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 0-17561
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) 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 OIL & GAS INCOME PROGRAM IV - SERIES 1, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
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(Unaudited)
CURRENT ASSETS:
Cash $ 5,050
Accounts receivable - oil & gas sales 15,276
Other current assets 1,297
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Total current assets 21,623
--------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,593,885
Less accumulated depreciation and depletion 1,570,757
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Property, net 23,128
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TOTAL $ 44,751
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LIABILITIES AND PARTNERS' CAPITAL (Deficit)
CURRENT LIABILITIES:
Accounts payable $ 2,983
Payable to general partner 19,361
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Total current liabilities 22,344
--------------
NONCURRENT PAYABLE TO
GENERAL PARTNER 38,723
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PARTNERS' CAPITAL ((Deficit):
Limited partners (61,343)
General partner 45,027
--------------
Total partners' (deficit) (16,316)
--------------
TOTAL $ 44,751
==============
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) QUARTER ENDED SIX MONTHS ENDED
------------------------------------ --------------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
--------------- ----------------- ----------------- -----------------
REVENUES:
Oil and gas sales $ 11,068 $ 49,708 $ 71,115 $ 99,322
--------------- ----------------- ----------------- -----------------
EXPENSES:
Depreciation and depletion (2,351) 32,299 5,247 58,340
Impairment of property - - 254,366 -
Lease operating expenses 7,361 29,986 25,871 57,417
Production taxes 575 2,959 4,011 6,041
General and administrative 6,018 19,056 12,817 25,677
--------------- ----------------- ----------------- -----------------
Total expenses 11,603 84,300 302,312 147,475
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LOSS FROM OPERATIONS (535) (34,592) (231,197) (48,153)
--------------- ----------------- ----------------- -----------------
OTHER INCOME:
Gain on sale of property - - 2,229 -
--------------- ----------------- ----------------- -----------------
NET LOSS $ (535) $ (34,592) $ (228,968) $ (48,153)
=============== ================= ================= =================
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)
SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (228,968) $ (48,153)
Adjustments to reconcile net (loss)
to net cash provided by operating
activities:
Depreciation and depletion 5,247 58,340
Impairment of property 254,366 -
Gain on sale of property (2,229) -
(Increase) decrease in:
Accounts receivable - oil & gas sales 5,569 (2,731)
Other current assets (186) (568)
Increase (decrease) in:
Accounts payable (5,864) 4,267
Payable to affiliated partnership - 592
Payable to general partner (60,711) 1,589
Total adjustments 196,192 61,489
Net cash provided by operating activities (32,776) 13,336
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 35,700 -
Property (additions) credits
- development costs 1,372 (2,845)
Net cash provided (used) by investing
activities 37,072 (2,845)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (9,071)
NET INCREASE IN CASH 4,296 1,420
CASH AT BEGINNING OF YEAR 754 1,029
CASH AT END OF PERIOD $ 5,050 $ 2,449
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.) 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 Operations.
Second Quarter 1995 Compared to Second Quarter 1996
Oil and gas sales for the second quarter decreased to $11,068 in 1996 from
$49,708 in 1995. This represents a decrease of $38,640 (78%). Oil sales
decreased by $28,538 (100%). There was no oil production in the second quarter
of 1996 due to the Credo acquisition being sold, effective February 1, 1996. Gas
sales decreased by $10,102 (47%). A 59% decrease in gas production reduced sales
by $12,694. This decrease was partially offset by a 29% increase in the average
gas sales price. The increase in the average gas sales price corresponds with
changes in the overall market for the sale of gas. The decrease in gas
production was primarily due to the sale of the Credo acquisition in the first
quarter of 1996, coupled with natural production declines which were especially
pronounced on the Barnes Estate acquisition.
Lease operating expenses decreased to $7,361 in the second quarter of 1996 to
$29,986 in the second quarter of 1995. The decrease of $22,625 (75%) is
primarily due to the changes in production, noted above.
Depreciation and depletion expense decreased to a negative $2,351 in the second
quarter of 1996 from $32,299 in the second quarter of 1995. This represents a
decrease of $34,650 (107%). The negative amount for the second quarter of 1996
is due to the reversal of an accrual of sales from the Credo acquisition, the
sale of which was closed in April, 1996, but was effective February 1, 1996. The
changes in production, noted above, reduced depreciation and depletion expense
by $24,601. A 131% decrease in the depletion rate reduced the expense by an
additional $10,049. The decrease in the depletion rate was primarily due to the
lower property basis resulting from the recognition of a $254,366 property
impairment in the first quarter of 1996.
General and administrative expenses decreased to $6,018 in the second quarter of
1996 from $19,056 in the second quarter of 1995. This decrease of $13,038 is
primarily due to $7,959 of legal costs incurred in the second quarter of 1995
for a property interest dispute on the Barnes Estate acquisition, coupled with
less 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 $71,115 in 1996 from
$99,322 in 1995. This represents a decrease of $28,207 (28%). Oil sales
decreased by $23,254 (50%). A 54% decrease in oil production reduced sales by
$25,332. This decrease was partially offset by a 10% increase in the average oil
sales price. Gas sales decreased by $4,953 (9%). A 24% decrease in gas
production reduced sales by $12,521. This decrease was partially offset by a 19%
increase in the average gas sales price. The increases in the average sales
prices correspond with changes in the overall market for the sale of oil and
gas. The decrease in oil and gas production was primarily due to the sale of the
Credo acquisition in the first quarter of 1996, coupled with natural production
declines, which were especially pronounced on the Barnes Estate acquisition.
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Lease operating expenses for the first six months decreased to $25,871 in 1996
from $57,417 in 1995. The decrease of $31,546 (55%) is primarily due to the
declines in production, noted above, coupled with costs incurred on the Credo
acquisition to repair a casing leak in 1995.
Depreciation and depletion expense decreased to $5,247 in the first six months
of 1996 from $58,340 in the first six months of 1995. This represents a decrease
of $53,093 (91%). The changes in production, noted above, reduced depreciation
and depletion expense by $19,789. An 86% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $33,304. 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 decreased to $12,817 in the first six months
of 1996 from $25,677 in 1995. This decrease of $13,060 (51%) is primarily due to
$7,959 of legal costs incurred in the second quarter of 1995 for a property
interest dispute on the Barnes Estate acquisition, coupled with less staff time
required to manage the Company's operations in 1996.
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 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.
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 OIL & GAS INCOME
PROGRAM IV - 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