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, 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 0-15434
ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0179824
(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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.
BALANCE SHEET
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MARCH 31,
ASSETS 1996
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(Unaudited)
CURRENT ASSETS:
Cash $ 5,469
Accounts receivable - oil & gas sales 23,043
Other current assets 1,723
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Total current assets 30,235
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,647,746
Less accumulated depreciation and depletion 1,293,006
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Property, net 354,740
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TOTAL $ 384,975
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LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 6,297
Current portion of payable to general partner 39,223
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Total current liabilities 45,520
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NONCURRENT PAYABLE TO GENERAL PARTNER 289,471
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PARTNERS' CAPITAL (DEFICIT):
Limited partners (1,850)
General partner 51,834
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Total partners' capital (deficit) 49,984
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TOTAL $ 384,975
===============
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) THREE MONTHS ENDED
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MARCH 31, MARCH 31,
1996 1995
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REVENUES:
Oil and gas sales $ 53,690 $ 45,852
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EXPENSES:
Depreciation and depletion 16,717 22,269
Lease operating expenses 17,296 15,387
Production taxes 2,486 2,166
General and administrative: 9,241 6,053
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Total expenses 45,740 45,875
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INCOME (LOSS) FROM OPERATIONS 7,950 (23)
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OTHER EXPENSE:
Interest expense - (448)
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NET INCOME (LOSS) $ 7,950 $ (471)
=============== ============
See accompanying notes to financial statements.
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ENEX OIL AND GAS INCOME PROGRAM III - SERIES 2, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 7,950 $ (471)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and depletion 16,717 22,269
(Increase) decrease in:
Accounts receivable - oil & gas sales (9,453) (3,665)
Other current assets 2,223 2,426
Increase (decrease) in:
Accounts payable (7,153) 235
Payable to general partner (2,092) (5,282)
Total adjustments 242 15,983
Net cash provided by operating activities 8,192 15,512
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (4,852) (8,656)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable to general partner - (3,565)
NET INCREASE IN CASH 3,340 3,291
CASH AT BEGINNING OF YEAR 2,129 494
CASH AT END OF PERIOD $ 5,469 $ 3,785
Cash paid during period for interest $ - $ 448
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 2, 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. Principal payments of $3,564 were made on the note payable to the general
partner during the first quarter of 1995. Weighted average principal was
$13,751 and bore interest at a weighted average rate of 9.64% during the
first quarter of 1995. The note was completely repaid on May 1, 1995.
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Item 2Management's Discussion and Analysis or Plan of Operation.
First Quarter 1996 Compared to First Quarter 1995
Oil and gas sales for the first quarter increased from $45,852 in 1995 to
$53,690 in 1996. This represents an increase of $7,838 or 17%. Oil sales
increased $4,824 or 12%. A 34% increase in average oil prices increased sales by
$11,334. This increase was partially offset by a 16% decrease in oil production.
Gas sales increased by $3,014 or 53%. A 14% increase in average gas prices
increased sales by $1,074. A 34% increase in gas production increased sales by
an additional $1,940. The decrease in oil production was primarily the result of
natural production declines. The increase in gas production was primarily the
result of enhanced production improvements on the Concord acquisition. The
changes in average prices correspond with changes in the overall market for the
sale of oil and gas.
Lease operating expenses increased from $15,387 in the first quarter of 1995 to
$17,296 in the first quarter of 1996. The increase of $1,909 (12%) is primarily
due to the changes in production, noted above.
Depreciation and depletion expense decreased from $22,269 in the first quarter
of 1995 to $16,717 in the first quarter of 1996. This represents a decrease of
$5,552 (25%). A 19% decrease in the depletion rate reduced depreciation and
depletion expense by $3,799. The changes in production, noted above, decreased
depreciation and depletion expense by an additional $1,753. The decrease in the
depletion rate was primarily the result of upward revisions of the oil and gas
reserves at December 31, 1995.
General and administrative expenses increased from $6,053 in 1995 to $9,241 in
1996. This increase of $3,188 is primarily due to $3,207 higher direct expenses
incurred by the Company in 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 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.
The Company discontinued the payment of distributions in January, 1994. Future
distributions are dependent upon, among other things, an increase in prices
received for oil and gas. The Company will continue to recover its reserves and
reduce its obligations on 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 expenses, repay its debt obligations and pay distributions.
As of March 31, 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 March 31, 1996.
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 OIL & GAS INCOME
PROGRAM III - 2, L.P.
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(Registrant)
By:ENEX RESOURCES CORPORATION
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General Partner
By: /s/ R. E. Densford
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R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
May 11, 1996 By: /s/ James A. Klein
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James A. Klein
Controller and Chief
Accounting Officer