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 0-18327 ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 6, L.P. (Exact name of small business issuer as specified in its charter) New Jersey 76-0259723 (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 88-89 INCOME AND RETIREMENT FUND - SERIES 6, L.P. BALANCE SHEET - --------------------------------------------------------------------------- JUNE 30, ASSETS 1996 --------------------- CURRENT ASSETS: Cash .......................................... $ 6,113 Accounts receivable - oil & gas sales ......... 10,767 -------- Total current assets ............................ 16,880 -------- OIL & GAS PROPERTIES (Successful efforts accounting method) - Proved mineral interests ............................ 906,914 Less accumulated depletion ................... 832,357 -------- Property, net ................................... 74,557 -------- TOTAL ........................................... $ 91,437 ======== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Accounts payable ............................. $ 96 Payable to general partner ................... 12,272 -------- Total current liabilities ....................... 12,368 -------- NONCURRENT PAYABLE TO GENERAL PARTNER ........... 61,362 -------- PARTNERS' CAPITAL: Limited partners ............................. 10,710 General partner .............................. 6,997 -------- Total partners' deficit ......................... 17,707 -------- TOTAL ........................................... $ 91,437 ======== See accompanying notes to financial statements. - ------------------------------------------------------------------------------ I-1 ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 6, L.P. STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------- (UNAUDITED) QUARTER ENDED SIX MONTHS ENDED ------------------- ------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, 1996 1995 1996 1995 --------- -------- -------- -------- REVENUES: Oil, gas & gas plant sales $18,350 $13,298 $30,554 $23,938 ------- ------- ------- ------- EXPENSES: Depletion ................ 3,726 5,903 6,971 11,808 Production taxes ......... 897 785 1,670 2,078 General and administrative 2,649 2,322 6,123 4,714 ------- ------- ------- ------- Total expenses ............. 7,272 9,010 14,764 18,600 ------- ------- ------- ------- NET INCOME ................. $11,078 $ 4,288 $15,790 $ 5,338 ======= ======= ======= ======= See accompanying notes to financial statements. - -------------------------------------------------------------------------- I-2 ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 6, L.P. STATEMENTS OF CASH FLOWS - ------------------------------------------------------------------------ (UNAUDITED) SIX MONTHS ENDED ---------------------- JUNE 30, JUNE 30, 1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income .................................... $ 15,790 $ 5,338 -------- -------- Adjustments to reconcile net income to net cash provided by operating activities Depletion ................................... 6,971 11,808 (Increase) decrease in: Accounts receivable - oil & gas sales ....... (2,250) 1,389 (Decrease) in: Accounts payable ........................... (1,737) (2,857) Payable to general partner ................. (15,394) (13,564) -------- -------- Total adjustments ............................. (12,410) (3,224) -------- -------- Net cash provided by operating activities ..... 3,380 2,114 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash distributions ........................ -- (5,182) -------- -------- NET INCREASE (DECREASE) IN CASH ............... 3,380 (3,068) CASH AT BEGINNING OF YEAR ..................... 2,733 5,754 -------- -------- CASH AT END OF PERIOD ......................... $ 6,113 $ 2,686 ======== ======== See accompanying notes to financial statements. - --------------------------------------------------------------------------- I-3 ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 6, 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. I-4 Item 2. Management's Discussion and Analysis or Plan of Operation. Second Quarter 1995 Compared to Second Quarter 1996 Oil and gas sales for the second quarter increased to $18,350 in 1996 from $13,298 in 1995. This represents an increase of $5,052 (38%). Oil sales increased by $901 or 17%. A 39% increase in the average net oil sales price increased sales by $1,741. This increase was partially offset by a 16% decrease in oil production. Gas sales increased $4,151 or 52%. A 13% increase in gas production increased sales by $1,049. A 34% increase in the average net gas sales price increased sales by an additional $3,102. The decrease in oil production was primarily due to natural production declines. The increase in gas production was primarily due to higher production from the Speary acquisition on which a compressor was successfully reworked coupled with higher production from the Wardner Ranch acquisition which was shut-in for a workover in the second quarter of 1995. The increases in average net sales prices correspond with higher prices in the overall market for the sale of oil and gas. Depletion expense decreased to $3,726 in the second quarter of 1996 from $5,903 in the second quarter of 1995. This represents a decrease of $2,177 (37%). A 42% decrease in the depletion rate reduced depletion expense by $2,742. This decrease was partially offset by the changes in production, noted above. The decrease in the depletion rate was primarily due upward revisions of the oil and gas reserves during December 1995. General and administrative expenses increased to $2,649 in 1996 from $2,322 in 1995. This increase of $327 (14%) is primarily due to more staff time being required to manage the Company's operations. First Six Months in 1995 Compared to First Six Months in 1996 Oil and gas sales for the first six months increased to $30,554 in 1996 from $23,938 in 1995. This represents an increase of $6,616 (28%). Oil sales increased by $517 or 5%. A 33% increase in the average net oil sales price increased sales by $2,477. This increase was partially offset by a 21% decrease in oil production. Gas sales increased $6,099 or 42%. A 1% increase in gas production increased sales by $43. A 42% increase in the average net gas sales price increased sales by an additional $6,056. The decrease in oil production was primarily due to natural production declines. The increase in gas production was primarily due to higher production from the Speary acquisition on which a compressor was successfully reworked coupled with higher production from the Wardner Ranch acquisition which was shut-in for a workover in the second quarter of 1995, partially offset by natural production declines. The increases in average net sales prices correspond with higher prices in the overall market for the sale of oil and gas. Depletion expense decreased to $6,971 in the first six months of 1996 from $11,808 in the first six months of 1995. This represents a decrease of $4,837 (41%). The decreases in production, I-5 noted above, reduced depletion expense by $725. A 37% decrease in the depletion rate reduced depletion expense by an additional $4,112. The decrease in the depletion rate was primarily due upward revisions of the oil and gas reserves during December 1995. General and administrative expenses increased to $6,123 in 1996 from $4,714 in 1995. This increase of $1,409 (30%) is primarily due to more staff time being required to manage the Company's operations. 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 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. I-6 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 88-89 INCOME AND RETIREMENT FUND - SERIES 6, 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