United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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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September 30,
ASSETS 1996
-------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 1,307
Accounts receivable - oil & gas sales 16,343
Other current assets 1,297
-----------------
Total current assets 18,947
-----------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,566,300
Less accumulated depreciation and depletion 1,544,921
-----------------
Property, net 21,379
-----------------
TOTAL $ 40,326
=================
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 1,547
Payable to general partner 46,464
-----------------
Total current liabilities 48,011
-----------------
PARTNERS' CAPITAL (DEFICIT):
Limited partners (53,788)
General partner 46,103
-----------------
Total partners' capital (7,685)
-----------------
TOTAL $ 40,326
=================
Number of $500 Limited Partner units outstanding 6,472
See accompanying notes to financial statements.
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I-1
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 1, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) QUARTER ENDED NINE MONTHS ENDED
------------------------------------- ----------------------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
---------------- ----------------- ----------------- -------------------
REVENUES:
Oil and gas sales $ 35,575 $ 43,216 $ 106,690 $ 142,538
---------------- ----------------- ----------------- -------------------
EXPENSES:
Depreciation and depletion 2,117 30,021 7,364 88,361
Impairment of property - - 254,366 -
Lease operating expenses 9,372 19,861 35,243 77,278
Production taxes 1,955 2,505 5,966 8,546
General and administrative 4,914 8,008 17,731 33,685
---------------- ----------------- ----------------- -------------------
Total expenses 18,358 60,395 320,670 207,870
---------------- ----------------- ----------------- -------------------
INCOME (LOSS) FROM OPERATIONS 17,217 (17,179) (213,980) (65,332)
---------------- ----------------- ----------------- -------------------
OTHER INCOME:
Gain on sale of property 680 - 2,909 -
---------------- ----------------- ----------------- -------------------
NET INCOME (LOSS) $ 17,897 $ (17,179) $ (211,071) $ (65,332)
================ ================= ================= ===================
See accompanying notes to financial statements.
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I-2
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 1, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
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PER $500
LIMITED
PARTNER
GENERAL LIMITED UNIT OUT-
TOTAL PARTNER PARTNERS STANDING
-------------- ------------- -------------- --------
BALANCE, JANUARY 1, 1994 $ 706,467 $ 41,726 $ 664,741 $ 103
CASH DISTRIBUTIONS (127,497) (12,737) (114,760) (18)
NET INCOME (LOSS) (269,757) 10,478 (280,235) (43)
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1994 309,213 39,467 269,746 42
CASH DISTRIBUTIONS (9,069) (906) (8,163) (2)
NET INCOME (LOSS) (87,492) 3,404 (90,896) (14)
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1995 $ 212,652 $ 41,965 $ 170,687 (1) $ 26
CASH DISTRIBUTIONS (9,267) (926) (8,341) (1)
NET INCOME (LOSS) (211,070) 5,064 (216,134) (33)
-------------- ------------- -------------- --------
BALANCE, SEPTEMBER 30, 1996 $ (7,685) $ 46,103 $ (53,788)(1) $ (8)
============== ============= ============== ========
(1) Includes 1,072 units purchased by the general partner as a limited partner.
See accompanying notes to financial statements.
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I-3
ENEX OIL AND GAS INCOME PROGRAM IV - SERIES 1, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
NINE MONTHS ENDED
--------------------------------------------
September 30, September 30,
1996 1995
------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (211,071) $ (65,332)
------------------- -------------------
Adjustments to reconcile net(loss) to net cash provided (used) by operating
activities:
Depreciation and depletion 7,364 88,361
Impairment of property 254,366 -
Gain from sale of property (2,909) -
(Increase) decrease in:
Accounts receivable - oil & gas sales 4,502 (869)
Other current assets (186) (620)
(Decrease) in:
Accounts payable (7,300) (8,015)
Payable to general partner (72,331) (2,699)
------------------- -------------------
Total adjustments 183,506 76,158
------------------- -------------------
Net cash provided (used) by operating activities (27,565) 10,826
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 36,658 -
Property (additions) credits - development costs 727 (2,785)
------------------- -------------------
Net cash provided (used) by investing activities 37,385 (2,785)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (9,267) (9,070)
------------------- -------------------
NET INCREASE (DECREASE) IN CASH 553 (1,029)
CASH AT BEGINNING OF YEAR 754 1,029
------------------- -------------------
CASH AT END OF PERIOD $ 1,307 $ -
=================== ===================
See accompanying notes to financial statements.
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I-4
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. On November 13, 1996, the Company submitted amended
preliminary proxy material to the SEC with respect to this
consolidation. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
3. Effective August 1, 1996 the company sold its interest in the Spider
Lake 3-2 well for $758. The Company recognized a gain of $680 from the
sale.
4. A cash distribution was made to the limited partners of the Company in
the amount of $6,977, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on July 31, 1996.
5. 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. Prior to this pronouncement, the
Company assessed properties on an aggregate basis. Upon adoption
of SFAS 121, the Company began assessing properties on an
individual basis, wherein total capitalized costs may not exceed
the property's fair market value. The fair market value of each
property was determined by H. J. Gruy and Associates, ("Gruy").
To determine the fair market value, Gruy estimated each
property's oil and gas reserves, applied certain assumptions
regarding price and cost escalations, applied a 10% discount
factor for time and certain discount factors for risk, location,
type of ownership interest, category of reserves, operational
characteristics, and other factors. 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 changes in the
overall market for the sale of oil and gas and significant
decreases in the projected production from certain of the
Company's oil and gas properties.
I-5
Item 2. Management's Discussion and Analysis or Plan of Operations.
Third Quarter 1995 Compared to Third Quarter 1996
Oil and gas sales for the third quarter decreased to $35,575 in 1996 from
$49,216 in 1995. This represents a decrease of $13,641 (28%). Oil sales
decreased by $16,066 (48%). A 58% decrease in oil production reduced sales by
$18,375. This decrease was partially offset by a 26% increase in the average oil
sales price. Gas sales increased by $2,425 (11%). A 31% increase in the average
gas sales price increased sales by $5,616. This increase was partially offset by
a 15% decrease in gas production. The increases in the average gas sales prices
correspond with changes in the overall market for the sale of oil and gas. The
decreases in oil and gas production were primarily due to the sale of the Credo
acquisition in the first quarter of 1996, coupled with natural production
declines.
Lease operating expenses decreased to $9,372 in the third quarter of 1996 from
$19,861 in the third quarter of 1995. The decrease of $10,489 (53%) is primarily
due to the changes in production, noted above.
Depreciation and depletion expense decreased to $2,117 in the third quarter of
1996 from $30,021 in the third quarter of 1995. This represents a decrease of
$27,904 (93%). The changes in production, noted above, reduced depreciation and
depletion expense by $9,122. A 90% decrease in the depletion rate reduced the
expense by an additional $18,782. 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.
Effective August 1, 1996 the Company sold its interest in the Spider Lake 3-2
for $758. The Company recognized a gain of $680 from the sale.
General and administrative expenses decreased to $4,914 in the third quarter of
1996 from $8,008 in the third quarter of 1995. This decrease of $3,094 (39%) is
primarily due to less staff time being required to manage the Company's
operations in 1996.
First Nine Months in 1995 Compared to First Nine Months in 1996
Oil and gas sales for the first nine months decreased to $106,690 in 1996 from
$142,538 in 1995. This represents a decrease of $35,848 (25%). Oil sales
decreased by $33,255 (49%). A 56% decrease in oil production reduced sales by
$37,848. This decrease was partially offset by a 14% increase in the average oil
sales price. Gas sales decreased by $2,593 (4%). A 21% decrease in gas
production reduced sales by $15,704. This decrease was partially offset by a 22%
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 decreases in oil and gas production were 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.
I-6
Lease operating expenses for the first nine months decreased to $35,243 in 1996
from $77,278 in 1995. The decrease of $42,035 (54%) 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 $7,364 in the first nine months
of 1996 from $88,361 in the first nine months of 1995. This represents a
decrease of $80,997 (92%). The changes in production, noted above, reduced
depreciation and depletion expense by $29,239. An 88% decrease in the depletion
rate reduced depreciation and depletion expense by an additional $51,758. 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.
Effective August 1, 1996 the Company sold its interest in the Spider Lake 3-2
for $758. The Company recognized a gain of $680 from 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. Prior to this
pronouncement, the Company assessed properties on an aggregate basis. Upon
adoption of SFAS 121, the Company began assessing properties on an individual
basis, wherein total capitalized costs may not exceed the property's fair market
value. The fair market value of each property was determined by H. J. Gruy and
Associates, ("Gruy"). To determine the fair market value, Gruy estimated each
property's oil and gas reserves, applied certain assumptions regarding price and
cost escalations, applied a 10% discount factor for time and certain discount
factors for risk, location, type of ownership interest, category of reserves,
operational characteristics, and other factors. 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 changes in the overall market for the sale
of oil and gas and significant decreases in the projected production from
certain of the Company's oil and gas properties.
On April 2, 1996, the Company settled a property interest dispute on the Barnes
Estate acquisition. In the settlement, the Company agreed to pay $6,500 to the
plaintiff and convey 0.26% overriding royalty interest in the Barnes Estate #1
and #2 wells. Such conveyance should not have a material impact on the current
or future revenues of the Company.
General and administrative expenses decreased to $17,731 in the first nine
months of 1996 from $33,685 in 1995. This decrease of $15,954 (47%) 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.
I-7
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's "available cash
flow" is essentially equal to the net amount of cash provided by operating,
financing and investing activities.
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. Based on the December 31, 1995
reserve report prepared by Gruy, there appears to be sufficient future net
revenues to pay all obligations and expenses. The Company does not intend to
purchase additional properties or fund extensive development of existing oil and
gas properties, and as such; has no long-term liquidity needs. The Company's
projected cash flows from operations will provide sufficient funding to pay its
operating expenses and debt obligations. The general partner does not intend to
accelerate the repayment of the debt beyond the cash flow provided by operating,
financing and investing activities. Based upon current projected cash flows from
its property, it does not appear that the Company will have sufficient cash to
pay distributions and pay its operating expenses, and meet its debt obligations.
The Company did make a distribution of $6,977 on July 31, 1996. 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. On
November 13, 1996, the Company submitted amended preliminary proxy material to
the SEC with respect to this consolidation. The terms and conditions of the
proposed consolidation are set forth in such preliminary proxy material.
As of September 30, 1996, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
I-8
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 September 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
December 23, 1996 By: /s/ James A. Klein
James A. Klein
Controller and Chief
Accounting Officer