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 June 30, 1996
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 0-14233
ENEX PROGRAM I PARTNERS, L.P.
(Exact name of small business issuer as specified in its Charter)
New Jersey 76-0175128
(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) has 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
Transitional Small Business Disclosure Format (Check one):
Yes No x
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX PROGRAM I PARTNERS, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 36,660
Accounts receivable - oil & gas sales ............... 475,367
Receivable from litigation settlement ............... 267,319
Other current assets ................................ 141,253
-----------
Total current assets .................................. 920,599
-----------
OIL & GAS PROPERTIES
(Successful efforts accounting method) -
Proved mineral interests and related
equipment & facilities 83,407,217
Less accumulated depreciation and depletion ........ 80,034,949
-----------
Property, net ......................................... 3,372,268
-----------
TOTAL ................................................. $ 4,292,867
===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ................................... $ 162,782
Payable to general partner ......................... 13,158
-----------
Total current liabilities ............................. 175,940
-----------
PARTNERS' CAPITAL:
Limited partners ................................... 3,119,385
General partner .................................... 997,542
-----------
Total partners' capital ............................... 4,116,927
-----------
TOTAL ................................................. $ 4,292,867
===========
See accompanying notes to financial statements.
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ENEX PROGRAM I PARTNERS, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) QUARTER ENDED SIX MONTHS ENDED
----------------------- -------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
---------- --------- -------- --------
REVENUES:
Oil and gas sales ............... $ 595,785 $ 563,031 $ 1,229,671 $ 1,102,000
Gas plant sales ................. 225,163 159,169 437,738 333,006
----------- ----------- ----------- -----------
Total revenues .................... 820,948 722,200 1,667,409 1,435,006
----------- ----------- ----------- -----------
EXPENSES:
Depreciation and depletion ...... 212,502 166,196 332,104 330,195
Impairment of property .......... -- -- 125,097 --
Lease operating expenses ........ 182,329 152,723 383,029 368,215
Gas plant purchases ............. 187,358 123,193 346,052 245,419
Production taxes ................ 34,306 42,205 74,203 80,480
General and administrative:
Allocated from general partner 188,917 154,710 413,520 416,742
Direct expenses .............. 21,831 36,707 46,362 52,148
----------- ----------- ----------- -----------
Total expenses .................... 827,243 675,734 1,720,367 1,493,199
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS .... (6,295) 46,466 (52,958) (58,193)
----------- ----------- ----------- -----------
OTHER INCOME:
Gain on sale of property ........ 21,649 -- 21,649
Interest income ................. 0 6,366 5,695 12,890
----------- ----------- ----------- -----------
Total other income ................ 21,649 6,366 27,344 12,890
----------- ----------- ----------- -----------
NET INCOME (LOSS) ................. $ 15,354 $ 52,832 $ (25,614) $ (45,303)
=========== =========== =========== ===========
See accompanying notes to financial statements.
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ENEX PROGRAM I PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
SIX MONTHS ENDED
------------------------
JUNE 30, JUNE 30,
1996 1995
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................... $ (25,614) $ (45,303)
--------- ---------
Adjustments to reconcile net loss to
net cash provided by operating activities:
Gain on sale of property ......................... (21,649) --
Depreciation and depletion ....................... 332,104 330,195
Impairment of property ........................... 125,097 --
(Increase) in:
Accounts receivable - oil & gas sales ............ (94,960) (20,366)
Receivable from litigation settlement ............ 12,731 (12,731)
Other current assets ............................. (9,813) (11,780)
Increase (decrease) in:
Accounts payable ................................ (112,673) 582
Payable to general partner ...................... (13,827) (76,384)
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Total adjustments .................................. 217,010 209,516
--------- ---------
Net cash provided by operating activities .......... 191,396 164,213
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property ................. 55,100 --
Property (additions) credits - development costs (208,046) (46,315)
--------- ---------
Net cash (used) by investing activities ............ (152,946) (46,315)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions .............................. (382,158) --
--------- ---------
NET INCREASE (DECREASE) IN CASH ................... (343,708) 117,898
--------- ---------
CASH AT BEGINNING OF YEAR .......................... 380,368 12,269
--------- ---------
CASH AT END OF PERIOD .............................. $ 36,660 $ 130,167
========= =========
See accompanying notes to financial statements.
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ENEX PROGRAM I PARTNERS, 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. On August 9, 1996, the Company's General Partner submitted preliminary
proxy material to the Securities Exchange Commission with respect to a
proposed consolidation of the Company with 33 other managed limited
partnerships. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Second Quarter 1995 Compared to Second Quarter 1996
Oil and gas sales for the second quarter increased to $595,785 in 1996 from
$563,031 in 1995. This represents an increase of $32,754 (6%). Oil sales
increased by $4,378. A 15% increase in the average oil sales price increased
sales by $33,328. This increase was partially offset by an 11% decrease in oil
production. Gas sales increased by $28,372 (9%). A 36% increase in the average
gas sales price increased sales by $90,339. This increase was partially offset
by a 19% decrease in gas production. Gas plant sales increased to $225,163 in
1996 from $159,169 in 1995. This represents an increase of $65,994. A 46%
increase in the average sales price of gas plant products increased sales by
$71,309. This increase was partially offset by a 3% decrease in the production
of gas plant products. The decreases in oil, gas and gas plant production were
primarily due to natural production declines. The changes in average sales
prices correspond with changes in the overall market for the sale of oil, gas
and gas plant products.
Lease operating expenses increased to $187,329 in 1996 from $152,723 in 1996.
The increase of $34,606 is primarily due to workover expenses incurred on the
A&W acquisition in 1996. Gas plant purchases increased to $187,358 in the second
quarter of 1996 from $123,193 in the second quarter of 1995. The increase of
$64,165 or 52% corresponds with the increase in gas plant product sales, as
noted above.
Depreciation and depletion expense increased to $212,502 in the second quarter
of 1996 from $166,196 in the second quarter of 1995. This represents an increase
of $46,306 (28%). A 47% increase in the depletion rate increased depreciation
and depletion expense by $68,334. This increase was partially offset by the
changes in production, noted above. The increase in the depletion rate was
primarily due to relatively higher depreciation on the gas plant due to a
downward revision of the gas plant reserves furing December 1995, partially
offset by the lower property basis resulting from the recognition of an property
impairment of $125,097 in the first quarter of 1996.
General and administrative expenses increased to $210,748 in 1996 from $191,417
in 1995. This increase of $19,331 (10%) is primarily due to more staff time
being required to manage the Company's operations in 1996.
First Six Months in 1995 Compared to First Six Months in 1996
Oil and gas sales for the first six months increased to $1,229,671 in 1996 from
$1,102,000 in 1995. This represents an increase of $127,671 (12%). Oil sales
increased by $7,396 or 1%. A 13% increase in the average oil sales price
increased sales by $59,234. This increase was partially offset by a 10% decrease
in oil production. Gas sales increased by $120,275 (21%). A 40% increase in the
average gas sales price increased sales by $199,948. This increase was partially
offset by a 14% decrease in gas production. Gas plant sales increased to
$437,738 in
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1996 from $333,006 in 1995. This represents an increase of $104,732 (31%). A 33%
increase in the average sales price of gas plant products increased sales by
$107,686. This increase was partially offset by a 1% decrease in the production
of gas plant products. The decreases in oil, gas and gas plant production were
primarily due to natural production declines. The changes in average sales
prices correspond with changes in the overall market for the sale of oil, gas
and gas plant products.
Lease operating expenses increased to $383,029 in 1996 from $368,215 in 1995.
The increase of $14,814 (4%) is primarily due to workover expenses incurred on
the A&W acquisition in 1996. Gas plant purchases increased to $346,052 in the
first half of 1996 from $245,419 in the first half of 1995. The increase of
$100,633 or 41% corresponds with the increase in gas plant product sales, as
noted above.
Depreciation and depletion expense increased to $332,104 in the first half of
1996 from $330,195 in the first half of 1995. This represents an increase of
$1,909 (1%). An 11% increase in the depletion rate increased depreciation and
depletion expense by $31,632. This increase was partially offset by the changes
in production, noted above. The increase in the depletion rate was primarily due
to relatively higher depreciation on the gas plant due to a downward revision of
the gas plant reserves furing December 1995, partially offset by the lower
property basis resulting from the recognition of an property impairment of
$125,097 in the first quarter of 1996.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to be Disposed Of," which requires
certain assets to be reviewed for impairment whenever events or circumstances
indicate the carrying amount may not be recoverable. In the first quarter of
1996, the Company recognized a non-cash impairment provision of $125,097 for
certain oil and gas properties due to market indications that the carrying
amounts were not fully recoverable.
General and administrative expenses decreased to $459,882 in 1996 from $468,890
in 1995. This decrease of $9,008 (2%) is primarily due to lower direct expenses
incurred by the Company in the first half of 1996.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow is a direct result of the amount of net proceeds
realized from the sale of oil and gas production and the repayment of its debt
obligations. Accordingly, the changes in cash flow from 1995 to 1996 are
primarily due to the changes in oil and gas sales described above and the
repayment of the Company's debt obligations. It is the general partner's
intention to distribute substantially all of the Company's available cash flow,
after debt repayment, to the Company's partners.
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The Company discontinued the payment of distributions during 1990. In the fourth
quarter of 1995, the Company paid a distribution of $730,913 to its limited
partners. The distribution in 1995 was primarily the result of the receipt of
$744,127 as proceeds from the sale of properties. Future distributions are
dependent upon, among other things, future prices received for oil and gas. The
Company will continue to recover its reserves and reduce its debt obligations.
It is anticipated that the periodic distributions will be made in the future as
cash becomes available.
On August 9, 1996, the Company's General Partner submitted preliminary proxy
material to the Securities Exchange Commission with respect to a proposed
consolidation of the Company with 33 other managed limited partnerships. The
terms and conditions of the proposed consolidation are set forth in such
preliminary proxy material.
As of June 30, 1995, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
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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 June 30, 1996.
II-1
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has this report to be signed on its behalf by the undersigned thereunto duly
authorized.
ENEX PROGRAM I PARTNERS, 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
August 13, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer