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 0-18396
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
(Exact name of small business issuer 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)
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 7, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
-------------------
CURRENT ASSETS:
Cash .......................................... $ 16,686
Accounts receivable - oil & gas sales ......... 9,948
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Total current assets ............................ 26,634
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests ............................ 1,341,371
Less accumulated depletion ................... 963,947
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Property, net ................................... 377,424
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TOTAL ........................................... $ 404,058
==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ............................. $ 32
Payable to general partner ................... 14,470
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Total current liabilities ....................... 14,502
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PARTNERS' CAPITAL:
Limited partners ............................. 379,598
General partner .............................. 9,958
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Total partners' capital ......................... 389,556
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TOTAL ........................................... $ 404,058
==========
Number of $500 Limited Partner units outstanding 3,089
See accompanying notes to financial statements.
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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 $39,215 in 1996 from
$27,483 in 1995. This represents an increase of $11,732 (43%). Oil sales
increased by $251 or 3%. A 12% increase in the average net oil sales price
increased sales by $945. This increase was partially offset by an 8% decrease in
oil production. Gas sales increased by $11,481 or 38%. A 15% increase in gas
production increased sales by $2,809. A 40% increase in average net gas prices
increased sales by an additional $8,672. The decrease in oil production was
primarily the result of natural production declines. The increase in gas
production was due to higher production from the Wardner Ranch acquisition which
was shut-in for a rework during the second quarter of 1995. The changes in
average net sales prices correspond with changes in the overall market for the
sale of oil and gas.
Depletion expense increased to $18,861 in the second quarter of 1996 from
$17,490 in the second quarter of 1995. This represents an increase of $1,371
(8%). The changes in production, noted above, increased depletion expense by
$1,590. This increase was partially offset by a 1% decrease in the depletion
rate. The decrease in the depletion rate was primarily the result of an upward
revision of the oil reserves during December 1995, partially offset by a
downward revision of the gas reserves during December 1995.
General and administrative expenses increased to $3,483 in 1996 from $3,105 in
1995. This increase of $378 (12%) 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 $70,620 in 1996 from
$54,194 in 1995. This represents an increase of $16,426 (30%). Oil sales
decreased by $1,748 or 10%. A 16% decrease in oil production reduced sales by
$2,846. This decrease was partially offset by a 7% increase in the average net
oil sales price. Gas sales increased by $18,174 or 50%. A 5% increase in gas
production increased sales by $1,860. A 43% increase in average net gas prices
increased sales by an additional $16,314. The decrease in oil production was
primarily the result of natural production declines. The increase in gas
production was due to higher production from the Wardner Ranch acquisition which
was shut-in for a rework in the second quarter of 1995. The changes in average
net sales prices correspond with changes in the overall market for the sale of
oil and gas.
Depletion expense decreased to $35,287 in the first six months of 1996 from
$36,179 in the first six months of 1995. This represents a decrease of $892
(2%). The changes in production, noted above, reduced depletion expense by $70.
A 2% decrease in the depletion rate reduced depletion expense by an additional
$822. The decrease in the depletion rate was a result of an upward
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revision of the oil reserves during December 1995, partially offset by a
downward revision of the gas reserves during December 1995.
General and administrative expenses increased to $7,900 in 1996 from $5,613 in
1995. This increase of $2,287 (41%) 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'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.
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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 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
Novemer 7, 1996 By: /s/ James A. Klein
James A. Klein
Controller and Chief
Accounting Officer