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 March 31, 1997
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 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)
Registrant'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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX PROGRAM I PARTNERS, L.P.
BALANCE SHEET
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MARCH 31,
ASSETS 1997
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 352,736
Accounts receivable - oil & gas sales 554,180
Receivable from litigation settlement 280,050
Other current assets 130,128
---------------------
Total current assets 1,317,094
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 79,215,434
Less accumulated depreciation and depletion 76,182,657
---------------------
Property, net 3,032,777
---------------------
TOTAL $ 4,349,871
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 257,055
Payable to general partner 124,962
---------------------
Total current liabilities 382,017
---------------------
LIMITED PARTNERS' CAPITAL SUBJECT
TO REDEMPTION 3,182,173
GENERAL PARTNER'S CAPITAL 785,681
---------------------
TOTAL $ 4,349,871
=====================
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) THREE MONTHS ENDED
----------------------------------------
MARCH 31, MARCH 31,
1997 1996
------------------- -------------------
REVENUES:
Oil and gas sales $ 787,080 $ 633,886
Gas plant sales 356,831 212,575
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Total revenues 1,143,911 846,461
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EXPENSES:
Depreciation and depletion 131,508 119,602
Impairment of property - 125,097
Lease operating expenses 107,344 200,700
Gas plant purchases 274,899 158,694
Production taxes 45,516 39,897
General and administrative:
Allocated from general partner 180,298 224,603
Direct expenses 19,017 24,531
------------------- -------------------
Total expenses 758,582 893,124
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INCOME (LOSS) FROM OPERATIONS 385,329 (46,663)
------------------- -------------------
OTHER INCOME 20,000 5,695
------------------- -------------------
NET INCOME (LOSS) $ 405,329 $ (40,968)
=================== ===================
See accompanying notes to financial statements.
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ENEX PROGRAM I PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997
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PER $500
LIMITED
PARTNER
GENERAL LIMITED UNIT OUT-
TOTAL PARTNER PARTNERS STANDING
--------------- ----------------- ----------------- -----------------
BALANCE, JANUARY 1, 1996 $ 4,524,699 $ 973,491 $ 3,551,208 $ 18
CASH DISTRIBUTIONS (1,055,336) (78,397) (976,939) (5)
NET INCOME 694,908 - 694,908 4
--------------- ----------------- ----------------- -----------------
BALANCE, DECEMBER 31, 1996 4,164,271 895,094 3,269,177 17
CASH DISTRIBUTIONS (601,746) (109,413) (492,333) (3)
NET INCOME 405,329 - 405,329 2
--------------- ----------------- ----------------- -----------------
BALANCE, MARCH 31, 1997 $ 3,967,854 $ 785,681 $ 3,182,173 (1) $ 16
=============== ================= ================= =================
(1) Includes 105,661 units purchased by the general partner as a limited
partner.
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)
THREE MONTHS ENDED
--------------------------------------
MARCH 31, MARCH 31,
1997 1996
----------------- ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 405,329 $ (40,968)
----------------- ------------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and depletion 131,508 119,602
Impairment of property - 125,097
(Increase) decrease in:
Accounts receivable - oil & gas sales 6,524 (95,817)
Other current assets (3,867) (59,014)
Increase (decrease) in:
Accounts payable (11,792) (88,201)
Payable to general partner 103,467 109,681
----------------- ------------------
Total adjustments 225,840 111,348
----------------- ------------------
Net cash provided by operating activities 631,169 70,380
----------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (87,175) (18,493)
----------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (601,746) (382,158)
----------------- ------------------
NET DECREASE IN CASH (57,752) (330,271)
----------------- ------------------
CASH AT BEGINNING OF YEAR 410,488 380,368
----------------- ------------------
CASH AT END OF PERIOD $ 352,736 $ 50,097
================= ==================
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. A cash distribution was made to the limited partners of the Company in
the amount of $492,333, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on January 31, 1997.
3. On April 7, 1997, the Company's General Partner mailed proxy material
to the limited partners 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 proxy
material.
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 changes in the overall market for the sale of
oil and gas and significant decreases in the projected production from
certain of the Company's oil and gas properties.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
First Quarter 1996 Compared to First Quarter 1997
Oil and gas sales for the first quarter increased from $633,886 in 1996 to
$787,080 in 1997. This represents an increase of $153,194 (24%). Oil sales
decreased by $87,633 or 32%. A 40% decline in oil production reduced sales by
$109,441. This decrease was partially offset by a 13% increase in average oil
sales prices. Gas sales increased by $240,827 or 67%. A 16% increase in average
gas sales prices increased sales by $82,836. A 44% increase in gas production
increased sales by an additional $157,991. The decrease in oil production was
primarily the result of natural production declines coupled with the sale in the
fourth quarter of 1996, of the E.M. Lane well in the Shell acquisition and the
Grass Island acquisition. The increase in gas production was primarily due to
higher production from the Dent acquisition which had additional wells drilled
on it in 1996. The increases in average oil and gas sales prices correspond with
higher prices in the overall market for the sale of oil and gas. Gas plant sales
increased by $144,256 or 68% from $212,575 in 1996 to $356,831 in 1997. A 73%
increase in the average sales price of gas plant product increased sales by
$150,264. This increase was partially offset by a 3% decrease in production of
plant products. The increase in the average sales price of gas plant products
correspond with higher prices in the overall market for the sale of gas plant
products. The decrease in production of plant products was primarily due to
natural production declines.
Lease operating expenses decreased from $200,700 in 1996 to $107,344 in 1997.
The decrease of $93,356 (47%) is primarily due to the changes in production,
noted above, including the sale of the Grass Island acquisition which had
relatively higher operating costs.
Depreciation and depletion expense increased from $119,602 in the first quarter
of 1996 to $131,508 in the first quarter of 1997. This represents an increase of
$11,906 (10%). The changes in production, noted above, caused depreciation and
depletion expense to increase by $7,915. A 3% increase in the depletion rate
increased depreciation and depletion expense by an additional $3,991. The
increase in the depletion rate was primarily due to relatively higher production
from properties with a higher depletion rate, partially offset by an upward
revision of the gas reserves during December 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 changes in the overall market for the sale of oil
and gas and
I-6
significant decreases in the projected production from certain of the Company's
oil and gas properties.
General and administrative expenses decreased from $249,134 in the first quarter
of 1996 to $199,315 in the first quarter of 1997. This decrease of $49,819 (20%)
is primarily due to less staff time being required to manage the Company's
operations in 1997.
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 1996 to 1997 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. Periodic
distributions were made in the first and third quarters of 1996 and the first
quarter of 1997. 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 April 7, 1997, the Company's General Partner mailed proxy material to the
limited partners 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 proxy material.
As of March 31, 1997, 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 March 31, 1997.
II-1
SIGNATURES
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 hereunto 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
May 11, 1997 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer