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 0-16552
ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0179822
(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 4, L.P.
BALANCE SHEET
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MARCH 31,
ASSETS 1996
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(Unaudited)
CURRENT ASSETS:
Accounts receivable - oil & gas sales $ 19,850
Other current assets 4,343
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Total current assets 24,193
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,694,656
Less accumulated depreciation and depletion 1,330,329
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Property, net 364,327
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TOTAL $ 388,520
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 22,317
Payable to general partner 33,794
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Total current liabilities 56,111
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NONCURRENT PAYABLE TO GENERAL PARTNER 135,178
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PARTNERS' CAPITAL:
Limited partners 185,755
General partner 11,476
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Total partners' capital 197,231
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TOTAL $ 388,520
===============
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, 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 $ 33,163 39,388
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EXPENSES:
Depreciation and depletion 3,737 13,716
Impairment of property 88,363 -
Lease operating expenses 22,454 23,776
Production taxes 2,229 2,645
General and administrative 7,068 8,945
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Total expenses 123,851 49,082
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NET LOSS $ (90,688) (9,694)
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See accompanying notes to financial statements.
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ENEX OIL AND GAS INCOME PROGRAM III - SERIES 4, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (90,688) $ (9,694)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and depletion 3,737 13,716
Impairment of property 88,363 -
(Increase) in:
Accounts receivable - oil & gas sales (7,588) (852)
Other current assets (4) (1,720)
Increase in:
Accounts payable 214 8,989
Payable to general partner 6,301 5,245
Total adjustments 91,023 25,378
Net cash provided by operating activities 335 15,684
CASH FLOWS FROM INVESTING ACTIVITIES:
Property (additions) credits - development costs (550) 919
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (7,506)
NET INCREASE (DECREASE) IN CASH (215) 9,097
CASH AT BEGINNING OF YEAR 215 801
CASH AT END OF PERIOD $ - $ 9,898
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 4, 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. 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. In the
first quarter of 1996, the Company recognized a non-cash impairment
provision of $88,363 for certain oil and gas properties due to market
indications that the carrying amounts were not fully recoverable.
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Item 2 Management's Discussion and Analysis or Plan of Operation.
First Quarter 1996 Compared to First Quarter 1995
Oil and gas sales for the first quarter decreased from $39,388 in 1995 to
$33,163 in 1996. This represents a decrease of $6,225 (16%). Oil sales decreased
$15,181 or 39%. A 25% decrease in oil production reduced sales by $9,622, while
a 19% decrease in average oil prices reduced sales by an additional $5,559. Gas
sales increased by $8,956 or 1,478%. A 2,652% increase in average gas prices
increased sales by $9,215. This increase was partially offset by a 43% decrease
in gas production. The decrease in oil production was primarily the result of
the Company not participating in a workover on the L.L. Butler well in the
Hightower acquisition. The lower average oil price was a result of a relatively
higher production of oil from wells with a relatively lower sales price,
partially offset by higher prices in the overall market for the sale of oil. The
lower gas production was primarily the result of the shut-in of production from
the Dorothy Stevens #1 well in the Shana acquisition. The higher average gas
price was a result of a relatively lower net profits payout on the Shana
acquisition coupled with higher prices in the overall market for the sale of
gas.
Lease operating expenses decreased from $23,776 in 1995 to $22,454 in 1995. The
decrease of $1,322 (6%) is primarily due to the decreases in production, noted
above, partially offset by higher operating expenses incurred on the Shana
acquisition in 1996.
Depreciation and depletion expense decreased from $13,716 in the first quarter
of 1995 to $3,737 in the first quarter of 1995. This represents a decrease of
$9,979 (73%). The changes in production, noted above, caused depreciation and
depreciation expense to decrease by $3,718. A 63% decrease in the depletion rate
reduced depreciation and depletion expense by an additional $6,261. The decrease
in the depletion rate was primarily due to the lower property basis resulting
from the recognition of an $88,363 property impairment, partially offset by a
downward revision of the oil and gas reserves at December 31, 1995.
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. In the
first quarter of 1996, the Company recognized a non-cash impairment
provision of $88,363 for certain oil and gas properties due to market
indications that the carrying amounts were not fully recoverable.
General and administrative expenses decreased from $8,945 in 1995 to $7,068 in
1996. This decrease of $1,877 (21%) 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 after
the payment of its debt obligations. Distribution amounts are subject to change
if net revenues are greater or less than expected. Based upon current projected
cash flows from the properties, it does not appear that the Company will have
sufficient cash to pay its operating expenses, repay its debt obligations and
pay distributions in 1996.
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 - 4, 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, 1995 By: /s/ James A. Klein
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James A. Klein
Controller and Chief
Accounting Officer