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 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 0-18321
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 4, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0251422
(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 4, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 7,951
Accounts receivable - oil & gas sales 10,180
Other current assets 1,040
---------------------
Total current assets 19,171
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,159,479
Less accumulated depreciation and depletion 1,041,239
---------------------
Property, net 118,240
---------------------
TOTAL $ 137,411
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 1,732
Payable to general partner 26,881
---------------------
Total current liabilities 28,613
---------------------
NONCURRENT PAYABLE TO GENERAL PARTNER 53,764
---------------------
PARTNERS' CAPITAL:
Limited partners 48,090
General partner 6,944
---------------------
Total partners' capital 55,034
---------------------
TOTAL $ 137,411
=====================
Number of $500 Limited Partner units outstanding 2,520
See accompanying notes to financial statements.
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I-1
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 4, 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. A cash distribution was made to the limited partners of the Company in
the amount of $7,069, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on April 30, 1996.
3. 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.
4. 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 $243,005 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
16% increase in the average oil sales price increased sales by $5,423. This
increase was partially offset by a 5% decrease in oil production. Gas sales
increased by $4,297 or 47%. A 5% increase in gas production increased sales by
$422. A 41% increase in the average gas sales price increased sales by an
additional $3,875. Sales of plant products decreased by $3,423. An 88% decrease
in the production of plant products reduced sales by $3,886. This decrease was
partially offset by a 91% increase in the average plant product sales price. The
decrease in oil production was primarily due to natural production declines. The
increase in gas production was primarily the result of enhanced production
improvements on the Concord acquisition, partially offset by natural production
declines. The lower production of plant products was due to the recognition of
back revenues from the Kalkaska gas plant in the second quarter of 1995. The
higher average plant product sales price was primarily due to recognition of
back revenues from the Kalkaska gas plant in the second quarter of 1995, which
had a relatively lower sales price. The changes in the average oil sales price
correspond with changes in the overall market for the sale of oil. The higher
average gas sales price was primarily the result of relatively higher production
from the Concord acquisition, which has a relatively higher gas sales price,
coupled with higher prices in the overall market for the sale of gas.
Lease operating expenses decreased to $10,233 in the first six months of 1996
from $13,044 in the first six months of 1995. The decrease of $2,811 (22%) is
primarily due to the changes in production, noted above.
Depreciation and depletion expense decreased to $12,241 in the first six months
of 1996 from $31,707 in the first six months of 1995. This represents a decrease
of $19,466 (61%). The changes in production, noted above, caused depreciation
and depletion expense to decrease by $5,951, while a 52% decrease in the
depletion rate reduced depreciation and depletion expense by an additional
$13,515. The rate decrease was primarily due to the lower property basis
resulting from the recognition of a $243,005 impairment of property 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. 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 $243,005 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-6
General and administrative expenses increased to $10,659 in the first six months
of 1996 from $9,468 in the first six months of 1995. This increase of $1,191
(13%) is primarily due to more staff time being required to manage the Company's
operations in 1996.
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's "available cash flow" is essentially equal to
the net amount of cash provided by operating activities.
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.
Distribution amounts are subject to change if net revenues are greater or less
than expected. Nonetheless, the general partner believes the Company will
continue to have sufficient cash flow to fund operations and to maintain a
regular pattern of distributions.
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.
I-7
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 4, 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
November 7, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer