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 0-16552
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
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 4, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 4,016
Accounts receivable - oil & gas sales 18,899
Other current assets 4,344
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Total current assets 27,259
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,696,670
Less accumulated depreciation and depletion 1,334,760
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Property, net 361,910
---------------------
TOTAL $ 389,169
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 15,383
Payable to general partner 33,317
---------------------
Total current liabilities 48,700
---------------------
NONCURRENT PAYABLE TO GENERAL PARTNER 133,270
---------------------
PARTNERS' CAPITAL:
Limited partners 194,283
General partner 12,916
---------------------
Total partners' capital 207,199
---------------------
TOTAL $ 389,169
=====================
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) QUARTER ENDED SIX MONTHS ENDED
------------------------------------ --------------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
--------------- ----------------- ----------------- -----------------
REVENUES:
Oil and gas sales $ 43,957 $ 40,848 $ 77,120 $ $ 80,236
--------------- ----------------- ----------------- -----------------
EXPENSES:
Depreciation and depletion 4,431 11,807 8,168 25,523
Impairment of property - - 88,363 -
Lease operating expenses 21,125 22,084 43,579 45,860
Production taxes 2,324 3,183 4,553 5,828
General and administrative 6,109 5,794 13,177 14,739
--------------- ----------------- ----------------- -----------------
Total expenses 33,989 42,868 157,840 91,950
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NET INCOME (LOSS) $ 9,968 $ (2,020) $ (80,720) $ $ (11,714)
=============== ================= ================= =================
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)
NINE MONTHS ENDED
---------------------------
JUNE 30, JUNE 30,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (80,720) $ (11,714)
-------- --------
Adjustments to reconcile net (loss)
to net cash provided by operating
activities:
Depreciation and depletion 8,168 25,523
Impairment of property 88,363 -
(Increase) in:
Accounts receivable - oil & gas sales (6,637) (11,206)
Other current assets (5) (2,779)
Increase (decrease) in:
Accounts payable (6,720) 13,901
Payable to affiliated partnership - (15)
Payable to general partner 3,916 (4,499)
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Total adjustments 87,085 20,925
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Net cash provided by operating activities 6,365 9,211
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (2,564) (421)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (7,507)
-------- -------
NET INCREASE IN CASH 3,801 1,283
CASH AT BEGINNING OF YEAR 215 801
---------- ----------
CASH AT END OF PERIOD $ 4,016 $ 2,084
========== ==========
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.) 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 1995 Compared to Second Quarter 1996
Oil and gas sales for the second quarter increased to $43,957 in 1996 from
$40,848 in 1995. This represents an increase of $3,109 (8%). Oil sales decreased
by $4,704 (10%). A 12% decrease in the average oil sales price caused sales to
decrease by $5,478. This decrease was partially offset by a 2% increase in oil
production. Gas sales increased by $7,813 (156%). A 170% increase in the average
gas sales price increased sales by $8,820. This increase was partially offset by
a 20% decrease in gas production. The decrease in average oil sales price was
primarily the result of higher net profits payments on the Shana acquisition
which had a pump replaced on the Dorothy Stevens #4 well in 1995, partially
offset by higher prices in the overall market for the sale of oil. The increase
in the average gas sales price was primarily the result of higher prices in the
overall market for the sale of gas coupled with higher production from
properties with a relatively higher gas price. The higher oil production was
primarily the result of higher production from the Shana acquisition, which was
partially shut-in in 1995 for a pump replacement, partially offset by natural
production declines. The lower gas production was primarily the result of the
shut-in of non-economic wells in the Pecan Island acquisition, coupled with
natural production declines.
Lease operating expenses decreased to $21,125 in 1996 from $22,084 in 1995. The
decrease of $959 (4%) is primarily due to charges incurred to replace a pump on
the Shana acquisition in the second quarter of 1996, partially offset by the
changes in production, noted above.
Depreciation and depletion expense decreased to $4,431 in the second quarter of
1996 from $11,807 in the second quarter of 1995. This represents a decrease of
$7,376. The changes in production, noted above, reduced depreciation and
depletion expense by $122. A 62% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $7,254. The decrease in the
depletion rate was primarily due to the lower property basis resulting from the
recognition of an $88,363 property impairment in the first quarter of 1996,
partially offset by a downward revision of the oil and gas reserves during
December 1995.
General and administrative expenses increased to $6,109 in 1996 from $5,794 in
1995. This increase of $315 (5%) is primarily due to more staff time being
required to manage the Company's operations in 1996.
First Six Months in 1995 Compared to First Six Months in 1996
Oil and gas sales for the first six months decreased to $77,120 in 1996 from
$80,236 in 1995. This represents a decrease of $3,116 (4%). Oil sales decreased
by $19,885 (23%). A 12% decrease in the average oil sales price caused sales to
decrease by $8,673. A 13% decrease in oil production reduced sales by an
additional $11,212. Gas sales increased by $16,769 (382%). A 526% increase in
the average gas sales price increased sales by $17,289. This increase was
partially offset by a 34% decrease in gas production. The decrease in average
oil sales price was primarily the result of higher net profits payments on the
Shana acquisition which had a pump
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replaced on the Dorothy Stevens #4 well in 1995, partially offset by higher
prices in the overall market for the sale of oil. The increase in the average
gas sales price was primarily the result of higher prices in the overall market
for the sale of gas coupled with higher production from properties with a
relatively higher gas price. The lower oil production was primarily the result
of natural production declines. The lower gas production was primarily the
result of the shut-in of non-economic wells in the Pecan Island acquisition,
coupled with natural production declines.
Lease operating expenses decreased to $43,579 in 1996 from $45,860 in 1995. The
decrease of $2,281 (5%) is primarily due to charges incurred to replace a pump
on the Shana acquisition in the second quarter of 1996, partially offset by the
changes in production, noted above.
Depreciation and depletion expense decreased to $8,168 in the first six months
of 1996 from $25,523 in the first six months of 1995. This represents a decrease
of $17,355 (68%). The changes in production, noted above, reduced depreciation
and depletion expense by $4,000. A 62% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $13,355. The decrease in the
depletion rate was primarily due to the lower property basis resulting from the
recognition of an $88,363 property impairment in the first quarter of 1996,
partially offset by a downward revision of the oil and gas reserves during
December 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 to $13,177 in 1996 from $14,739 in
1995. This decrease of $1,562 (11%) is primarily due to less staff time being
required to manage the Company's operations in 1996.
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 discontinued the payment of distributions during 1995. 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
distribute to the limited partners the net proceeds realized form the sale of
oil and gas production. Distribution amounts are subject to change if net
revenues are greater or less than expected. Future periodic distributions will
be made once sufficient net revenues are accumulated.
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 4, 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