.......................... 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 Signatures............................................... 11 2 PARKER & PARSLEY 87-A, LTD. (A Texas Limited Partnership) Part I. Financial Information Item 1. Financial Statements BALANCE SHEETS March 31, December 31, 2001 2000 ------------ ------------ (Unaudited) ASSETS Current assets: Cash $ 301,993 $ 321,340 Accounts receivable - oil and gas sales 455,532 435,508 ----------- ----------- Total current assets 757,525 756,848 ----------- ----------- Oil and gas properties - at cost, based on the successful efforts accounting method 20,197,105 20,198,629 Accumulated depletion (17,685,979) (17,611,694) ----------- ----------- Net oil and gas properties 2,511,126 2,586,935 ----------- ----------- $ 3,268,651 $ 3,343,783 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Accounts payable - affiliate $ 52,367 $ 37,865 Partners' capital: Managing general partner 32,136 33,032 Limited partners (28,811 interests) 3,184,148 3,272,886 ----------- ----------- 3,216,284 3,305,918 ----------- ----------- $ 3,268,651 $ 3,343,783 =========== =========== The financial information included as of March 31, 2001 has been prepared by the managing general partner without audit by independent public accountants. The accompanying notes are an integral part of these financial statements.

3 PARKER & PARSLEY 87-A, LTD. (A Texas Limited Partnership) STATEMENTS OF OPERATIONS (Unaudited) Three months ended March 31, ------------------------- 2001 2000 ---------- ---------- Revenues: Oil and gas $ 774,832 $ 648,941 Interest 5,464 5,228 Gain on disposition of assets 2,399 5,861 --------- --------- 782,695 660,030 --------- --------- Costs and expenses: Oil and gas production 284,079 265,708 General and administrative 23,245 19,468 Depletion 74,285 51,744 --------- --------- 381,609 336,920 --------- --------- Net income $ 401,086 $ 323,110 ========= ========= Allocation of net income: Managing general partner $ 4,011 $ 3,231 ========= ========= Limited partners $ 397,075 $ 319,879 ========= ========= Net income per limited partnership interest $ 13.78 $ 11.10 ========= ========= The financial information included herein has been prepared by the managing general partner without audit by independent public accountants. The accompanying notes are an integral part of these financial statements.

4 PARKER & PARSLEY 87-A, LTD. (A Texas Limited Partnership) STATEMENT OF PARTNERS' CAPITAL (Unaudited) Managing general Limited partner partners Total ---------- ---------- ---------- Balance at January 1, 2001 $ 33,032 $3,272,886 $3,305,918 Distributions (4,907) (485,813) (490,720) Net income 4,011 397,075 401,086 --------- --------- --------- Balance at March 31, 2001 $ 32,136 $3,184,148 $3,216,284 ========= ========= ========= The financial information included herein has been prepared by the managing general partner without audit by independent public accountants. The accompanying notes are an integral part of these financial statements.

5 PARKER & PARSLEY 87-A, LTD. (A Texas Limited Partnership) STATEMENTS OF CASH FLOWS (Unaudited) Three months ended March 31, ------------------------ 2001 2000 ---------- ---------- Cash flows from operating activities: Net income $ 401,086 $ 323,110 Adjustments to reconcile net income to net cash provided by operating activities: Depletion 74,285 51,744 Gain on disposition of assets (2,399) (5,861) Changes in assets and liabilities: Accounts receivable (20,024) (33,931) Accounts payable 14,502 11,341 --------- --------- Net cash provided by operating activities 467,450 346,403 --------- --------- Cash flows from investing activities: Additions to oil and gas properties (834) (4,560) Proceeds from disposition of assets 4,757 7,591 --------- --------- Net cash provided by investing activities 3,923 3,031 --------- --------- Cash flows used in financing activities: Cash distributions to partners (490,720) (337,058) --------- --------- Net increase (decrease) in cash (19,347) 12,376 Cash at beginning of period 321,340 339,531 --------- --------- Cash at end of period $ 301,993 $ 351,907 ========= ========= The financial information included herein has been prepared by the managing general partner without audit by independent public accountants. The accompanying notes are an integral part of these financial statements.

6 PARKER & PARSLEY 87-A, LTD. (A Texas Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 2001 (Unaudited) Note 1. Organization and nature of operations Parker & Parsley 87-A, Ltd. (the "Partnership") is a limited partnership organized in 1987 under the laws of the State of Texas. The Partnership engages in oil and gas development and production in Texas and is not involved in any industry segment other than oil and gas. Note 2. Basis of presentation In the opinion of management, the unaudited financial statements of the Partnership as of March 31, 2001 include all adjustments and accruals consisting only of normal recurring accrual adjustments which are necessary for a fair presentation of the results for the interim period. These interim results are not necessarily indicative of results for a full year. Certain reclassifications may have been made to the March 31, 2000 financial statements to conform to the March 31, 2001 financial statement presentations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Partnership's Report on Form 10-K for the year ended December 31, 2000, as filed with the Securities and Exchange Commission, a copy of which is available upon request by writing to Rich Dealy, Vice President and Chief Accounting Officer, 5205 North O'Connor Boulevard, 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 increased 19% to $774,832 for the three months ended March 31, 2001 as compared to $648,941 for the same period in 2000. The increase in revenues resulted from higher average prices received, offset by declines in production. For the three months ended March 31, 2001, 14,267 barrels of oil, 7,635 barrels of natural gas liquids ("NGLs") and 42,755 mcf of gas were sold, or 29,028 barrel of oil equivalents ("BOEs"). For the three months ended March 31, 2000, 16,334 barrels of oil, 8,851 barrels of NGLs and 40,626 mcf of gas were sold, or 31,956 BOEs. 7 The average price received per barrel of oil increased $.66, or 2%, from $27.18 for the three months ended March 31, 2000 to $27.84 for the same period in 2001. The average price received per barrel of NGLs increased $3.50, or 23%, from $15.12 for the three months ended March 31, 2000 to $18.62 for the same period in 2001. The average price received per mcf of gas increased 215% from $1.75 during the three months ended March 31, 2000 to $5.51 for the same period in 2001. The market price for oil and gas has been extremely volatile in the past decade, and management expects a certain amount of volatility to continue in the foreseeable future. The Partnership may therefore sell its future oil and gas production at average prices lower or higher than that received during the three months ended March 31, 2001. Gains on disposition of assets of $2,399 and $5,861 were due to equipment credits received on one well during the three months ended March 31, 2001 and 2000, respectively. Costs and Expenses: Total costs and expenses increased to $381,609 for the three months ended March 31, 2001 as compared to $336,920 for the same period ended March 31, 2000, an increase of $44,689, or 13%. This increase was due to increases in depletion, production costs and general and administrative expenses ("G&A"). Production costs were $284,079 for the three months ended March 31, 2001 and $265,708 for the same period in 2000, resulting in an increase of $18,371, or 7%. The increase was primarily due to higher production taxes associated with higher oil and gas prices and additional well maintenance costs incurred to stimulate well production. G&A's components are independent accounting and engineering fees and managing general partner personnel and administrative costs. During this period, G&A increased 19% from $19,468 for the three months ended March 31, 2000 to $23,245 for the same period in 2001, primarily due to an increase in the accrual for tax preparation fees. Depletion was $74,285 for the three months ended March 31, 2001 as compared to $51,744 for the same period in 2000, an increase of $22,541, or 44%. The increase was primarily due to a downward revision to one well's proved reserves, offset by a decline in oil production of 2,067 barrels during the three months ended March 31, 2001 as compared to the same period in 2000. Liquidity and Capital Resources Net Cash Provided by Operating Activities: Net cash provided by operating activities increased $121,047 during the three months ended March 31, 2001 from the same period in 2000. The increase was primarily attributable to an increase of $126,127 in oil and gas sales receipts and a reduction in working capital of $17,068, offset by increases in production costs of $18,371 and G&A expenses of $3,777. The increase in oil and gas receipts resulted from the increase in commodity prices during 2001 which contributed an additional $194,581 to oil and gas receipts, offset by $68,454 resulting from the decline in production during 2001 as compared to the same period in 2000. The increase in production costs was primarily due to increased 8 production taxes associated with higher oil and gas prices and additional well maintenance costs incurred to stimulate well production. The increase in G&A was primarily due to an increase in the accrual for tax preparation fees. Net Cash Provided by Investing Activities: The Partnership's principle investing activities during the three months ended March 31, 2001 and 2000 were related to the upgrades of oil and gas equipment on active properties. Proceeds from asset dispositions of $4,757 and $7,591 received during the three months ended March 31, 2001 and 2000, respectively, were comprised of $2,399 and $5,861, respectively, received from the salvage of equipment on one fully depleted well and $2,358 and $1,730, respectively, from equipment salvage on active properties. Net Cash Used in Financing Activities: For the three months ended March 31, 2001, cash distributions to the partners were $490,720, of which $4,907 was distributed to the managing general partner and $485,813 to the limited partners. For the same period ended March 31, 2000, cash distributions to the partners were $337,058, of which $3,371 was distributed to the managing general partner and $333,687 to the limited partners. Proposal to acquire partnerships On April 17, 2001, Pioneer Natural Resources Company ("Pioneer") filed a preliminary proxy statement/prospectus with the Securities and Exchange Commission proposing an agreement and plan of merger among Pioneer, Pioneer Natural Resources USA, Inc. ("Pioneer USA"), a wholly- owned subsidiary of Pioneer, and the limited partners of 46 Parker & Parsley limited partnerships. Each partnership that approves the agreement and plan of merger and the other related merger proposals will merge with and into Pioneer USA, and the partnership interests of each such partnership will be converted into the right to receive cash and Pioneer common stock. Pioneer USA is the sole or managing general partner of the partnerships. The Partnership is one of the 46 Parker & Parsley limited partnerships being requested to approve the agreement and plan of merger. The preliminary proxy statement/prospectus is non-binding and is subject to, among other things, consideration of offers from third parties to purchase any partnership or its assets, the majority approval of the limited partnership interests in each partnership and the resolution of Securities and Exchange Commission review comments. No solicitation will be made using preliminary materials. --------------- (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 - none (b) Reports on Form 8-K - none. 10 PARKER & PARSLEY 87-A, LTD. (A Texas 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 87-A, LTD. By: Pioneer Natural Resources USA, Inc. Managing General Partner Dated: May 10, 2001 By: /s/ Rich Dealy -------------------------------- Rich Dealy, Vice President and Chief Accounting Officer 11

PARKER & PARSLEY 87-A LTD 10-Q