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 0-15433
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
Transitional Small Business Disclosure Format (Check one):
Yes No x
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM III - SERIES 1, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 3,747
Accounts receivable - oil & gas sales 14,595
Other current assets 1,186
---------------------
Total current assets 19,528
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,151,492
Less accumulated depreciation and depletion 912,391
---------------------
Property, net 239,101
---------------------
TOTAL $ 258,629
=====================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 3,508
Payable to general partner 18,447
---------------------
Total current liabilities 21,955
---------------------
NONCURRENT PAYABLE TO GENERAL PARTNER 210,242
---------------------
PARTNERS' CAPITAL (DEFICIT):
Limited partners (21,858)
General partner 48,290
---------------------
Total partners' capital 26,432
---------------------
TOTAL $ 258,629
=====================
See accompanying notes to financial statements.
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I-1
ENEX OIL & GAS INCOME PROGRAM III - SERIES 1, L.P.
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------
(UNAUDITED) QUARTER ENDED SIX MONTHS ENDED
------------------------------- --------------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
---------------- ----------- ----------------- -----------------
REVENUES:
Oil and gas sales $ 34,652 $ 33,514 $ 72,158 $ $ 65,535
---------------- ----------- ----------------- -----------------
EXPENSES:
Depreciation and depletion 10,281 14,083 21,969 29,657
Lease operating expenses (credit) (48) 4,619 12,004 15,364
Production taxes 1,701 1,332 3,438 2,844
General and administrative 6,199 3,272 14,056 7,953
---------------- ----------- ----------------- -----------------
Total expenses (6,044) (1,693) 51,467 55,818
---------------- ----------- ----------------- -----------------
INCOME FROM OPERATIONS 40,696 35,207 20,691 9,717
---------------- ----------- ----------------- -----------------
OTHER EXPENSE:
Interest expense - (427) - (761)
---------------- ----------- ----------------- -----------------
NET INCOME $ 40,696 $ 34,780 $ 20,691 $ $ 8,956
================ =========== ================= =================
See accompanying notes to financial statements.
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I-2
ENEX OIL AND GAS INCOME PROGRAM III - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 20,691 $ 8,956
--------- ---------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and depletion 21,969 29,657
(Increase) decrease in:
Accounts receivable - oil & gas sales (5,103) (4,272)
Other current assets 1,568 114
(Decrease) in:
Accounts payable (7,288) (4,703)
Payable to general partner (25,463) (9,791)
--------- --------
Total adjustments (14,317) 11,005
---------- --------
Net cash provided by operating activities 6,374 19,961
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (4,705) (9,932)
---------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable to general partner - (10,204)
NET INCREASE (DECREASE) IN CASH 1,669 (175)
CASH AT BEGINNING OF YEAR 2,078 734
-------- -----
CASH AT END OF PERIOD $ 3,747 $ 559
======== ======
Cash paid for interest during the period $ - $ 761
======== ======
See accompanying notes to financial statements.
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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.) 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 1996 Compared to Second Quarter 1995
Oil and gas sales for the second quarter increased to $34,652 in 1996 from
$33,514 in 1995. This represents an increase of $1,138 (3%). Oil sales decreased
by $886 (3%). An 8% decrease in oil production reduced sales by $2,385. This
decrease was partially offset by a 5% increase in the average oil sales price.
Gas sales increased by $2,024 (52%). A 34% increase in the average gas sales
price increased sales by $1,489. A 14% increase in gas production increased
sales by an additional $535. The increases in the average sales prices
correspond with changes in the overall market for the sale of oil and gas. The
decrease in oil production was primarily due to natural production declines. The
increase in gas production was primarily the result of the enhanced production
improvements on the Concord acquisition.
Lease operating expenses for the second quarter decreased to a negative $48 in
1996 from $4,619 in 1995. The decrease of $4,667 is primarily due from the
settlement of the Company's equity investment in an electric cooperative which
resulted from the purchase of electricity used on the Florida acquisition while
it was owned by the Company.
Depreciation and depletion expense decreased to $10,281 in the second quarter of
1996 from $14,083 in the second quarter of 1995. This represents a decrease of
$3,802 (27%). A 24% decrease in the depletion rate reduced depreciation and
depletion expense by $3,282. The changes in production, noted above, reduced
depreciation and depletion expense by an additional $520. The decrease in the
depletion rate is primarily the result of an upward revision of the oil and gas
reserves during December 1995.
General and administrative expenses incurred during the second quarter increased
to $6,199 in 1996 from $3,272 in 1995. This increase of $2,927 is primarily due
to more staff time being required to manage the Company's operations.
First Six Months in 1996 Compared to First Six Months in 1995
Oil and gas sales for the first six months increased to $72,158 in 1996 from
$65,535 in 1995. This represents an increase of $6,623 (10%). Oil sales
increased by $2,494 (4%). A 19% increase in average oil sales price increased
sales by $9,671. This increase was partially offset by a 12% decrease in oil
production. Gas sales increased by $4,129 (52%). A 23% increase in average gas
sales prices increased sales by $2,272. A 24% increase in gas production
increased sales by an additional $1,857. The increases in the average sales
prices correspond with changes in the overall market for the sale of oil and
gas. The decrease in oil production was primarily due to natural production
declines. The increase in gas production was primarily the result of the
enhanced production improvements on the Concord acquisition.
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Lease operating expenses incurred during the first six months decreased to
$12,004 in 1996 from $15,364 in 1995. The decrease of $3,360 (22%) is primarily
due from the settlement of the Company's equity investment in an electric
cooperative which resulted from the purchase of electricity used on the Florida
acquisition while it was owned by the Company.
Depreciation and depletion expense decreased to $21,969 in the first six months
of 1996 from $29,657 in the first six months of 1995. This represents a decrease
of $7,688 (26%). A 21% decrease in the depletion rate reduced depreciation and
depletion expense by $5,941. The changes in production, noted above, reduced
depreciation and depletion by an additional $1,747. The decrease in the
depletion rate is primarily the result of an upward revision of the oil and gas
reserves during December 1995.
General and administrative expenses increased to $14,056 in the first six months
of 1996 from $7,953 in the first six months of 1995. This increase of $6,103 is
primarily due to more 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 1995 to 1996 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. 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 1996. 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.
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, 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 June 30, 1996.
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
August 13, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer