United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-18396
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
(Exact name of registrant as specified in its Charter)
New Jersey 76-0259724
(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) (Zip Code)
Registrant's telephone number, including area code:
(713) 358-8401
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
BALANCE SHEET
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MARCH 31,
ASSETS 1996
-------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 9,537
Accounts receivable - oil & gas sales 8,052
---------------------
Total current assets 17,589
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests 1,341,371
Less accumulated depletion 945,086
---------------------
Property, net 396,285
---------------------
TOTAL $ 413,874
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 67
Payable to general partner 9,320
---------------------
Total current liabilities 9,387
NONCURRENT PAYABLE TO GENERAL PARTNER 18,640
---------------------
PARTNERS' CAPITAL:
Limited partners 377,306
General partner 8,541
---------------------
Total partners' capital 385,847
---------------------
TOTAL $ 413,874
=====================
See accompanying notes to financial statements.
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ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) THREE MONTHS ENDED
------------------------------------------
MARCH 31, MARCH 31,
1996 1995
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REVENUES:
Oil and gas sales $ 31,405 $ 26,711
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EXPENSES:
Depletion and amortization 16,426 20,233
Production taxes 2,392 4,059
General and administrative 4,417 2,508
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Total expenses 23,235 26,800
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NET INCOME (LOSS) $ 8,170 (89)
=================== ===================
See accompanying notes to financial statements.
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ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 8,170 $ (89)
Adjustments to reconcile net income (loss) to net
cash provided by operating
activities:
Depletion and amortization 16,426 20,233
Decrease in:
Accounts receivable - oil & gas sales 310 960
(Decrease) in:
Accounts payable (991) (2,887)
Payable to general partner (11,260) (2,645)
Total adjustments 4,485 15,661
Net cash provided by operating activities 12,655 15,572
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (12,122) (10,553)
NET INCREASE IN CASH 533 5,019
CASH AT BEGINNING OF YEAR 9,004 8,149
CASH AT END OF PERIOD $ 9,537 $ 13,168
See accompanying notes to financial statements.
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ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, 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 $10,908, representing net revenues from the sale of oil and gas
produced from properties owned by the Company. This distribution was made
on January 31, 1996.
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Item 2Management's Discussion and Analysis or Plan of Operation.
First Quarter 1996 Compared to First Quarter 1995
Oil and gas sales for the first quarter increased from $26,711 in 1995 to
$31,405 in 1996. This represents an increase of $4,694 (18%). Oil sales
decreased by $1,999 or 21%. A 23% decrease in oil production reduced sales by
$2,162. This decrease was partially offset by a 2% increase in average net oil
sales price. The decrease in oil production was primarily a result of natural
production declines which were especially pronounced on the Wardner Ranch
acquisition. The increase in the average net oil price was primarily the result
of higher prices in the overall market for the sale of oil partially offset by
relatively higher production of oil from properties with a lower average sales
price. Gas sales increased by $6,693 or 38%. A 45% increase in average net gas
sales price increased sales by $7,424. This increase was partially offset by a
4% decrease in gas production. The increase in average net gas sales price
corresponds with higher prices in the overall market for the sale of gas. The
decrease in gas production was primarily the result of natural production
declines.
Depletion expense decreased from $18,689 in the first quarter of 1995 to $16,426
in the first quarter of 1996. This represents a decrease of $2,263 (12%). The
changes in production, noted above, reduced depletion expense by $1,692. A 3%
decrease in the depletion rate reduced depletion expense by an additional $571.
The decrease in the depletion rate was primarily a result of upward revisions of
the oil and gas reserves during December 1995.
General and administrative expenses increased from $2,508 in 1995 to $4,417 in
1996. This increase of $1,909 (76%) was primarily a result of a $1,635 increase
in direct expenses incurred by the Company 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 will continue to recover its reserves and distribute to the limited
partners the net proceeds realized from the sale of oil and gas production after
payment of its debt obligations. 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.
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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 March 31, 1996.
II-1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENEX 88-89 INCOME AND RETIREMENT
FUND - SERIES 7, 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
May 11, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer