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 0-18321
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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September 30,
ASSETS 1996
--------------
(Unaudited)
CURRENT ASSETS:
Cash $ 5,913
Accounts receivable - oil & gas sales 12,904
Other current assets 6,062
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Total current assets 24,879
-------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,162,418
Less accumulated depreciation and depletion 1,048,360
-------------
Property, net 114,058
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TOTAL $ 138,937
=============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 562
Payable to general partner 71,229
-------------
Total current liabilities 71,791
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PARTNERS' CAPITAL:
Limited partners 58,279
General partner 8,867
-------------
Total partners' capital 67,146
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TOTAL $ 138,937
=============
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.
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 $ 33,240 $ 24,645 $ 86,919 $ 73,824
----------------- ----------------- ----------------- -------------------
EXPENSES:
Depreciation and depletion 7,121 12,522 19,362 44,229
Impairment of property - - 243,005 -
Lease operating expenses 4,737 4,822 14,970 17,866
Production taxes 1,887 1,299 4,837 3,787
General and administrative 3,775 4,622 14,434 14,090
----------------- ----------------- ----------------- -------------------
Total expenses 17,520 23,265 296,608 79,972
----------------- ----------------- ----------------- -------------------
NET INCOME (LOSS) $ 15,720 $ 1,380 $ (209,689) $ (6,148)
================= ================= ================= ===================
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM IV - SERIES 4, 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 $ 360,211 $ 1,478 $ 358,733 $ 142
CASH DISTRIBUTIONS (26,485) (2,647) (23,838) (9)
NET INCOME (LOSS) (23,992) 4,937 (28,929) (11)
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1994 309,734 3,768 305,966 122
CASH DISTRIBUTIONS (20,489) (2,049) (18,440) (7)
NET INCOME (LOSS) 850 3,997 (3,147) (1)
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1995 $ 290,095 $ 5,716 $ 284,379 $ 114
CASH DISTRIBUTIONS (13,260) (2,115) (11,145) (4)
NET INCOME (LOSS) (209,689) 5,266 (214,955) (85)
-------------- ------------- -------------- --------
BALANCE, SEPTEMBER 30, 1996 $ 67,146 $ 8,867 $ 58,279 (1) $ 24
============== ============= ============== ========
(1) Includes 294 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 4, 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) $ (209,689) $ (6,148)
------------------- -------------------
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation and depletion 19,362 44,229
Impairment of property 243,005 -
(Increase) decrease in:
Accounts receivable - oil & gas sales (5,191) 1,651
Other current assets (4,255) 686
(Decrease) in:
Accounts payable (8,101) (5,228)
Payable to general partner (13,959) (18,235)
------------------- -------------------
Total adjustments 230,861 23,103
------------------- -------------------
Net cash provided by operating activities 21,172 16,955
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (5,237) (4,554)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (13,260) (15,766)
------------------- -------------------
NET INCREASE (DECREASE) IN CASH 2,675 (3,365)
CASH AT BEGINNING OF YEAR 3,238 4,633
------------------- -------------------
CASH AT END OF PERIOD $ 5,913 $ 1,268
=================== ===================
See accompanying notes to financial statements.
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I-4
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 $2,871, 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.
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. 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.
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 changes in the overall market for
the sale of oil and gas and significant decreases in the projected
production from the Lake Decade acquisition, which indicated that the
carrying amounts were not fully recoverable.
I-5
Item 2. Management's Discussion and Analysis or Plan of Operation.
Third Quarter 1995 Compared to Third Quarter 1996
Oil and gas sales for the third quarter increased to $33,240 in 1996 from
$24,645 in 1995. This represents an increase of $8,595 (34%). Oil sales
increased by $7,080 or 39%. A 31% increase in the average oil sales price
increased sales by $6,056. A 6% increase in oil production increased sales by an
additional $1,024. Gas sales increased by $1,515 or 24%. A 25% increase in the
average gas sales price increased sales by $1,553. This was partially offset by
a 1% decrease in gas production. The changes in the average oil and gas sales
prices correspond with changes in the overall market for the sale of oil and
gas. The increase in oil production was primarily due to higher production from
the El Mac acquisition which had an acidization treatment in the third quarter
of 1996. The slight decrease in gas production was primarily due to natural
production declines partially offset by higher production from the El Mac
acquisition, as noted above.
Lease operating expenses decreased to $4,737 in the third quarter of 1996 from
$4,822 in the third quarter of 1995. The decrease of $85 (2%) is primarily due
to higher operating costs on the Concord acquisition in the third quarter of
1995.
Depreciation and depletion expense decreased to $7,121 in the third quarter of
1996 from $12,522 in the third quarter of 1995. This represents a decrease of
$5,401 (43%). A 45% decrease in the depletion rate reduced depreciation and
depletion expense by $5,875. This decrease was partially offset by the changes
in production, noted above. 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.
General and administrative expenses decreased to $3,775 in the third quarter of
1996 from $4,622 in the third quarter of 1995. This decrease of $847 (18%) is
primarily due to less staff time being required to manage the Company's
operations.
First Nine Months in 1995 Compared to First Nine Months in 1996
Oil, gas and gas plant sales for the first nine months increased to $86,919 in
1996 from $73,824 in 1995. This represents an increase of $13,095 (18%). Oil
sales increased by $10,660 or 20%. A 21% increase in the average oil sales price
increased sales by $11,305. This increase was partially offset by a 1% decrease
in oil production. Gas sales increased by $5,812 or 37%. A 3% increase in gas
production increased sales by $446. A 34% increase in the average gas sales
price increased sales by an additional $5,366. Sales of plant products decreased
by $3,377. An 84% decrease in the production of plant products reduced sales by
$4,070. This decrease was partially offset by an 88% 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
I-6
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 $14,970 in the first nine months of 1996
from $17,866 in the first nine months of 1995. The decrease of $2,896 (16%) is
primarily due to the changes in production, noted above.
Depreciation and depletion expense decreased to $19,362 in the first nine months
of 1996 from $44,229 in the first nine months of 1995. This represents a
decrease of $24,867 (56%). The changes in production, noted above, caused
depreciation and depletion expense to decrease by $5,330, while a 50% decrease
in the depletion rate reduced depreciation and depletion expense by an
additional $19,537. 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 oil and gas properties due to market
changes in the overall market for the sale of oil and gas and significant
decreases in the projected production from the Lake Decade acquisition, which
indicated that the carrying amounts were not fully recoverable.
General and administrative expenses increased to $14,434 in the first nine
months of 1996 from $14,090 in the first nine months of 1995. This increase of
$344 (2%) is primarily due to more staff time being required to manage the
Company's operations in 1996.
I-6
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, financing and investing
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. 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-7
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 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
December 23, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer