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 March 31, 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 0-18617
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 7, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0251427
(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) 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
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 7, L.P.
BALANCE SHEET
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MARCH 31,
ASSETS 1996
------------
(Unaudited)
CURRENT ASSETS:
Cash $ 16,731
Accounts receivable - oil & gas sales 40,051
Other current assets 2,104
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Total current assets 58,886
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,739,556
Less accumulated depreciation and depletion 1,373,280
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Property, net 366,276
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TOTAL $ 425,162
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 72,284
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PARTNERS' CAPITAL:
Limited partners 332,827
General partner 20,051
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Total partners' capital 352,878
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TOTAL $ 425,162
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See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM IV - 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 $ 88,275 99,279
EXPENSES:
Depreciation, depletion and amortization 18,185 40,825
Impairment of property 73,979 -
Lease operating expenses 41,822 47,757
Production taxes 5,511 6,610
General and administrative 11,258 12,005
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Total expenses 150,755 107,197
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LOSS FROM OPERATIONS (62,480) (7,918)
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OTHER INCOME:
Gain on sale of property 1,066 -
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NET LOSS $ (61,414) (7,918)
=========== ============
See accompanying notes to financial statements.
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ENEX OIL AND GAS INCOME PROGRAM IV - SERIES 7, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (61,414) $ (7,918)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation, depletion and amortization 18,185 40,825
Impairment of property 73,979 -
Gain on sale of property (1,066) -
(Increase) decrease in:
Accounts receivable - oil & gas sales (3,574) (2,439)
Other current assets - 124
Increase (decrease) in:
Accounts payable 45,778 2,479
Payable to general partner (3,231) (34,651)
Total adjustments 130,071 6,338
Net cash provided (used) by operating activities 68,657 (1,580)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property 1,066 -
Property additions - development costs (51,154) (2,917)
Net cash used by investing activities (50,088) (2,917)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (17,218) (10,465)
NET INCREASE (DECREASE) IN CASH 1,351 (14,962)
CASH AT BEGINNING OF YEAR 15,380 23,587
CASH AT END OF PERIOD $ 16,731 $ 8,625
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM IV - 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 $15,496, 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.
3. 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. In the
first quarter of 1996, the Company recognized a non-cash impariment
provision of $73,979 for certain oil and gas properties due to market
indications that the carrying amounts were not fully recoverable.
4. Effective January 1, 1996, the Company sold its interest in the Nunley
Ranch acquisition for $1,066. The Company recognized a gain of $1,066 on
the sale.
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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 decreased from $99,279 in 1995 to
$88,275 in 1996. This represents a decrease of $11,004 (11%). Oil sales
increased by $3,163 or 6%. A 9% increase in average oil sales prices increased
sales by $4,713. This increase was partially offset by a 3% decrease in oil
production due to natural production declines. Gas sales decreased by $14,167 or
33%. A 40% decrease in gas production reduced sales by $17,329. This decrease
was partially offset by a 12% increase in gas production. The decrease in gas
production was primarily a result of the sale of the Nunley Ranch acquisition
effective January 1, 1996, coupled with natural production declines which were
especially pronounced on the Binger acquisition. The changes in average prices
correspond with changes in the overall market for the sale of oil and gas.
Lease operating expenses decreased from $47,757 in the first quarter of 1995 to
$41,822 in the first quarter of 1996. The decrease of $5,935 (12%) is primarily
due to the changes in production, noted above.
Depreciation and depletion expense decreased from $40,825 in the first quarter
of 1995 to $18,185 in the first quarter of 1996. This represents a decrease of
$22,640 (55%). A 40% decrease in the depletion rate reduced depreciation and
depletion expense by $12,038. The changes in production, noted above, reduced
depreciation and depletion by an additional $10,602. The rate decrease was
primarily due to the lower property basis resulting from the recognition of an
impairment of property of $73,979 in the first quarter of 1996.
Effective January 1, 1996, the Company sold its interest in the Nunley Ranch
acquisition for $1,066. The Company recognized a gain of $1,066 on the sale.
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. In the first quarter of
1996, the Company recognized a non-cash impairment provision of $73,979 for
certain oil and gas properties due to market indications that the carrying
amounts were not fully recoverable.
General and administrative expenses decreased from $12,005 in the first quarter
of 1995 to $11,258 in the first quarter of 1996. This decrease of $747 (6%) is
primarily due to less staff time being required to manage the Company's
operations, partially offset by $2,352 higher 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
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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.
As of March 31, 1996, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
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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.
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 OIL & GAS INCOME
PROGRAM IV - 7, L.P.
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(Registrant)
By:ENEX RESOURCES CORPORATION
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General Partner
By: /s/ R. E. Densford
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R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
May 11, 1996 By: /s/ James A. Klein
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James A. Klein
Controller and Chief
Accounting Officer