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 0-16551
ENEX OIL & GAS INCOME PROGRAM III - SERIES 3, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0179823
(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 3, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 21,311
Accounts receivable - oil & gas sales 34,021
Other current assets 2,562
---------------------
Total current assets 57,894
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 2,631,948
Less accumulated depreciation and depletion 2,109,000
---------------------
Property, net 522,948
---------------------
TOTAL $ 580,842
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 13,688
Payable to general partner 31,553
---------------------
Total current liabilities 45,241
---------------------
NONCURRENT PAYABLE TO GENERAL PARTNER 94,659
---------------------
PARTNERS' CAPITAL:
Limited partners 404,778
General partner 36,164
---------------------
Total partners' capital 440,942
---------------------
TOTAL $ 580,842
=====================
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 3, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) QUARTER ENDED SIX MONTHS ENDED
-------------------------------- -----------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
--------------- ------------- -------------- ---------------
REVENUES:
Oil and gas sales $ 79,827 $ 70,985 $ 169,739 $ 145,917
--------------- ------------- -------------- ---------------
EXPENSES:
Depreciation and depletion 21,029 30,244 46,529 63,686
Lease operating expenses 12,905 10,430 31,325 35,965
Production taxes 4,765 4,248 9,585 9,110
General and administrative 7,888 8,501 18,394 19,999
--------------- ------------- -------------- ---------------
Total expenses 46,587 53,423 105,833 128,760
--------------- ------------- -------------- ---------------
NET INCOME $ 33,240 $ 17,562 $ 63,906 $ 17,157
=============== ============= ============== ===============
See accompanying notes to financial statements.
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ENEX OIL AND GAS INCOME PROGRAM III - SERIES 3, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
---------------------------
JUNE 30, JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: -------- ---------
Net income $ 63,906 $ 17,157
-------------- -------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and depletion 46,529 63,686
(Increase) decrease in:
Accounts receivable - oil & gas sales (10,870) (2,156)
Other current assets 3,387 245
Increase (decrease) in:
Accounts payable (11,021) 4,022
Payable to general partner (27,884) (26,683)
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Total adjustments 141 39,114
------------ ----------
Net cash provided by operating activities 64,047 56,271
------------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (10,240) (21,369)
------------ --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (46,002) (25,232)
----------- --------
NET INCREASE IN CASH 7,805 9,670
CASH AT BEGINNING OF YEAR 13,506 2,812
---------- -------
CASH AT END OF PERIOD $ 21,311 $ 12,482
=============== ==========
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 3, 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 $20,393, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on April 30, 1996.
3.) 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 $79,827 in 1996 from
$70,985 in 1995. This represents an increase of $8,842 (12%). Oil sales
increased by $2,311 (4%). A 24% increase in the average oil sales price
increased $12,989. This increase was partially offset by a 16% decrease in oil
production. Gas sales increased by $6,531 (105%). An 80% increase in average gas
sales prices increased sales by $5,673. A 14% increase in gas production
increased sales by an additional $858. 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 incurred during the second quarter increased to $12,905
in 1996 from $10,430 in 1995. The increase of $2,475 (58%) is primarily due to
the increases in production, noted above, and enhanced recovery costs incurred
on the Concord acquisition in the second quarter of 1996.
Depreciation and depletion expense decreased to $21,029 in the second quarter of
1996 from $30,244 in the second quarter of 1995. This represents a decrease of
$9,215 (30%). A 22% decrease in the depletion rate reduced depreciation and
depletion expense by $5,873. The changes in production, noted above, reduced
depreciation and depletion expense by an additional $3,342. 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 decreased
to $7,888 in 1996 from $8,501 in 1995. This decrease of $613 (7%) is primarily
due to less 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 $169,739 in 1996 from
$145,917 in 1995. This represents an increase of $23,822 (16%). Oil sales
increased by $12,745 (10%). A 29% increase in the average oil sales price
increased $31,916. This increase was partially offset by a 15% decrease in oil
production. Gas sales increased by $11,077 (75%). A 41% increase in average gas
sales prices increased sales by $7,571. A 24% increase in gas production
increased sales by an additional $3,506. 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 incurred during the first six months decreased to
$31,325 in 1996 from $35,965 in 1995. The decrease of $4,640 (13%) is primarily
due to the changes in production, noted above.
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Depreciation and depletion expense decreased to $46,529 in the first six months
of 1996 from $63,686 in the first six months of 1995. This represents a decrease
of $17,157 (27%). A 20% decrease in the depletion rate reduced depreciation and
depletion expense by $11,807. The changes in production, noted above, reduced
depreciation and depletion expense by an additional $5,350. 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 first six months
decreased to $18,394 in 1996 from $19,999 in 1995. This decrease of $1,605 (8%)
is primarily due to less staff time being required to manage the Company's
operations.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations is a direct result of the amount of net
proceeds realized from the sale of oil and gas production. Accordingly, the
changes in cash flow from 1995 to 1996 are primarily due to the changes in oil
and gas sales described above. It is the general partner's intention to
distribute substantially all of the Company's available cash flow to the
Company's partners.
The Company will continue to recover its reserves and distribute to the limited
partners the net proceeds realized from the sale of oil and gas production.
Distribution amounts are subject to change if net revenues are greater or less
than expected. Nonetheless, the general partner believes the Company will
continue to have sufficient cash flow to fund operations and to maintain a
regular pattern of 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.
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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 3, 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