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 0-16549
ENEX INCOME AND RETIREMENT FUND - SERIES 1, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0222813
(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) has 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 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 2,605
Receivable from affiliated limited partnership 80
Accounts receivable - oil & gas sales 19,360
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Total current assets 22,045
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests 1,148,114
Less depletion 822,385
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Property, net 325,729
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TOTAL $ 347,774
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 260
Payable to general partner 19,592
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Total current liabilities 19,852
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NONCURRENT PAYABLE TO GENERAL PARTNER 117,557
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PARTNERS' CAPITAL:
Limited partners 199,829
General partner 10,536
---------------------
Total partners' capital 210,365
---------------------
TOTAL $ 347,774
=====================
See accompanying notes to financial statements.
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ENEX INCOME AND RETIREMENT FUND - SERIES 1, 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 $ 10,816 $ 21,110 $ 26,870 $ 42,854
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EXPENSES:
Depletion 7,848 9,068 16,941 17,593
Impairment of property - - 50,639 -
Production taxes 733 306 1,403 905
General and administrative 6,198 5,602 13,724 14,624
-------------- ----------------- ----------------- -----------------
Total expenses 14,779 14,976 82,707 33,122
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NET INCOME (LOSS) $ (3,963) $ 6,134 $ (55,837) $ 9,732
============== ================= ================= =================
See accompanying notes to financial statements.
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ENEX INCOME AND RETIREMENT FUND - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
SIX MONTHS ENDED
--------------------------------------------
JUNE 30, JUNE 30,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (55,837) $ 9,732
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Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depletion 16,941 17,593
Impairment of property 50,639 -
(Increase) decrease in:
Accounts receivable - oil & gas sales (4,871) (7,846)
Receivable from affiliated limited partnership 56 -
(Decrease) in:
Accounts payable (3,511) (3,025)
Payable to general partner (1,445) (17,702)
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Total adjustments 57,809 (10,980)
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Net cash provided (used) by operating activities 1,972 (1,248)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (10,133)
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NET INCREASE (DECREASE) IN CASH 1,972 (11,381)
CASH AT BEGINNING OF YEAR 633 11,971
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CASH AT END OF PERIOD $ 2,605 $ 590
=================== ===================
See accompanying notes to financial statements.
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ENEX INCOME AND RETIREMENT FUND - 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 1995 Compared to Second Quarter 1996
Oil and gas sales for the second quarter decreased to $10,816 in 1996 from
$21,110 in 1995. This represents a decrease of $10,294 (49%). Oil sales
decreased by $7,203 (55%). A 27% decrease in oil production reduced sales by
$3,582. A 38% decrease in the average net oil sales price reduced sales by an
additional $3,621. Gas sales decreased by $3,091 (38%). An 18% decrease in the
average net gas sales price reduced sales by $1,096. A 25% decrease in gas
production reduced sales by an additional $1,995. The decreases in production
were primarily a result of the sale of the Garcia wells in the Shana
acquisition, effective July 1995, coupled with natural production declines. The
decreases in average net oil and gas prices were a result of higher operating
costs incurred on the Company's net profits royalty properties, especially the
Larto acquisition which incurred higher operating costs in the second quarter of
1996, partially offset by higher prices in the overall market for the sale of
oil and gas.
Depletion expense decreased to $7,848 in the second quarter of 1996 from $9,068
in the second quarter of 1995. This represents a decrease of $1,220 (13%). The
decreases in production, noted above, reduced depletion expense by $2,396. This
decrease was partially offset by an 18% increase in the depletion rate. This
rate increase is primarily the result of a downward revision of the gas reserves
during December 1995, partially offset by an upward revision of the oil reserves
during December 1995 and the lower property basis resulting from the recognition
of a $50,639 property impairment in the first quarter of 1996.
General and administrative expenses increased to $6,198 in 1996 from $5,602 in
1995. This increase of $596 (11%) is primarily due to more staff time being
required to manage the Company's operations.
First Six Months in 1995 Compared to First Six Months in 1996
Oil and gas sales for the first six months decreased to $26,870 in 1996 from
$42,854 in 1995. This represents a decrease of $15,984 (37%). Oil sales
decreased by $14,224 (58%). A 28% decrease in oil production reduced sales by
$7,003. A 41% decrease in the average net oil sales price reduced sales by an
additional $7,221. Gas sales decreased by $1,760 (10%). A 20% decrease in the
average net gas sales price reduced sales by $1,096. This decrease was partially
offset by a 13% increase in gas production. The decrease in oil production was
primarily a result of the sale of the Garcia wells in the Shana acquisition,
effective July 1995, coupled with natural production declines. The increase in
gas production was primarily the result of the shut-in of production for two
weeks in February 1995 from the Deal acquisition due to an explosion in the
field. The decreases in average net oil and gas prices were a result of higher
operating costs incurred on the Company's net profits royalty properties,
especially the Larto acquisition which incurred higher operating costs in 1996,
partially offset by higher prices in the overall market for the sale of oil and
gas.
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Depletion expense decreased to $16,941 in the first six months of 1996 from
$17,593 in the first six months of 1995. This represents a decrease of $652
(4%). The changes in production, noted above, reduced depletion expense by
$1,939. This decrease was partially offset by an 8% increase in the depletion
rate. This rate increase is primarily the result of a downward revision of the
gas reserves during December 1995, partially offset by an upward revision of the
oil reserves during December 1995 and the lower property basis resulting from
the recognition of a $50,639 property impairment in the first quarter of 1996.
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 $50,639 for
certain oil and gas properties due to market indications that the carrying
amounts were not fully recoverable.
General and administrative expenses decreased to $13,724 in 1996 from $14,624 in
1995. This decrease of $900 (6%) 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 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.
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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 INCOME AND RETIREMENT
FUND - 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