-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K87bjWYa+WO8LkY/LmuO8ZfJNiNFxtR8/kb6OF4wEqAOtwJdqAK1+26rcqguoSn4 +tLFTc3OtG9b7q/iYsiwbQ== 0000757545-98-000002.txt : 19980331 0000757545-98-000002.hdr.sgml : 19980331 ACCESSION NUMBER: 0000757545-98-000002 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980330 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARKER & PARSLEY 84-A LTD CENTRAL INDEX KEY: 0000757545 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 751974814 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 002-90417-01 FILM NUMBER: 98578743 BUSINESS ADDRESS: STREET 1: 303 W WALL STE 101 CITY: MIDLAND STATE: TX ZIP: 79701 BUSINESS PHONE: 9156834768 MAIL ADDRESS: STREET 1: 303 WEST WALL STREET 2: SUITE 101 CITY: MIDLAND STATE: TX ZIP: 79701 10-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K / x / Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required) For the fiscal year ended December 31, 1997 or / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) Commission File No. 2-90417 PARKER & PARSLEY 84-A, LTD. (Exact name of Registrant as specified in its charter) Texas 75-1974814 (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 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 original purchase price the aggregate market value of limited partnership interests owned by non-affiliates of the Registrant is $19,091,000. As of March 9, 1998, the number of outstanding limited partnership interests was 19,435. 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 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 84-A, Ltd. (the "Partnership") is a limited partnership organized in 1984 under the laws of the State of Texas. On August 8, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA") became the managing general partner of the Partnership, joining the existing general partner, P&P Employees 84-A, Ltd. ("EMPL"), a Texas limited partnership whose general partner is Pioneer USA, and 19,435 limited partnership interests as of March 9, 1998. Prior to August 8, 1997, the Partnership's managing general partner and the general partner of EMPL was Parker & Parsley Development L.P. ("PPDLP"), a wholly-owned subsidiary of Parker & Parsley Petroleum Company ("Parker & Parsley"). On August 7, 1997, Parker & Parsley and Mesa Inc. ("Mesa") received shareholder approval to merge and create Pioneer Natural Resources Company ("Pioneer"). On August 8, 1997, PPDLP was merged with and into Pioneer USA, a wholly-owned subsidiary of Pioneer, resulting in Pioneer USA becoming the managing general partner of the Partnership and the general partner of EMPL as PPDLP's successor by merger. For a more complete description of the Parker & Parsley and Mesa merger, see Pioneer's Registration Statement on Form S-4 as filed with the Securities and Exchange Commission. A Registration Statement, as amended, filed pursuant to the Securities Act of 1933, registering limited partnership interests aggregating $22,000,000 in a series of Texas limited partnerships formed under the Parker & Parsley 84 Development Drilling Program, was declared effective by the Securities and Exchange Commission on May 24, 1984. On July 6, 1984, the offering of limited partnership interests in the Partnership, the first partnership formed under such registration statement, was closed, with interests aggregating $19,435,000 being sold to 1,306 subscribers. The Partnership engages primarily in oil and gas development and production and is not involved in any industry segment other than oil and gas. See "Item 6. Selected Financial Data" and "Item 8. Financial Statements and Supplementary Data" of this report for a summary of the Partnership's revenue, income and identifiable assets. The principal markets during 1997 for the oil produced by the Partnership were refineries and oil transmission companies that have facilities near the Partnership's oil producing properties. The principal markets for the Partnership's gas were companies that have pipelines located near the Partnership's gas producing properties. Of the Partnership's total oil and gas revenues for 1997, approximately 58% and 26% were attributable to sales made to Genesis Crude Oil, L.P. and Western Gas Resources, Inc., respectively. 2 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. Because of the demand for oil and gas, the Partnership does not believe that the termination of the sales of its products to any one customer would have a material adverse impact on its operations. The loss of a particular customer for gas may have an effect if that particular customer has the only gas pipeline located in the areas of the Partnership's gas producing properties. The Partnership believes, however, that the effect would be temporary, until alternative arrangements could be made. Federal and state regulation of oil and gas operations generally includes the fixing of maximum prices for regulated categories of natural gas, the imposition of maximum allowable production rates, the taxation of income and other items, and the protection of the environment. 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. The Partnership does not have any employees of its own. Pioneer USA employs 1,133 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. 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 primarily 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 and exploratory 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 3 drilling of 42 oil and gas wells. At December 31, 1997, 38 wells were producing and four wells had been plugged and abandoned due to unprofitable operations; one each in 1989, 1990, 1992 and 1995. The Partnership received interests in six additional producing oil and gas wells in 1993 due to the Partnership's back-in after payout provisions. For information relating to the Partnership's estimated proved oil and gas reserves at December 31, 1997, 1996 and 1995, 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 estimated by the engineering staff of Pioneer USA with a review by an independent petroleum consultant. ITEM 3. Legal Proceedings The Partnership 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 believes to be material. ITEM 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the fourth quarter of 1997. 4 PART II ITEM 5. Market for Partnership's Common Equity and Related Stockholder Matters At March 9, 1998, the Partnership had 19,435 outstanding limited partnership interests held of record by 1,298 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, 1997 and 1996, distributions of $628,201 and $1,431,942, respectively, 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: 1997 1996 1995 1994 1993 ---------- ---------- ---------- ---------- ----------- Operating results: Oil and gas sales $1,668,018 $1,984,346 $ 1,623,611 $1,613,333 $ 1,941,975 ========= ========= ========== ========= ========== Impairment of oil and gas properties $ 370,361 $ - $ 1,238,979 $ - $ - ========= ========= ========== ========= ========== Litigation settlement, net $ - $1,055,353 $ - $ - $10,853,299 ========= ========= ========== ========= ========== Net income (loss) $ 70,124 $1,782,138 $(1,173,821) $ 54,264 $10,675,743 ========= ========= ========== ========= ========== Allocation of net income (loss): General partners $ 121,907 $ 462,041 $ (14,808) $ 98,429 $ 2,486,658 ========= ========= ========== ========= ========== Limited partners $ (51,783) $1,320,097 $(1,159,013) $ (44,165) $ 8,189,085 ========= ========= ========== ========= ========== Limited partners' net income (loss) per limited partnership interest $ (2.66) $ 67.92 $ (59.64) $ (2.27) $ 421.36 ========= ========= ========== ========= ========== Limited partners' cash distributions per limited partnership interest $ 32.32 $ 73.68(a) $ 24.03 $ 22.50 $ 471.86(a) ========= ========= ========== ========= ========== At year end: Total assets $3,657,643 $4,436,385 $ 4,598,559 $6,356,430 $ 6,883,767 ========= ========= ========== ========= ==========
- --------------- (a) Including litigation settlement per limited partnership interest of $42.48 in 1996 and $438.00 in 1993. 5 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of operations 1997 compared to 1996 The Partnership's 1997 oil and gas revenues decreased 16% to $1,668,018 from $1,984,346 in 1996. The decrease in revenues resulted from lower average prices received. In 1997, 58,956 barrels of oil, 13,850 barrels of natural gas liquids ("NGLs") and 199,235 mcf of gas were sold, or 106,012 barrel of oil equivalents ("BOEs"). In 1996, 64,490 barrels of oil and 236,446 mcf of gas were sold, or 103,898 BOEs. Consistent with the managing general partner, the Partnership has historically accounted for processed natural gas production as wellhead production on a wet gas basis. As a result of the merger with Mesa, the managing general partner has adopted Mesa's accounting policy and now accounts for processed natural gas production in two components: natural gas liquids and dry residue gas. As a result of the change in the managing general partner's policy, the Partnership now accounts 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. The average price received per barrel of oil decreased $2.57, or 12%, from $21.88 in 1996 to $19.31 in 1997. The average price received per barrel of NGLs was $9.23 in 1997. The average price received per mcf of gas decreased 17% from $2.42 in 1996 to $2.02 in 1997. The market price for oil and gas has been extremely volatile in the past decade, and management expects a certain amount of volatility 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 1997. A gain on disposition of assets of $3,072 was received during 1997 from equipment disposals on one saltwater disposal well. On April 29, 1996, Southmark Corporation, Pioneer USA and the Partnership entered into a final $7.4 million settlement agreement with Jack N. Price resolving all outstanding litigation between the parties. As a result, all of the pending lawsuits and judgments have been dismissed, the supersedeas bond released, and the Reserve released as collateral. On June 28, 1996, a final distribution was made to the working interest owners of $1,055,353 which included $825,594, or $42.48 per limited partnership interest, to the Partnership and its partners. Total costs and expenses increased in 1997 to $1,613,718 as compared to $1,267,952 in 1996, an increase of $345,766, or 27%. The increase was primarily due to the impairment of oil and gas properties, offset by decreases in abandoned property costs, general and administrative expenses ("G&A"), depletion and production costs. Production costs were $869,909 in 1997 and $876,376 in 1996, resulting in a $6,467 decrease. The decrease was due to a decline in production taxes, offset by an increase in well maintenance costs. 6 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, 14% from $67,319 in 1996 to $57,698 in 1997. The Partnership paid the managing general partner $50,041 in 1997 and $59,530 in 1996 for G&A incurred on behalf of the Partnership. G&A is allocated, in part, to the Partnership by the managing general partner. Such allocated expenses are determined by the managing general partner based upon its judgement of the level of activity of the Partnership relative to the managing general partner's activities and other entities it manages. The method of allocation has varied in certain years and may do so again depending on the activities of the managed entities. The Partnership adopted 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") effective as of October 1, 1995 (see Notes 2 and 3 of Notes to Financial Statements included in "Item 8. Financial Statements and Supplementary Data"). As a result of the review and evaluation of its long-lived assets for impairment, the Partnership recognized a non-cash charge of $370,361 related to its oil and gas properties during the fourth quarter of 1997. Depletion was $315,750 in 1997 compared to $323,910 in 1996. This represented a decrease of $8,160, or 3%. This decrease was primarily attributable to a decline in oil production of 5,534 barrels in 1997 compared to 1996, offset by a decrease in oil reserves during 1997 as a result of lower commodity prices. Abandoned property costs of $347 were incurred during 1996 from one well abandoned in a prior year. 1996 compared to 1995 The Partnership's 1996 oil and gas revenues increased 22% to $1,984,346 from $1,623,611 in 1995. The increase in revenues resulted from higher average prices received per barrel of oil and mcf of gas, offset by declines in barrels of oil and mcf of gas produced and sold. In 1996, 64,490 barrels of oil were sold compared to 68,417 in 1995, a decrease of 3,927 barrels, or 6%. In 1996, 236,446 mcf of gas were sold compared to 274,149 in 1995, a decrease of 37,703 mcf, or 14%. The volume decreases were primarily due to the decline characteristics of the Partnership's oil and gas properties. The average price received per barrel of oil increased $4.70, or 27%, from $17.18 in 1995 to $21.88 in 1996, while the average price received per mcf of gas increased 48% from $1.63 in 1995 to $2.42 in 1996. A gain on disposition of assets of $22,281 was recognized during 1995, resulting from proceeds received from equipment salvage on the abandonment of one fully depleted well. Abandoned property costs of $347 were incurred during 1996 from one well abandoned in a prior year. During 1995 abandoned property costs were $13,265 to plug and abandon one well. On April 29, 1996, Southmark Corporation, Pioneer USA and the Partnership entered into a final $7.4 million settlement agreement with Jack N. Price resolving all outstanding litigation between the parties. As a result, all of the pending lawsuits and judgments have been dismissed, the supersedeas bond released, and the Reserve released as collateral. On June 28, 1996, a final 7 distribution was made to the working interest owners of $1,055,353 which included $825,594, or $42.48 per limited partnership interest, to the Partnership and its partners. Total costs and expenses decreased in 1996 to $1,267,952 as compared to $2,828,272 in 1995, a decrease of $1,560,320, or 55%. The decrease was primarily due to the reduction in impairment of oil and gas properties and decreases in depletion, abandoned property costs and production costs, offset by an increase in G&A. Production costs were $876,376 in 1996 and $905,317 in 1995, resulting in a $28,941 decrease, or 3%. The decrease was the result of reductions in well maintenance costs, offset by an increase in ad valorem and production taxes. During this period, G&A increased, in aggregate, 18% from $57,235 in 1995 to $67,319 in 1996. The Partnership paid the managing general partner $59,530 in 1996 and $48,708 in 1995 for G&A incurred on behalf of the Partnership. The Partnership adopted SFAS 121 effective as of October 1, 1995 (see Notes 2 and 3 of Notes to Financial Statements included in "Item 8. Financial Statements and Supplementary Data"). As a result of the review and evaluation of its long-lived assets for impairment, the Partnership recognized a non-cash charge of $1,238,979 related to its oil and gas properties during the fourth quarter of 1995. Depletion was $323,910 in 1996 compared to $613,476 in 1995. This represented a decrease of $289,566, or 47%. This decrease was primarily attributable to the following factors: (i) a reduction in the Partnership's net depletable basis from charges taken in accordance with SFAS 121, (ii) a reduction in oil production of 3,927 barrels for 1996 as compared to 1995, and (iii) an increase in oil and gas reserves during 1996 as a result of higher commodity prices. Impact of inflation and changing prices on sales and net income Inflation impacts the fixed overhead rate charges of the lease operating expenses for the Partnership. During 1995, the annual change in the index of average weekly earnings of crude petroleum and gas production workers issued by the U.S. Department of Labor, Bureau of Labor Statistics increased by 4.4%. The 1996 annual change in average weekly earnings increased by 4.1%. The 1997 index (effective April 1, 1997) increased 2%. The impact of inflation for other lease operating expenses is small due to the current economic condition of the oil industry. The oil and gas industry experienced volatility during the past decade because of the fluctuation of the supply of most fossil fuels relative to the demand for such products and other uncertainties in the world energy markets causing significant fluctuations in oil and gas prices. During 1997, the price per barrel for oil production similar to the Partnership's ranged from approximately $16.00 to $23.00. During most of 1997 and 1996, 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 March 19, 1998, the market price for West Texas intermediate crude was $12.00 per barrel. A continuation of the oil price environment experienced during the first quarter of 1998 will have an adverse effect on the 8 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. Prices for natural gas are subject to ordinary seasonal fluctuations, and this volatility of natural gas prices may result in production being curtailed and, in some cases, wells being completely shut-in. Liquidity and capital resources Net Cash Provided by Operating Activities Net cash provided by operating activities decreased $1,041,743 during the year ended December 31, 1997 from the year ended December 31, 1996. The decrease was primarily due to the receipt of proceeds from the litigation settlement in 1996 as discussed above and a decline in oil and gas sales receipts, offset by a decrease in production costs paid. Net Cash Provided by (Used in) Investing Activities The Partnership's investing activities during 1997 and 1996 were related to expenditures for equipment replacement on various oil and gas properties. Proceeds from asset disposition of $3,072 were received during 1997 from the disposal of equipment on one saltwater disposal well. Net Cash Used in Financing Activities Cash was sufficient in 1997 for distributions to the partners of $845,250 of which $217,049 was distributed to the general partners and $628,201 to the limited partners. In 1996, cash was sufficient for distributions to the partners of $1,883,373 of which $451,431 was distributed to the general partners and $1,431,942 to the limited partners. It is expected that future net cash provided by operations 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 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 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 as defined pursuant to the partnership agreement. Although the costs are not estimable at this time, they should not be significant to the Partnership. 9 ITEM 8. Financial Statements and Supplementary Data Index to Financial Statements Page Financial Statements of Parker & Parsley 84-A, Ltd: Independent Auditors' Report........................................ 11 Balance Sheets as of December 31, 1997 and 1996..................... 12 Statements of Operations for the Years Ended December 31, 1997, 1996 and 1995............................................... 13 Statements of Partners' Capital for the Years Ended December 31, 1997, 1996 and 1995.................................. 14 Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and 1995............................................... 15 Notes to Financial Statements....................................... 16 10 INDEPENDENT AUDITORS' REPORT The Partners Parker & Parsley 84-A, Ltd. (A Texas Limited Partnership): We have audited the financial statements of Parker & Parsley 84-A, Ltd. as listed in the accompanying index. 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 generally accepted auditing standards. 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 84-A, Ltd. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. As discussed in Notes 2 and 3 to the financial statements, the Partnership adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in 1995. KPMG Peat Marwick LLP Midland, Texas March 20, 1998 11 PARKER & PARSLEY 84-A, LTD. (A Texas Limited Partnership) BALANCE SHEETS December 31 1997 1996 ------------ ------------- ASSETS Current assets: Cash and cash equivalents, including interest bearing deposits of $159,195 in 1997 and $161,973 in 1996 $ 159,695 $ 162,473 Accounts receivable - oil and gas sales 225,232 330,344 ---------- ----------- Total current assets 384,927 492,817 ---------- ----------- Oil and gas properties - at cost, based on the successful efforts accounting method 18,223,253 18,207,994 Accumulated depletion (14,950,537) (14,264,426) ----------- ----------- Net oil and gas properties 3,272,716 3,943,568 ---------- ----------- $ 3,657,643 $ 4,436,385 =========== ============ LIABILITIES AND PARTNERS' CAPITAL Current liabilities: Accounts payable - affiliate $ 41,183 $ 44,799 Partners' capital: General partners 395,245 490,387 Limited partners (19,435 interests) 3,221,215 3,901,199 ---------- ----------- 3,616,460 4,391,586 ---------- ----------- $ 3,657,643 $ 4,436,385 =========== ============ The accompanying notes are an integral part of these financial statements. 12 PARKER & PARSLEY 84-A, LTD. (A Texas Limited Partnership) STATEMENTS OF OPERATIONS For the years ended December 31 1997 1996 1995 ---------- ---------- ----------- Revenues: Oil and gas $1,668,018 $1,984,346 $ 1,623,611 Interest 12,752 10,391 8,559 Gain on disposition of assets 3,072 - 22,281 Litigation settlement - 1,055,353 - --------- --------- ---------- 1,683,842 3,050,090 1,654,451 --------- --------- ---------- Costs and expenses: Oil and gas production 869,909 876,376 905,317 General and administrative 57,698 67,319 57,235 Impairment of oil and gas properties 370,361 - 1,238,979 Depletion 315,750 323,910 613,476 Abandoned property - 347 13,265 --------- --------- ---------- 1,613,718 1,267,952 2,828,272 --------- --------- ---------- Net income (loss) $ 70,124 $1,782,138 $(1,173,821) ========= ========= ========== Allocation of net income (loss): General partners $ 121,907 $ 462,041 $ (14,808) ========= ========= ========== Limited partners $ (51,783) $1,320,097 $(1,159,013) ========= ========= ========== Net income (loss) per limited partnership interest $ (2.66) $ 67.92 $ (59.64) ========= ========= ========== The accompanying notes are an integral part of these financial statements. 13 PARKER & PARSLEY 84-A, LTD. (A Texas Limited Partnership) STATEMENTS OF PARTNERS' CAPITAL General Limited partners partners Total ---------- ----------- ----------- Partners' capital at January 1, 1995 $ 661,306 $ 5,639,089 $ 6,300,395 Distributions (166,721) (467,032) (633,753) Net loss (14,808) (1,159,013) (1,173,821) --------- ---------- ---------- Partners' capital at December 31, 1995 479,777 4,013,044 4,492,821 Distributions (451,431) (1,431,942) (1,883,373) Net income 462,041 1,320,097 1,782,138 --------- ---------- ---------- Partners' capital at December 31, 1996 490,387 3,901,199 4,391,586 Distributions (217,049) (628,201) (845,250) Net income (loss) 121,907 (51,783) 70,124 --------- ---------- ---------- Partners' capital at December 31, 1997 $ 395,245 $ 3,221,215 $ 3,616,460 ========= ========== ========== The accompanying notes are an integral part of these financial statements. 14 PARKER & PARSLEY 84-A, LTD. (A Texas Limited Partnership) STATEMENTS OF CASH FLOWS For the years ended December 31 1997 1996 1995 --------- ----------- ---------- Cash flows from operating activities: Net income (loss) $ 70,124 $ 1,782,138 $(1,173,821) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Impairment of oil and gas properties 370,361 - 1,238,979 Depletion 315,750 323,910 613,476 Gain on disposition of assets (3,072) - (22,281) Changes in assets and liabilities: Accounts receivable 105,112 (149,380) (2,346) Accounts payable (3,616) (60,266) 49,030 -------- ---------- ---------- Net cash provided by operating activities 854,659 1,896,402 703,037 -------- ---------- ---------- Cash flows from investing activities: Additions to oil and gas properties (15,259) (7,944) (2,719) Proceeds from asset dispositions 3,072 - 22,281 -------- ---------- ---------- Net cash provided by (used in) investing activities (12,187) (7,944) 19,562 -------- ---------- ---------- Cash flows from financing activities: Cash distributions to partners (845,250) (1,883,373) (633,753) -------- ---------- ---------- Net increase (decrease) in cash and cash equivalents (2,778) 5,085 88,846 Cash and cash equivalents at beginning of year 162,473 157,388 68,542 -------- ---------- ---------- Cash and cash equivalents at end of year $ 159,695 $ 162,473 $ 157,388 ======== ========== ========== The accompanying notes are an integral part of these financial statements. 15 PARKER & PARSLEY 84-A, LTD. (A Texas Limited Partnership) NOTES TO FINANCIAL STATEMENTS December 31, 1997, 1996 and 1995 Note 1. Organization and nature of operations Parker & Parsley 84-A, Ltd. (the "Partnership") is a limited partnership organized in 1984 under the laws of the State of Texas. On August 8, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA") became the managing general partner of the Partnership, joining the existing general partner, P&P Employees 84-A, Ltd. ("EMPL"), a Texas limited partnership whose general partner is Pioneer USA, and 19,435 limited partnership interests as of March 9, 1998. Prior to August 8, 1997, the Partnership's managing general partner and the general partner of EMPL was Parker & Parsley Development L.P. ("PPDLP"), a wholly-owned subsidiary of Parker & Parsley Petroleum Company ("Parker & Parsley"). On August 7, 1997, Parker & Parsley and Mesa Inc. received shareholder approval to merge and create Pioneer Natural Resources Company ("Pioneer"). On August 8, 1997, PPDLP was merged with and into Pioneer USA, a wholly-owned subsidiary of Pioneer, resulting in Pioneer USA becoming the managing general partner of the Partnership and the general partner of EMPL as PPDLP's successor by merger. 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. Summary of significant accounting policies A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: The Partnership accounts for long-lived assets to be disposed of at the lower of their carrying amount or fair value less costs to sell once management has committed to a plan to dispose of the assets. 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 determined by the engineering staff of Pioneer USA, the Partnership's managing general partner, and reviewed 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 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 16 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 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 reporting amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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 and cash equivalents include 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 or its affiliates. Such allocated expenses are determined by the managing general partner based upon its judgement of the level of activity of the Partnership relative to the managing general partner's activities and other entities it manages. The method of allocation has varied in certain years and may do so again depending on the activities of the managed entities. Reclassifications - Certain reclassifications have been made to the 1995 financial statements to conform to the 1997 financial statement presentation. 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. 17 Note 3. Impairment of long-lived assets The Partnership adopted SFAS 121 effective October 1, 1995. In order to determine whether an impairment has occurred, the Partnership estimates the expected future cash flows of its oil and gas properties and compares such future cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. For those 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 of the review and evaluation of its long-lived assets for impairment, the Partnership recognized non-cash charges of $370,361 and $1,238,979 related to its oil and gas properties during the fourth quarters of 1997 and 1995, respectively. Note 4. Income taxes The financial statement basis of the Partnership's net assets and liabilities was $1,002,350 greater than the tax basis at December 31, 1997. 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: 1997 1996 1995 -------- ---------- ---------- Net income (loss) per statements of operations $ 70,124 $1,782,138 $(1,173,821) Depletion and depreciation provisions for tax reporting purposes under amounts for financial reporting purposes 299,048 304,033 597,892 Impairment of oil and gas properties for financial reporting purposes 370,361 - 1,238,979 Other, net (12,815) (23,369) (10,332) ------- --------- ---------- Net income per Federal income tax returns $726,718 $2,062,802 $ 652,718 ======= ========= ========== 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: 1997 1996 1995 -------- -------- -------- Development costs $ 12,231 $ 7,618 $ 5,623 ======= ======= ======= 18 Capitalized oil and gas properties consist of the following: 1997 1996 ------------ ------------ Proved properties: Property acquisition costs $ 923,276 $ 923,276 Completed wells and equipment 17,299,977 17,284,718 ----------- ----------- 18,223,253 18,207,994 Accumulated depletion (14,950,537) (14,264,426) ------------ ----------- Net capitalized costs $ 3,272,716 $ 3,943,568 =========== =========== During 1997, the Partnership recognized a non-cash charge of $370,361 against oil and gas properties associated with SFAS 121. See Note 3. Note 6. Related party transactions Pursuant to the limited partnership agreement, the Partnership had the following related party transactions with the managing general partner or its affiliates during the years ended December 31: 1997 1996 1995 -------- -------- -------- Payment of lease operating and supervision charges in accordance with standard industry operating agreements $393,853 $372,085 $359,233 Reimbursement of general and administrative expenses $ 50,041 $ 59,530 $ 48,708 Receipt of proceeds for the salvage value of retired oil and gas equipment $ - $ - $ 18,888 Purchase of oil and gas properties and related equipment, at predecessor cost $ 10,613 $ 2,149 $ - Pioneer USA, P&P Employees 84-A, Ltd. ("EMPL") and the Partnership are parties to the Partnership agreement. EMPL is a limited partnership in which Pioneer USA owns 77.5% and the remaining portion is owned by former affiliates. Pioneer USA owned 344 limited partner interests in the Partnership at January 1, 1998. 19 The costs and revenues of the Partnership are allocated as follows: General Limited partners partners -------- -------- Revenues: Proceeds from property dispositions prior to cost recovery 10% 90% All other Partnership revenues 25% 75% Costs and expenses: Lease acquisition costs, drilling and completion costs 10% 90% Operating costs, direct costs and general and administrative expenses 25% 75% Incremental direct expenses - 100% Incremental direct expenses are direct expenses which would not be incurred except for the requirements of the securities regulatory authorities and totaled $7,657, $7,789 and $8,527 in 1997, 1996 and 1995, 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, 1997, 1996 and 1995 and changes in such quantities during the years then ended. All of the Partnership's reserves are proved and located within the United States. The Partnership's reserves are based on an evaluation prepared by the engineering staff of Pioneer USA and reviewed by an independent petroleum consultant, using criteria established by the Securities and Exchange Commission. Reserve value information is available to limited partners pursuant to the Partnership agreement and, therefore, is not presented. Oil and NGLs Gas (bbls) (mcf) ---------- ---------- Net proved reserves at January 1, 1995 814,499 3,214,611 Revisions 28,903 (126,503) Production (68,417) (274,149) ---------- ---------- Net proved reserves at December 31, 1995 774,985 2,813,959 Revisions 225,257 1,245,386 Production (64,490) (236,446) ---------- ---------- Net proved reserves at December 31, 1996 935,752 3,822,899 Revisions 190,095 (2,106,976) Production (72,806) (199,235) ---------- ---------- Net proved reserves at December 31, 1997 1,053,041 1,516,688 ========== ========== The estimated present value of future net revenues of proved reserves, calculated using December 31, 1997 prices of $17.17 per barrel of oil, $12.52 per barrel of NGLs and $2.20 per mcf of gas, discounted at 10% was approximately 20 $4,056,000 and undiscounted was $7,113,000 at December 31, 1997. Subsequent to December 31, 1997, the prices of oil and gas have been declining, and on March 19, 1998, the average prices for the Partnership's oil and gas were approximately $12.00 and $2.05, respectively. The Partnership emphasizes that reserve estimates are inherently imprecise and, accordingly, the estimates are expected to change as future information becomes available. 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: 1997 1996 1995 -------- -------- -------- Genesis Crude Oil, L.P. 58% 60% 61% Western Gas Resources, Inc. 26% 15% 14% GPM Gas Corporation - 12% 12% The above customers represent 66% of total accounts receivable at December 31, 1997. Pioneer USA is party to a long-term agreement pursuant to which Pioneer USA and affiliates are to sell to Basis Petroleum, Inc. (formerly Phibro Energy, Inc.) substantially all crude oil (including condensate) which any of such entities have the right to market from time to time. On November 25, 1996, Pioneer USA consented to the assignment of the agreement to Genesis Crude Oil, L.P. ("Genesis"), a limited partnership formed by Basis Petroleum, Inc. and Howell Corporation. The price to be paid by Genesis for oil purchased under the agreement ("Genesis Agreement") is to be competitive with prices paid by other substantial purchasers in the same areas who are significant competitors of Genesis. The price to be paid for oil purchased under the Genesis Agreement includes a market-related bonus that may vary from month to month based upon spot oil prices at various commodity trade points. The term of the Genesis Agreement is through June 30, 1998, and it may continue thereafter subject to termination rights afforded each party. Salomon, Inc., the parent company of Basis Petroleum, Inc. and a subordinated limited partner in Genesis, secures the payment obligations under the Genesis Agreement with a $25 million payment guarantee. Accounts receivable-oil and gas sales included $75,916 due from Genesis at December 31, 1997. Note 9. Organization and operations The Partnership was organized July 6, 1984 as a limited partnership under the Texas Uniform Limited Partnership Act for the purpose of acquiring and developing oil and gas properties. The following is a brief summary of the more significant provisions of the limited partnership agreement: General partners - The general partners of the Partnership are Pioneer USA and EMPL. Pioneer USA, the managing general partner, has the power and authority to manage, control and administer all Partnership affairs. 21 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 limited partners entered into subscription agreements for aggregate capital contributions of $19,435,000. The general partners are required to contribute amounts equal to 10% of Partnership expenditures for lease acquisition, drilling and completion and 25% of direct, general and administrative and operating expenses, and by agreement must maintain a calculated minimum capital balance. 22 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None 23 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. Pioneer USA is a wholly-owned subsidiary of Pioneer, a publicly-traded corporation on the New York Stock Exchange. 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 1997 Position - -------------------- ------------ ------------------------------------- Scott D. Sheffield 45 President and Director Timothy L. Dove 41 Executive Vice President and Director Dennis E. Fagerstone 48 Executive Vice President and Director Mark L. Withrow 50 Executive Vice President, General Counsel and Director M. Garrett Smith 36 Executive Vice President, Chief Financial Officer and Director Mel Fischer 63 Executive Vice President Lon C. Kile 42 Executive Vice President Rich Dealy 31 Vice President and Chief Accounting Officer Scott D. Sheffield. Mr. Sheffield is a distinguished 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 and a director of Pioneer USA. Mr. Sheffield was the President and a director of 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, Mr. Sheffield was employed as a production and reservoir engineer for Amoco Production Company. 24 Timothy L. Dove. Mr. Dove became Executive Vice President - Business Development of Pioneer and Pioneer USA in August 1997. He was also appointed a director of Pioneer USA in August 1997. 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. 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. 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 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. M. Garrett Smith. Mr. Smith, a graduate of The University of Texas with a B.S. in Electrical Engineering and Southern Methodist University with an M.B.A., was appointed Executive Vice President and Chief Financial Officer of Pioneer in December 1997. He served as Senior Vice President - Finance of Pioneer from August 1997 until December 1997. Mr. Smith was elected Senior Vice President - Finance and a director of Pioneer USA in August 1997. He served as Vice President - Corporate Acquisitions of Mesa from January 1997 until August 1997. From October 1996 to December 1996, Mr. Smith served as Vice President - Finance of Mesa and from 1994 to 1996 he served as Director of Financial Planning of Mesa. Mr. Smith was employed by BTC Partners, Inc. (a former financial advisor to Mesa) from 1989 to 1994. Mel Fischer. Mr. Fischer, a graduate of the University of California at Berkeley with a Masters degree in Geology, became Executive Vice President - Worldwide Exploration of Pioneer and Pioneer USA in August 1997. He served as a director of Parker & Parsley from November 1995 until August 1997 and was Executive Vice President - Worldwide Exploration for Parker & Parsley from February 1997 to August 1997. Mr. Fischer worked in the petroleum industry for 32 years, starting as a Petroleum Geologist with Texaco in 1962, and retiring as President, Occidental International Exploration and Production Company in March 25 1994. For the 10 years prior to becoming President of Occidental International, he served as Executive Vice President, World Wide Exploration with Occidental Oil and Gas Corporation. He is a registered geologist in the State of California, a member of the American Association of Petroleum Geologists and an emeritus member of the Board of Advisors for the Earth Sciences Research Institute at the University of Utah. Lon C. Kile. Mr. Kile, a graduate of Oklahoma State University with a B.B.A. in Accounting, became Executive Vice President of Pioneer and Pioneer USA in August 1997. Mr. Kile was Senior Vice President - Investor Relations from October 1996 to August 1997. Previously, he served as Vice President and Manager of the Mid-Continent Division, Vice President - Equity Finance & Analysis and Vice President - Marketing & Program Administration. Prior to joining Parker & Parsley in 1985, he was employed as Supervisor - Senior, Audit, in charge of Parker & Parsley's audit, with Ernst & Young. 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. ITEM 11. Executive Compensation The Partnership does not have any directors or officers. Management of the Partnership is vested in Pioneer USA, the managing general partner. Under the Partnership agreement, Pioneer USA pays 8% of the Partnership's acquisition, drilling and completion costs and 20% of its operating and general and administrative expenses. In return, Pioneer USA is allocated 20% of the Partnership's revenues. 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 or its affiliates by the Partnership. EMPL is a co-general partner of the Partnership. Under this arrangement, EMPL pays 2% of the Partnership's acquisition, drilling and completion costs and 5% of its operating and general and administrative expenses. In return, EMPL is allocated 5% of the Partnership's revenues. EMPL does not receive any fees or reimbursements from the Partnership. 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 Note 6 of Notes to Financial Statements included in "Item 8. Financial Statements and Supplementary Data". 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 26 and EMPL respectively own 80% and 20% of the general partners' interests in the Partnership. Pioneer USA owned 344 limited partner interests at January 1, 1998. (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 or its affiliates Pursuant to the limited partnership agreement, the Partnership had the following related party transactions with the managing general partner or its affiliates during the years ended December 31: 1997 1996 1995 -------- -------- -------- Payment of lease operating and supervision charges in accordance with standard industry operating agreements $393,853 $372,085 $359,233 Reimbursement of general and administrative expenses $ 50,041 $ 59,530 $ 48,708 Receipt of proceeds for the salvage value of retired oil and gas equipment $ - $ - $ 18,888 Purchase of oil and gas properties and related equipment, at predecessor cost $ 10,613 $ 2,149 $ - Under the limited partnership agreement, the general partners, Pioneer USA and EMPL, together pay 10% of Partnership's acquisition, drilling and completion costs and 25% of its operating and general and administrative expenses. In return, they are allocated 25% of the Partnership's revenues. Twenty percent of the general partners' share of costs and revenues is allocated to EMPL and the remainder is allocated to Pioneer USA. Certain former affiliates of the Pioneer USA are limited partners of EMPL. 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 Partnership. 27 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 annual report: Independent Auditors' Report Balance sheets as of December 31, 1997 and 1996 Statements of operations for the years ended December 31, 1997, 1996 and 1995 Statements of partners' capital for the years ended December 31, 1997, 1996 and 1995 Statements of cash flows for the years ended December 31, 1997, 1996 and 1995 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 annual report. 28 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 84-A, LTD. Dated: March 30, 1998 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 and Director of March 30, 1998 - ------------------------- Pioneer USA Scott D. Sheffield /s/ Timothy L. Dove Executive Vice President and March 30, 1998 - ------------------------- Director of Pioneer USA Timothy L. Dove /s/ Dennis E. Fagerstone Executive Vice President and March 30, 1998 - ------------------------- Director of Pioneer USA Dennis E. Fagerstone /s/ Mark L. Withrow Executive Vice President, General March 30, 1998 - ------------------------- Counsel and Director of Pioneer USA Mark L. Withrow /s/ M. Garrett Smith Executive Vice President, Chief March 30, 1998 - ------------------------- Financial Officer and Director M. Garrett Smith of Pioneer USA /s/ Mel Fischer Executive Vice President of March 30, 1998 - ------------------------- Pioneer USA Mel Fischer /s/ Lon C. Kile Executive Vice President of March 30, 1998 - ------------------------- Pioneer USA Lon C. Kile /s/ Rich Dealy Vice President and Chief Accounting March 30, 1998 - ------------------------- Officer of Pioneer USA Rich Dealy 29 PARKER & PARSLEY 84-A, LTD. INDEX TO EXHIBITS The following documents are incorporated by reference in response to Item 14(c): Exhibit No. Description Page - ----------- ----------- ---- 3.1 Agreement of limited partnership of Parker - & Parsley 84-A, Ltd. incorporated by reference to Exhibit 4(e) of Partnership's Registration Statement on Form S-1 (Registration No. 2-90417), as amended on May 24, 1984, the effective date thereof (hereinafter called, the Partnership's Registration Statement) 3.2 Amended and Restated Certificate of Limited - Partnership of Parker & Parsley 84-A, Ltd. incorporated by reference to Exhibit 3.2 of the Partnership's Annual Report on Form 10-K for the period from July 6, 1984 (date of organization) through December 31, 1984 4.1 Form of Subscription Agreement and Power of - Attorney incorporated by reference to Exhibit 4(b) of the Partnership's Registration Statement 4.2 Specimen Certificate of Limited Partnership - Interest incorporated by reference to Exhibit 4(d) of the Partnership's Registration Statement 27.*1 Financial Data Schedule 99.1 Mutual Release and Indemnity Agreement - dated May 25, 1993 incorporated by reference to Exhibit 99.1 of the Partnership's Annual Report on Form 10-K for the year ended December 31, 1993 * filed herewith 30 EX-27 2
5 0000757545 84A. 1 12-MOS DEC-31-1997 DEC-31-1997 159,695 0 225,232 0 0 384,927 18,223,253 14,950,537 3,657,643 41,183 0 0 0 0 3,616,460 3,657,643 1,668,018 1,683,842 0 1,613,718 0 0 0 70,124 0 70,124 0 0 0 70,124 (2.66) 0
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