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, 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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September 30,
ASSETS 1996
------------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 160,414
Accounts receivable - oil & gas sales 468,733
Receivable from litigation settlement 280,050
Other current assets 133,595
---------------
Total current assets 1,042,792
---------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 83,485,474
Less accumulated depreciation and depletion 80,225,006
---------------
Property, net 3,260,468
---------------
TOTAL $ 4,303,260
===============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 222,598
Payable to general partner 11,814
---------------
Total current liabilities 234,412
---------------
PARTNERS' CAPITAL:
Limited partners 3,071,306
General partner 997,542
---------------
Total partners' capital 4,068,848
---------------
TOTAL $ 4,303,260
===============
Number of $500 Limited Partner units outstanding 193,629
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 NINE MONTHS ENDED
--------------------------------------- ----------------------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
------------------ ----------------- ----------------- -------------------
REVENUES:
Oil and gas sales $ 706,444 $ 581,250 $ 1,936,115 $ 1,683,250
Gas plant sales 219,098 163,246 656,836 496,252
------------------ ----------------- ----------------- -------------------
Total revenues 925,542 744,496 2,592,951 2,179,502
------------------ ----------------- ----------------- -------------------
EXPENSES:
Depreciation and depletion 190,057 178,094 522,161 508,289
Impairment of property - - 125,097 -
Lease operating expenses 151,037 221,417 534,066 589,632
Gas plant purchases 167,434 128,002 513,486 373,421
Production taxes 41,627 39,608 115,830 120,088
General and administrative:
Allocated from general partner 167,271 161,207 580,791 577,949
Direct expenses 15,014 23,002 61,376 75,150
------------------ ----------------- ----------------- -------------------
Total expenses 732,440 751,330 2,452,807 2,244,529
------------------ ----------------- ----------------- -------------------
INCOME (LOSS) FROM OPERATIONS 193,102 (6,834) 140,144 (65,027)
------------------ ----------------- ----------------- -------------------
OTHER INCOME:
Gain on sale of property - 428,916 21,649 428,916
Interest income - 6,365 6,536 19,255
------------------ ----------------- ----------------- -------------------
Total other income 0 435,281 28,185 448,171
------------------ ----------------- ----------------- -------------------
NET INCOME $ 193,102 428,447 168,329 383,144
================== ================= ================= ===================
See accompanying notes to financial statements.
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ENEX PROGRAM I PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
September 30, September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 168,329 $ 383,144
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and depletion 522,161 508,289
Impairment of property 125,097 -
Gain on sale of property (21,649) (428,916)
(Increase) decrease in:
Accounts receivable - oil & gas sales (88,326) (68,610)
Receivable from litigation settlement 0 (19,096)
Other current assets (2,155) (771,360)
Increase (decrease) in:
Accounts payable (52,857) 18,863
Payable to general partner (15,171) (81,709)
Total adjustments 467,100 (842,539)
Net cash provided (used) by operating activities 635,429 (459,395)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 55,100 744,127
Property additions - development costs (286,303) (62,741)
Net cash provided (used) by investing activities (231,203) 681,386
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (624,180) -
NET INCREASE (DECREASE) IN CASH (219,954) 221,991
CASH AT BEGINNING OF YEAR 380,368 12,269
CASH AT END OF PERIOD $ 160,414 $ 234,260
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. On November 13, 1996, the Company submitted amended
preliminary proxy material to the SEC with respect to this
consolidation. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
3. A cash distribution was made to the limited partners of the Company in
the amount of $110,532, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on July 31, 1996.
4. 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. Prior to
this pronouncement, the Company assessed properties on an aggregate basis.
Upon adoption of SFAS 121, the Company began assessing properties on an
individual basis, wherein total capitalized costs may not exceed the
property's fair market value. The fair market value of each property was
determined by H. J. Gruy and Associates, ("Gruy"). To determine the fair
market value, Gruy estimated each property's oil and gas reserves, applied
certain assumptions regarding price and cost escalations, applied a 10%
discount factor for time and certain discount factors for risk, location,
type of ownership interest, category of reserves, operational
characteristics, and other factors. 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.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
Third Quarter 1995 Compared to Third Quarter 1996
Oil, gas and gas plant sales for the third quarter increased to $925,542 in 1996
from $744,496 in 1995. This represents an increase of $181,046 (24%). Oil sales
decreased by $12,055 (5%). A 30% decrease in oil production reduced sales by
$70,035. This decrease was offset by a 36% increase in the average oil sales
price. Gas sales increased by $137,249 (39%). A 34% increase in the average gas
sales price increased sales by $123,705. A 4% increase in gas production
increased sales by an additional $13,544. Gas plant sales increased to $219,098
in 1996 from $163,246 in 1995. This represents an increase of $55,852. A 35%
increase in the average sales price of gas plant products increased sales by
$57,618. This increase was partially offset by a 1% decrease in the production
of gas plant products. The decreases in oil and gas plant production were
primarily due to natural production declines. The increase in gas production was
primarily due to higher production from the Dent acquisition which had
additional wells drilled in 1996. 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 decreased to $151,037 in 1996 from $221,417 in 1995.
The decrease of $70,380 is primarily due to workover expenses incurred on the
A&W acquisition in 1995. Gas plant purchases increased to $167,434 in the third
quarter of 1996 from $128,002 in the third quarter of 1995. The increase of
$39,432 or 31% corresponds with the increase in gas plant product sales, as
noted above.
Depreciation and depletion expense increased to $190,057 in the third quarter of
1996 from $178,094 in the third quarter of 1995. This represents an increase of
$11,963 (7%). A 12% increase in the depletion rate increased depreciation and
depletion expense by $20,281. This increase was 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 during 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 decreased to $182,285 in the third quarter
of $184,209 in the third quarter of 1995. This decrease of $1,924 (1%) is
primarily due to lower direct expenses incurred during 1996 partially offset by
higher allocated expenses due to more staff time being required to manage the
Company's operations in 1996.
First Nine Months in 1995 Compared to First Nine Months in 1996
- ----------------------------------------------------------------
Oil, gas and gas plant sales for the first nine months increased to $2,592,951
in 1996 from $2,179,502 in 1995. This represents an increase of $413,449 (19%).
Oil sales decreased by $4,659 or 1%. A 19% increase in the average oil sales
price increased sales by $119,790. This
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increase was partially offset by a 16% decrease in oil production. Gas sales
increased by $257,512 (27%). A 38% increase in the average gas sales price
increased sales by $327,959. This increase was partially offset by an 8%
decrease in gas production. Gas plant sales increased to $656,836 in 1996 from
$496,252 in 1995. This represents an increase of $160,596 (32%). A 33% increase
in the average sales price of gas plant products increased sales by $164,892.
This increase was partially offset by a 2% 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 decreased to $534,066 in 1996 from $589,632 in 1995.
The decrease of $55,566 (9%) is primarily due to workover expenses incurred on
the A&W acquisition in 1995. Gas plant purchases increased to $513,486 in the
first nine months of 1996 from $373,421 in the first nine months of 1995. The
increase of $140,065 or 40% corresponds with the increase in gas plant product
sales, as noted above.
Depreciation and depletion expense increased to $522,161 the first nine months
of 1996 from $508,289 in the first nine months of 1995. This represents an
increase of $13,872 (3%). An 11% increase in the depletion rate increased
depreciation and depletion expense by $52,171. This increase was 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 during 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. Prior to this
pronouncement, the Company assessed properties on an aggregate basis. Upon
adoption of SFAS 121, the Company began assessing properties on an individual
basis, wherein total capitalized costs may not exceed the property's fair market
value. The fair market value of each property was determined by H. J. Gruy and
Associates, ("Gruy"). To determine the fair market value, Gruy estimated each
property's oil and gas reserves, applied certain assumptions regarding price and
cost escalations, applied a 10% discount factor for time and certain discount
factors for risk, location, type of ownership interest, category of reserves,
operational characteristics, and other factors. 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 $642,167 in 1996 from $653,099
in 1995. This decrease of $10,932 (2%) is primarily due to lower direct expenses
incurred by the Company in the first nine months of 1996.
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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. The Company's "available cash
flow" is the net amount of cash flow provided by operations, net of financing
and investing activities.
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. Additional distributions were
made in the first and third quarters of 1996. 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 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. On
November 13, 1996, the Company submitted amended preliminary proxy material to
the SEC with respect to this consolidation. The terms and conditions of the
proposed consolidation are set forth in such preliminary proxy material.
As of September 30, 1996, 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 September 30, 1996.
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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
November 13, 1996 By: /s/ James A. Klein
James A. Klein
Controller and Chief
Accounting Officer