United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-17557
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
(Exact name of registrant as specified in its Charter)
New Jersey 76-0251410
(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) (Zip Code)
Registrant's telephone number, including area code:
(713) 358-8401
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
BALANCE SHEET
- -------------------------------------------------------------------------------
MARCH 31,
ASSETS 1995
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 383
Accounts receivable - oil & gas sales 23,723
---------------------
Total current assets 24,106
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests 1,578,968
Less accumulated depletion 1,527,551
---------------------
Property, net 51,417
---------------------
TOTAL $ 75,523
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 257
Payable to general partner 20,944
---------------------
Total current liabilities 21,201
---------------------
NONCURRENT PAYABLE TO GENERAL PARTNER 83,779
---------------------
PARTNERS' CAPITAL (DEFICIT):
Limited partners (33,177)
General partner 3,720
---------------------
Total partners' capital (deficit) (29,457)
---------------------
TOTAL $ 75,523
=====================
See accompanying notes to financial statements.
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I-1
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) THREE MONTHS ENDED
------------------------------------------
MARCH 31, MARCH 31,
1996 1995
------------------- -------------------
REVENUES:
Oil and gas sales $ 15,171 $ 16,696
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EXPENSES:
Depletion 10,219 16,039
Impairment of property 333,294 -
Production taxes 1,174 702
General and administrative 5,200 4,195
------------------- -------------------
Total expenses 349,887 20,936
------------------- -------------------
NET LOSS $ (334,716) $ (4,240)
=================== ===================
See accompanying notes to financial statements.
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I-2
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
THREE MONTHS ENDED
-----------------------------
MARCH 31, MARCH 31,
1995 1995
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (334,716) $ (4,240)
------------- ------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depletion 10,219 16,039
Impairment of property 333,294 -
(Increase) decrease in:
Accounts receivable - oil & gas sales (9,734) 4,853
Increase (decrease) in:
Accounts payable (2,245) (3,050)
Payable to general partner 3,092 (4,959)
------------- ------------
Total adjustments 334,626 12,883
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Net cash provided (used) by operating activities (90) 8,643
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (7,600)
------------- ------------
NET INCREASE (DECREASE) IN CASH (90) 1,043
CASH AT BEGINNING OF YEAR 473 4,171
------------- ------------
CASH AT END OF PERIOD $ 383 $ 5,214
============= ============
See accompanying notes to financial statements.
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I-3
ENEX 88-89 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. 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 $333,294 for certain oil and gas properties due to market
conditions and reserve revisions on the Lake Decade acquisition, which
indicated that the carrying amounts were not fully recoverable.
I-4
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 decreased from $16,696 in 1995 to
$15,171 in 1996. This represents a decrease of $1,525 (9%). Oil sales increased
by $442 or 9%. A 14% increase in average net oil prices increased sales by $672.
This increase was partially offset by a 5% decrease in oil production. Gas sales
decreased by $1,967 or 17%. A 39% decrease in average net gas prices reduced
sales by $6,259. This decrease was partially offset by a 36% increase in gas
production. The decrease in oil production was primarily the result of natural
production declines. The increase in gas production was primarily the result of
a successful workover on the Barnes Estate #2C in the first quarter of 1996. The
increase in the average oil net sales price was primarily due to higher prices
in the overall market for the sale of oil. The decrease in the average net gas
sales price was primarily due to workover expenses incurred on the Barnes Estate
acquisition, on which the Company receives a net profits royalty, partially
offset by higher prices in the overall market for the sale of gas.
Depletion expense decreased from $16,039 in the first quarter of 1995 to $10,219
in the first quarter of 1996. This represents a decrease of $5,820 (36%). A 48%
decrease in the depletion rate reduced depletion expense by $9,393. This
decrease was partially offset by the changes in production, noted above. The
decrease in the depletion rate was primarily due to the lower property basis
resulting from the recognition of a $333,294 property impairment.
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 $333,294 for
certain oil and gas properties due to market conditions and reserve revisions on
the Lake Decade acquisition, which indicated that the carrying amounts were not
fully recoverable.
General and administrative expenses increased from $4,195 in the first quarter
of 1995 to $5,200 in the first quarter of 1996. This increase of $1,005 (24%) is
primarily due to a $1,812 increase in direct expenses incurred by the Company in
1996, partially offset by 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.
I-5
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
payment of its debt obligations. Distribution amounts are subject to change if
net revenues are greater or less than expected. The general partner does not
intend to accelerate the repayment of the debt beyond the cash flow provided by
operating activities. 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.
II-1
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 88-89 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
May 11, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer