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 33-45253
ENEX OIL & GAS INCOME PROGRAM VI - SERIES 1, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0303885
(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 VI- SERIES 1, L.P.
BALANCE SHEET
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MARCH 31,
ASSETS 1996
-----------------
(Unaudited)
CURRENT ASSETS:
Cash $ 13,423
Accounts receivable - oil & gas sales 35,066
Other current assets 151
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Total current assets 48,640
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,137,384
Less accumulated depreciation and depletion 477,559
---------------
Property, net 659,825
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ORGANIZATION COSTS
(Net of accumulated amortization of $15,492) 24,923
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TOTAL $ 733,388
===============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 30,609
Note payable to general partner 33,735
Payable to general partner 23,383
---------------
Total current liabilities 87,727
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NONCURRENT PAYABLE TO GENERAL PARTNER 67,472
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PARTNERS' CAPITAL:
Limited partners 564,419
General partner 13,770
---------------
Total partners' capital 578,189
---------------
TOTAL $ 733,388
===============
See accompanying notes to financial statements.
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OIL & GAS INCOME PROGRAM VI - SERIES 1, L.P.
STATEMENT OF OPERATIONS
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THREE MONTHS ENDED
--------------------------------
MARCH 31, MARCH 31,
1996 1995
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REVENUES:
Oil and gas sales $ 93,242 $ 103,738
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EXPENSES:
Depreciation, depletion and amortization 30,681 45,179
Impairment of property 201,736 -
Lease operating expenses 46,857 58,312
Production taxes 4,345 4,859
General and administrative 8,512 7,865
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Total expenses 292,131 116,215
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LOSS FROM OPERATIONS (198,889) (12,477)
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OTHER EXPENSE:
Interest expense (338) (2,105)
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NET LOSS $ (199,227) $ (14,582)
============= =============
See accompanying notes to financial statements.
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I-2
OIL & GAS INCOME PROGRAM VI - SERIES 1, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (199,227) $ (14,582)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation, depletion and amortization 30,681 45,179
Impairment of property 201,736 -
(Increase) decrease in:
Accounts receivable - oil sales (8,598) (8,754)
Other current assets 1,981 (337)
Increase (decrease) in:
Accounts payable (122) 13,956
Payable to general partner 11,778 19,799
Total adjustments 237,456 69,843
Net cash provided by operating activities 38,229 55,261
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (16,116) (22,257)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable to general partner (8,525) (9,282)
Cash distributions (2,975) (18,678)
Net cash used by financing activities (11,500) (27,960)
NET INCREASE IN CASH 10,613 5,044
CASH AT BEGINNING OF YEAR 2,810 1,966
CASH AT END OF PERIOD $ 13,423 $ 7,010
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM VI - SERIES 1, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The 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 period.
2. A cash distribution was made to the limited partners of the Company in the
amount of $2,677 representing net revenues from the temporary investment
of proceeds from subscriptions by the Company. This distribution was made
on January 31, 1996.
3. On December 29, 1994, in order to partially finance the purchase of
producing oil and gas properties, the Company borrowed $87,000 from the
general partner. The resulting note payable to the general partner bears
interest at the general partner's borrowing rate of prime plus
three-fourths of one-percent. Principal repayments of $8,525 and $9,282
were made on the note during the first quarter of 1996 and 1995,
respectively. The weighted average principal outstanding during the first
three months of 1996 and 1995 was $36,577 and $80,812, respectively, and
bore interest at an average rate of 9.25% and 9.56% in the first quarter of
1996 and 1995, respectively.
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. In the
first quarter of 1996, the Company recognized a non-cash impairment
provision of $201,736 for certain oil and gas properties due to market
indications that the carrying amounts were not fully recoverable.
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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 $103,738 in 1995 to
$93,242 in 1996. This represents a decrease of $10,496 (10%). Oil sales
decreased by $13,144 or 13%. A 43% decrease in oil production reduced sales by
$42,274. This decrease was partially offset by a 52% increase in average oil
sales prices. Gas sales increased by $2,648 or 47%. A 9% increase in gas
production increased sales by $485. A 35% increase in average gas sales price
increased sales by an additional $2,163. The decrease in oil production was
primarily the result of lower production from the McBride acquisition which was
shut-in during January and February of 1996 due to extreme low temperatures. The
higher average oil sales price was primarily the result of the Company obtaining
new oil sales contracts and relatively higher production from properties with a
higher sales price together with higher prices in the overall market for the
sale of oil. The increase in gas production was primarily the result of enhanced
production improvements on the Concord acquisition. The increase in average gas
prices was due to relatively higher production from the Concord acquisition,
which has a higher gas sales price, coupled with higher prices in the overall
market for the sale of gas.
Lease operating expenses decreased from $58,312 in the first quarter of 1995 to
$46,857 in the first quarter of 1995. The decrease of $11,455 (20%) is primarily
due to lower operating costs incurred on the McBride acquisition in 1996, as a
result of new techniques utilized to control paraffin build-up.
Depreciation and depletion expense decreased from $43,159 in the first quarter
of 1995 to $28,661 in the first quarter of 1996. This represents a decrease of
$14,498 (34%). The changes in production, noted above, reduced depreciation and
depletion expense by $16,440. This decrease was partially offset by a 7%
increase in the depletion rate. The rate increase was primarily due to a
downward revision of the oil reserves during December 1995.
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 $201,736 for
certain oil and gas properties due to market indications that the carrying
amounts were not fully recoverable.
General and administrative expenses increased from $7,865 in the first quarter
of 1996 to $8,512 in the first quarter of 1996. This increase of $647 (8%) is
primarily due to a $2,627 increase in direct expenses incurred by the Company in
1996, partially offset by less staff time being required to manage the Company's
operations.
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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.
TThe 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 VI - 1, 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