United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-16550
ENEX INCOME AND RETIREMENT FUND - SERIES 2, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0222815
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)
Issuer's telephone number:
(713) 358-8401
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
ENEX INCOME AND RETIREMENT FUND - SERIES 2, L.P.
BALANCE SHEET
- --------------------------------------------------------------------
September 30,
ASSETS 1995
-------------
(Unaudited)
CURRENT ASSETS:
Cash .......................................... $ 4,057
Receivable from affiliated limited partnership 340
Accounts receivable - oil & gas sales ......... 22,052
Other current assets .......................... 20,000
----------
Total current assets ............................ 46,449
----------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests ............................ 1,209,403
Less accumulated depletion ................... 821,688
----------
Property, net ................................... 387,715
----------
TOTAL ........................................... $ 434,164
==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ............................. $ 6
Payable to general partner ................... 26,548
----------
Total current liabilities ....................... 26,554
----------
NONCURRENT PAYABLE TO GENERAL PARTNER ........... 26,548
----------
PARTNERS' CAPITAL:
Limited partners ............................. 373,292
General partner .............................. 7,771
----------
Total partners' capital ......................... 381,063
----------
TOTAL ........................................... $ 434,164
==========
<FN>
See accompanying notes to financial statements.
- --------------------------------------------------------------------
</FN>
I-1
ENEX INCOME AND RETIREMENT FUND - SERIES 2, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) QUARTER ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
REVENUES:
Oil and gas sales ........ $24,270 $34,504 $64,774 $115,965
------- ------- ------- --------
EXPENSES:
Depletion ................ 13,794 12,689 28,640 41,133
Production taxes ......... 2,008 1,520 3,140 4,650
General and administrative 7,002 7,995 23,189 30,585
------- ------- ------- --------
Total expenses ............. 22,804 22,204 54,969 76,368
------- ------- ------- --------
INCOME FROM OPERATIONS ..... 1,466 12,300 9,805 39,597
------- ------- ------- --------
OTHER INCOME:
Gain from sale of property 15,286 -- 15,286 --
------- ------- ------- --------
NET INCOME ................. $16,752 $12,300 $25,091 $ 39,597
======= ======= ======= ========
<FN>
See accompanying notes to financial statements.
- ---------------------------------------------------------------------------------------
</FN>
I-2
ENEX INCOME AND RETIREMENT FUND - SERIES 2, L.P.
STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
(UNAUDITED)
NINE MONTHS ENDED
------------------------------
September 30, September 30,
1995 1994
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................... $ 25,091 $ 39,597
--------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities
Depletion ................................... 28,640 41,133
Gain from sale of property .................. (15,286) --
(Increase) decrease in:
Accounts receivable - oil & gas sales ....... 4,048 5,299
Accounts receivable - affiliated partnerships (340) --
Other current assets ........................ (20,000) --
Increase (decrease) in:
Accounts payable ........................... (3,033) --
Payable to general partner ................. (18,032) 16,240
--------- ---------
Total adjustments ............................. (24,003) 62,672
--------- ---------
Net cash provided by operating activities ..... 1,088 102,269
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property ............. 20,000 --
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ......................... (24,708) (97,792)
--------- ---------
NET INCREASE (DECREASE) IN CASH ............... (3,620) 4,477
CASH AT BEGINNING OF YEAR ..................... 7,677 17,713
--------- ---------
CASH AT END OF PERIOD ......................... $ 4,057 $ 22,190
========= =========
<FN>
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
</FN>
I-3
ENEX INCOME AND RETIREMENT FUND - SERIES 2, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The interim financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of results for the
interim periods.
2. In the third quarter of 1995, the Company sold a portion of its in-
terest in the Shana Acquisition for $20,000. A gain of $15,286 was
recognized on the sale.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Third Quarter 1995 Compared to Third Quarter 1994
Oil and gas sales for the third quarter decreased from $34,504 in 1994 to
$24,270 in 1995. This represents a decrease of $10,234 (30%). Oil sales
decreased by $810 (23%). A 9% decrease in oil production reduced oil sales by
$297. A 16% decrease in the average net oil sales price reduced sales by an
additional $513. Gas sales decreased by $9,424 (30%). A 34% decrease in the
average net gas sales price reduced sales by $10,960. This decrease was
partially offset by a 5% increase in gas production. The decrease in oil
production was primarily due to natural production declines. The decreases in
the average net oil and gas sales prices were primarily due to relatively lower
net profits payments received on the Shana acquisition which incurred workover
charges in 1995 coupled with lower prices in the overall market for the sale
gas. The increase in gas production was primarily due to higher production from
the Corinne acquisition which had been shut-in in the third quarter of 1994 due
to over-production and due to higher production from the East Cameron
acquisition resulting from a recompletion in the fourth quarter of 1994.
Depletion expense increased from $12,689 in the third quarter of 1994 to
$13,794 in the third quarter of 1995. This represents an increase of $1,105
(9%). The changes in production, noted above, caused depletion expense to
increase by $413, while a 5% increase in the depletion rate increased depletion
expense by $692. The rate increase is primarily the result of relatively higher
production from properties with a higher depletion rate, partially offset by an
upward revision of the oil and gas reserves at December 31, 1994.
In the third quarter of 1995, the Company sold a portion of its interest in the
Shana acquisition for $20,000. A gain of $15,286 was recognized on the sale.
General and administrative expenses decreased from $7,995 in 1994 to $7,002 in
1995. This decrease of $993 (12%) is primarily due to less staff time being
required to manage the Company's operations.
First Nine Months in 1995 Compared to First Nine Months in 1994
Oil and gas sales for the first nine months decreased from $115,965 in 1994 to
$64,774 in 1995. This represents a decrease of $51,191 (44%). Oil sales
increased by $2,382 (19%). A 63% increase in oil production increased oil sales
by $7,906. This increase was partially offset by a 27% decrease in the average
net oil sales price. Gas sales decreased by $53,573 (52%). A 30% decrease in gas
production reduced sales by $30,894. A 31% decrease in the average net gas sales
price reduced sales by an additional $22,679. The increase in oil production was
primarily the result of higher production from the Shana acquisition which was
partially shut-in during 1994 to perform a workover. The decrease in gas
production was primarily due to lower
I-5
production from the Corinne acquisition which was shut-in for over-production in
the first half of 1995, and due to natural production declines which were
especially pronounced on the Pecan Island acquisition. The decrease in the
average net oil sales price was primarily due to higher operating costs incurred
on the Shana acquisition, in which the Company has a net profits royalty
interest, partially offset by higher prices in the overall market for the sale
of oil. The decrease in the average net gas sales price was primarily due to
higher operating costs incurred on the Shana acquisition, in which the Company
has a net profits royalty interest coupled with lower prices in the overall
market for the sale gas.
Depletion expense decreased from $41,133 in the first nine months of 1994 to
$28,640 in the first nine months of 1995. This represents a decrease of $12,493
(30%). A 40% decrease in the depletion rate reduced depletion expense by
$18,802. This decrease was partially offset by the changes in production, noted
above. The rate decrease is primarily the result of an upward revision of the
oil and gas reserves at December 31, 1994.
In the third quarter of 1995, the Company sold a portion of its interest in the
Shana acquisition for $20,000. A gain of $15,286 was recognized on the sale.
General and administrative expenses decreased from $30,585 in 1994 to $23,189 in
1995. This decrease of $7,396 (24%) is primarily due to less staff time being
required to manage the Company's operations.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations is a direct result of the amount of net
proceeds realized from the sale of oil and gas production. Accordingly, the
changes in cash flow from 1994 to 1995 are primarily due to the changes in oil
and gas sales described above. It is the general partner's intention to
distribute substantially all of the Company's available cash flow to the
Company's partners.
The Company discontinued the payment of distributions in July 1995. Future
distributions are dependent upon, among other things, an increase in prices
received for oil and gas. The Company will continue to recover its reserves and
distribute to the limited partners the net proceeds realized form the sale of
oil and gas production. Distribution amounts are subject to change if net
revenues are greater or less than expected. Future periodic distributions will
be made once sufficient net revenues are accumulated.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits to this report.
(b) The Company filed no reports on Form 8-K during the
quarter ended September 30, 1995.
II-1
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ENEX INCOME AND RETIREMENT
FUND - SERIES 2, L.P.
---------------------
(Registrant)
By:ENEX RESOURCES CORPORATION
--------------------------
General Partner
By: /s/ R. E. Densford
------------------
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
November 11, 1995 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer