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 0-15433
ENEX OIL & GAS INCOME PROGRAM III - SERIES 1, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0179821
(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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM III - SERIES 1, L.P.
BALANCE SHEET
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September 30,
ASSETS 1995
-------------
(Unaudited)
CURRENT ASSETS:
Cash ................................................ $ 2,760
Accounts receivable - oil & gas sales ............... 9,373
Other current assets ................................ 1,549
-----------
Total current assets .................................. 13,682
-----------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,145,911
Less accumulated depreciation and depletion ........ 894,861
-----------
Property, net ......................................... 251,050
-----------
TOTAL ................................................. $ 264,732
===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable ................................... $ 4,019
Payable to general partner ......................... 28,562
-----------
Total current liabilities ............................. 32,581
-----------
NONCURRENT PAYABLE TO GENERAL PARTNER ................. 228,495
-----------
PARTNERS' CAPITAL (DEFICIT):
Limited partners ................................... (40,601)
General partner .................................... 44,257
-----------
Total partners' capital ............................... 3,656
-----------
TOTAL ................................................. $ 264,732
===========
<FN>
See accompanying notes to financial statements.
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</FN>
I-1
ENEX OIL & GAS INCOME PROGRAM III - SERIES 1, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) QUARTER ENDED NINE MONTHS
-------------------------- ------------------------------
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
-------------------------- ------------- -------------
REVENUES:
Oil and gas sales ......... $ 28,282 $ 33,969 $ 93,817 $ 88,886
--------- --------- --------- ----------
EXPENSES:
Depreciation and depletion 15,504 16,983 45,161 50,319
Lease operating expenses .. 8,035 11,505 23,399 59,362
Production taxes .......... 1,380 1,674 4,224 4,273
General and administrative 5,324 4,711 13,277 14,867
--------- --------- --------- ----------
Total expenses .............. 28,550 34,873 86,061 128,821
--------- --------- --------- ----------
INCOME (LOSS) FROM OPERATIONS (268) (904) 7,756 (39,935)
--------- --------- --------- ----------
OTHER EXPENSE:
Interest expense .......... -- (3,307) (761) (5,686)
--------- --------- --------- ----------
NET INCOME (LOSS) ........... $ (268) $ (4,211) $ 6,995 $ (45,621)
========= ========= ========= ==========
<FN>
See accompanying notes to financial statements.
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I-2
</FN>
ENEX OIL AND GAS INCOME PROGRAM III - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
NINE MONTHS ENDED
-----------------------------
September 30, September 30,
1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .................................. $ 6,995 $(45,621)
--------- ---------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and depletion ....................... 45,161 50,319
(Increase) decrease in:
Accounts receivable - oil & gas sales ............ (822) 454
Other current assets ............................. 2,135 (139)
Increase (decrease) in:
Accounts payable ................................ (4,710) (26,615)
Payable to general partner ...................... (22,768) 1,018
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Total adjustments .................................. 18,996 25,037
--------- ---------
Net cash provided (used) by operating activities ... 25,991 (20,584)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property (additions) credits - development costs (13,761) 13,068
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in note payable to general .. (10,204) 10,036
partner
--------- ---------
NET INCREASE IN CASH .............................. 2,026 2,520
CASH AT BEGINNING OF YEAR .......................... 734 3,019
--------- ---------
CASH AT END OF PERIOD .............................. $ 2,760 $ 5,539
========= =========
Cash paid for interest during the period ........... $ 761 $ 5,686
========= =========
<FN>
See accompanying notes to financial statements.
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</FN>
I-3
ENEX OIL & GAS INCOME PROGRAM III - SERIES 1, 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 fourth quarter of 1993, the Company borrowed $73,838 from the
general partner, the proceeds of which were used to pay off a note
payable to a bank. The resultant note payable to the general partner
bore interest at a rate of prime plus three-fourths of one percent or
8.23% and during the third quarter of 1994. Weighted average principal
outstanding was $83,874 during the third quarter of 1994. The note was
completely repaid in the second quarter of 1995.
I-4
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 $33,969 in 1994 to
$28,282 in 1995. This represents a decrease of $5,687 (17%). Oil sales decreased
by $6,292 (21%). A 5% decrease in the average oil sales price reduced sales by
$1,295. A 16% decrease in oil production decreased sales by an additional
$4,997. Gas sales increased by $605 (18%). A 28% increase in gas production
increased sales by $959. This increase was partially offset by an 8% decrease in
the average gas sales price. The increase in gas production was primarily the
result of the completion of a waterflood project on the Schafter Lake field and
the acquisition of additional interest in the Concord acquisition in the fourth
quarter of 1994. The decrease in oil production was primarily due to natural
production declines and due to the sale of the Florida acquisition, partially
offset by the acquisition of additional interest in the Concord acquisition. The
changes in average sales prices correspond with changes in the overall market
for the sale of oil and gas.
Lease operating expenses decreased from $11,505 in 1994 to $8,035 in 1995. The
decrease of $3,470 (30%) is primarily due to operating and workover expenses
incurred in 1994 on the Florida acquisition which was sold in the fourth quarter
of 1994.
Depreciation and depletion expense decreased from $16,983 in the third quarter
of 1994 to $15,504 in the third quarter of 1995. This represents a decrease of
$1,479 (9%). The changes in production, noted above, reduced depreciation and
depletion expense by $1,637. This decrease was partially offset by a 1% increase
in the depletion rate. The rate increase is primarily due to a downward revision
of the oil and gas reserves at December 31, 1994.
General and administrative expenses increased from $4,711 in 1994 to $5,324 in
1995. This increase of $613 is primarily due to a $772 increase in direct
expenses resulting from engineering studies performed in the third quarter of
1995.
First Nine Months in 1995 Compared to First Nine Months in 1994
Oil and gas sales for the first nine months increased from $88,886 in 1994 to
$93,817 in 1995. This represents an increase of $4,931 (6%). Oil sales increased
by $4,861 (6%). A 10% increase in average oil sales price increased sales by
$7,442. This increase was partially offset by a 3% decrease in oil production.
Gas sales increased by $70 (1%). A 23% increase in gas production increased
sales by $2,459. This increase was partially offset by an 18% decrease in the
average gas sales price. The increase in gas production was primarily the result
of the completion of a waterflood project on the Schafter Lake field and the
acquisition of additional interest in the Concord acquisition in the fourth
quarter of 1994. The decrease in oil production was primarily due to natural
production declines and due to the sale of the Florida acquisition, partially
offset by the acquisition of additional interest in the Concord acquisition. The
changes in average sales prices correspond with changes in the overall market
for the sale of oil and gas.
I-5
Lease operating expenses decreased from $59,362 in 1994 to $23,399 in 1995. The
decrease of $35,963 (61%) is primarily due to operating and workover expenses
incurred in 1994 on the Florida acquisition, which was sold in the fourth
quarter of 1994.
Depreciation and depletion expense decreased from $50,319 in the first nine
months of 1994 to $45,161 in the first nine months of 1995. This represents a
decrease of $5,158 (10%). An 11% decrease in the depletion rate reduced
depreciation and depletion expense by $5,508. This decrease was partially offset
by the changes in production, noted above. The rate decrease is primarily due to
the sale of the Florida acquisition, which had a relatively higher depletion
rate, partially offset by downward revisions of the oil and gas reserves at
December 31, 1994.
General and administrative expenses decreased from $14,867 in 1994 to $13,277 in
1995. This decrease of $1,590 (11%) is primarily due to less staff time being
required to manage the Company's operations.
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 issuance of additional
debt. Accordingly, the changes in cash flow from 1994 to 1995 are primarily due
to the changes in oil and gas sales described above and the repayment of $10,204
on a note to the general partner in 1995 as compared to proceeds of $10,036 from
a loan from the general partner in 1994. It is the general partner's intention
to distribute substantially all of the Company's remaining available cash flow
to the Company's partners.
The Company discontinued the payment of distributions in January 1994. Future
distributions are dependent upon, among other things, an increase in the prices
received for oil and gas. The Company will continue to recover its reserves and
reduce its obligations in 1995. Based upon current projected cash flows from its
property, it does not appear that the Company will have sufficient cash to pay
its operating expense, repay its debt obligations and pay distributions.
As of September 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 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 OIL & GAS INCOME
PROGRAM III - SERIES 1, 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