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 TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-17561
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 1, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0251419
(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 IV - SERIES 1, L.P.
BALANCE SHEET
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March 31,
ASSETS 1996
--------------
(Unaudited)
CURRENT ASSETS:
Cash $ 408
Accounts receivable - oil & gas sales 33,328
Other current assets 1,150
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Total current assets 34,886
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,594,551
Less accumulated depreciation and depletion 1,573,108
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Property, net 21,443
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TOTAL $ 56,329
==============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 3,803
Payable to general partner 22,769
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Total current liabilities 26,572
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NONCURRENT PAYABLE TO
GENERAL PARTNER 45,538
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PARTNERS' CAPITAL (DEFICIT):
Limited partners (61,097)
General partner 45,316
--------------
Total partners' capital (deficit) (15,781)
--------------
TOTAL $ 56,329
==============
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM IV - SERIES 1, 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 $ 60,047 $ 49,614
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EXPENSES:
Depreciation and depletion 7,598 26,041
Impairment of property 254,366 -
Lease operating expenses 18,510 27,431
Production taxes 3,436 3,082
General and administrative 6,799 6,621
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Total expenses 290,709 63,175
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LOSS FROM OPERATIONS (230,662) (13,561)
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OTHER INCOME:
Gain on sale of property 2,229 -
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NET LOSS $ (228,433) $ (13,561)
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See accompanying notes to financial statements.
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ENEX OIL AND GAS INCOME PROGRAM IV - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (228,433) $ (13,561)
Adjustments to reconcile net (loss) to net
cash provided by operating activities:
Depreciation and depletion 7,598 26,041
Impairment of property 254,366 -
Gain on sale of property (2,229) -
(Increase) in:
Accounts receivable - oil & gas sales (12,483) (1,195)
Other current assets (39) (523)
Increase (decrease) in:
Accounts payable (5,044) (2,840)
Payable to general partner (50,488) 6,196
Total adjustments 191,681 27,679
Net cash provided (used) by operating activities (36,752) 14,118
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 35,700 -
Property (additions) credits - development costs 706 (1,910)
Net cash provided (used) by investing activities 36,406 (1,910)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (9,069)
NET INCREASE (DECREASE) IN CASH (346) 3,139
CASH AT BEGINNING OF YEAR 754 1,029
CASH AT END OF PERIOD $ 408 $ 4,168
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM IV - 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 $254,366 for certain oil and gas properties due to market
indications that the carrying amounts were not fully recoverable.
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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 increased from $49,614 in 1995 to
$60,047 in 1996. This represents a decrease of $10,433 (21%). Oil sales
increased by $5,284 or 28%. A 16% increase in oil production caused sales to
increase by $3,056. A 10% increase in the average oil sales price increased
sales by an additional $2,228. Gas sales increased by $5,149 or 17%. A 6%
increase in gas production increased sales by $1,878. A 10% increase in average
gas prices increased sales by an additional $3,271. The increase in oil
production was primarily the result of a partial shut-in of production, in the
first quarter of 1995, from the Credo acquisition to repair a casing leak. The
increase in gas production was primarily due to higher production from the
Barnes Estate acquisition due to increased demand during the quarter.The changes
in average prices correspond with changes in the overall market for the sale of
oil and gas.
Lease operating expenses decreased from $27,431 in the first quarter of 1995 to
$18,510 in the first quarter of 1996. The decrease of $8,921 (33%) is primarily
due to workover costs incurred in 1995 on the Credo acquisition to repair a
casing leak.
Depreciation and depletion expense decreased from $26,041 in the first quarter
of 1995 to $7,598 in the first quarter of 1995. This represents a decrease of
$18,443 (71%). A 73% decrease in the depletion rate reduced depreciation and
depletion expense by $20,763. This decrease was partially offset by the
increases in production, noted above. The decrease in the depletion rate was
primarily due to the lower property basis resulting from the recognition of a
$254,366 impairment of property in the first quarter of 1996.
Effective February 1, 1996, the Company sold its interest in the Credo
acquisition for $35,700. The Company recognized a gain of $2,229 on the sale.
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 $254,366 for
certain oil and gas properties due to market indications that the carrying
amounts were not fully recoverable.
General and administrative expenses increased from $6,621 in the first quarter
of 1995 to $6,799 in the first quarter of 1996. This increase of $178 (3%) is
primarily due to $2,144 higher 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 is a direct result of the amount of net proceeds
realized from the sale of oil and gas production after the repayment of its debt
obligations. Accordingly, the changes in cash flow from 1995 to 1996 are
primarily due to the changes in oil and gas sales described
I-5
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 in the second quarter of
1995. Future distributions are dependent upon among other things, an increase in
the prices received for oil and gas. The Company will continue to recover its
reserves and reduce its obligations in 1996. 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 in the near
future.
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 IV - 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