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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, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-18322
ENEX CONSOLIDATED PARTNERS, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0508488
(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:
(281) 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
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Transitional Small Business Disclosure Format (Check one):
Yes No x
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ENEX CONSOLIDATED PARTNERS, L.P.
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BALANCE SHEET, JUNE 30, 1998
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,473,450
Accounts receivable - oil & gas sales 773,660
Receivable from litigation settlement 280,050
Other current assets 79,791
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TOTAL CURRENT ASSETS 2,606,951
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 11,065,846
Less accumulated depreciation and depletion 1,745,881
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PROPERTY, NET 9,319,965
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TOTAL $11,926,916
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 229,023
Payable to general partner 373,489
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Total current liabilities 602,512
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LIMITED PARTNERS' CAPITAL SUBJECT
TO REDEMPTION 11,313,839
GENERAL PARTNER CAPITAL 10,565
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TOTAL $11,926,916
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See accompanying notes to financial statements.
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ENEX CONSOLIDATED PARTNERS, L.P.
STATEMENTS OF OPERATIONS
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ENEX CONSOLIDATED PREDECESSOR ENEX CONSOLIDATED PREDECESSOR
PARTNERS, L.P. PARTNERSHIPS PARTNERS, L.P. PARTNERSHIPS
------------------- -------------- ------------------- -------------------
(UNAUDITED) QUARTER QUARTER SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30 June 30 JUNE 30 June 30
1998 1997 1998 1997
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REVENUES:
Oil and gas sales $ 1,462,212 $ 2,326,210 $ 3,241,097 $ 5,200,270
Gas plant sales - 210,708 17,733 619,555
Gain (loss) from sale of property (167,302) 5,940 504,621 5,940
Other revenues - - 1,432 21,000
Interest income - - 3,632 1,265
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TOTAL REVENUES 1,294,910 2,542,858 3,768,515 5,848,030
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EXPENSES:
Depreciation, depletion and amortization 455,269 523,900 932,013 1,048,413
Lease operating expenses 729,023 910,704 1,417,661 1,743,841
Gas plant purchases 4,169 146,493 8,166 439,370
Production taxes 78,447 128,169 162,417 288,581
General and administrative:
Allocated from general partner 200,385 360,214 481,727 758,298
Direct expenses 25,596 35,784 125,173 58,349
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TOTAL EXPENSES 1,492,889 2,105,264 3,127,157 4,336,852
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INCOME (LOSS) (197,979) 437,594 641,358 1,511,178
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See accompanying notes to financial statements.
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ENEX CONSOLIDATED PARTNERS, L.P.
COMBINED HISTORICAL STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1997
AND FOR THE SIX MONTHS ENDED JUNE 30, 1998
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LIMITED
PARTNERS'
GENERAL CAPITAL
PARTNER'S SUBJECT TO
TOTAL CAPITAL REDEMPTION
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Predecessor Balance, January 1, 1997 $ 14,250,339 $ 1,728,241 $ 12,522,098
Cash Distributions (2,841,709) (512,192) (2,329,517)
Net Income 1,511,178 156,491 1,354,687
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Combined Historical Balance, June 30, 1997 12,919,808 1,372,540 11,547,268
Purchase Accounting Adjustments:
Adjustment to Record Property at
Fair Market Value (1,561,322) - (1,561,322)
Recognize Conversion of Payable to
General Partner to Limited Partner Capital 2,420,858 - 2,420,858
Recognize Conversion of General Partner
Capital to Limited Partner Capital - (1,372,540) 1,372,540
Expenses of Consolidation (549,158) - (549,158)
Cash Distributions (2,310,678) (46,240) (2,264,438)
Net Income 1,951,873 117,375 1,834,498
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Consolidated Balance, December 31, 1997 12,871,381 71,135 12,800,246
CASH DISTRIBUTIONS (2,188,335) (125,166) (2,063,169)
NET INCOME 641,358 64,596 576,762
CONSOLIDATED BALANCE, JUNE 30, 1998 $ 11,324,404 $ 10,565 $ 11,313,839
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See accompanying notes to financial statements.
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ENEX CONSOLIDATED PARTNERS, L.P.
STATEMENTS OF CASH FLOW
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ENEX CONSOLIDATED PREDECESSOR
PARTNERS, L.P. PARTNERSHIPS
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SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 641,358 $ 1,511,178
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ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation, depletion and amortization 932,013 1,048,413
Gain on sale of property (504,621) (5,940)
(INCREASE) DECREASE IN:
Accounts receivable - oil & gas sales 551,020 599,008
Other current assets (74,451) 172,568
INCREASE (DECREASE) IN:
Accounts payable (258,558) (401,102)
Payable to general partner 318,558 47,924
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TOTAL ADJUSTMENTS 963,961 1,460,871
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NET CASH PROVIDED BY OPERATING ACTIVITIES 1,605,319 2,972,049
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 1,036,000 5,940
Property additions - development costs (121,973) (106,788)
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NET CASH USED BY INVESTING ACTIVITIES 914,027 (100,848)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (2,188,335) (2,841,710)
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NET (DECREASE) IN CASH 331,011 29,491
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CASH AT BEGINNING OF YEAR 1,142,439 923,596
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CASH AT END OF PERIOD $ 1,473,450 $ 953,087
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See accompanying notes to financial statements.
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ENEX CONSOLIDATED PARTNERS, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. Effective June 30, 1997, Enex Consolidated Partners, L.P. (the
"Company") was formed from the consolidation of thirty-four (34)
partnerships consisting of Enex Program I Partners, L.P., four
partnerships in Enex Oil & Gas Income Program II, the eight
partnerships in Enex Oil & Gas Income Program III, six partnerships in
Enex Oil & Gas Income Program IV, the five partnerships in Enex Oil &
Gas Income Program V, Enex Oil & Gas Income Program VI - Series 1,
L.P., the three partnerships in Enex Income and Retirement Fund, three
partnerships in Enex 88-89 Income and Retirement Fund, and the three
partnerships in Enex 90-91 Income and Retirement Fund (collectively the
"Partnerships").
The consolidation of the Company was recorded using the purchase method
of accounting; as such, assets are recorded at their fair market value.
The statements of operations and cash flows, in the accompanying
financial statements, are presented on a combined historical basis. The
balance sheet has been adjusted to reflect the conversion of the
payable to the general partner and the general partner's capital
account into limited partner capital units. The general partner has a
4.11% revenue interest in addition to its proportional interest as a
limited partner of 56.2%.
2. 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.
3. Effective January 1, 1997, the Company sold its interests in the
Perkins well in the Burkholder acquisition for $5,940. A gain of $5,940
was recognized on this sale.
Effective January 1, 1998, the Company sold its interest in the Dover
Hennessey Gas Plant for $1,000,000. A gain of $671,923 was recognized
on the sale. Effective June 1, 1998 the Company sold its interest in
the Corkscrew acquisition for $36,000. A loss of $167,302 was
recognized on the sale.
4. In February 1998, Middle Bay Oil Company, Inc., an independent oil and
gas producer, announced a tender offer for all of the outstanding
shares of Enex Resources Corporation ("Enex"), the Company's general
partner. The tender offer was accepted by a majority of Enex
shareholders and was completed on March 27, 1998.
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5. On July 17, 1998, the Securities and Exchange Commission declared
effective a registration statement filed under the Securities Act of
1933 for the merger of Enex Resources Corporation into Middle Bay Oil
Company. A special meeting of the stockholders of Middle Bay Oil
Company will be held on August 20, 1998. Middle Bay intends to issue
common stock for the remaining shares of Enex that is not currently
owned.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
SECOND QUARTER 1998 COMPARED TO SECOND QUARTER 1997
Oil and gas sales for the second quarter decreased from $2,536,210 in 1997 to
$1,462,212 in 1998. This represents a decrease of $1,073,998 (42%). Oil sales
decreased by $574,347 (43%). A 10% decline in oil production reduced sales by
$128,155. A 37% decrease in the average oil sales price reduced sales by an
additional $446,192. Gas sales decreased by $244,774 (26%). A 25% decrease in
gas production decreased sales by $232,869. A 2% decrease in the average gas
sales price reduced gas sales by an additional $11,905. The changes in the
average oil and gas sales price correspond with lower prices in the overall
market for the sale of oil and gas. The decrease in oil and gas production was
primarily due to natural production declines.
There were no gas plant sales in the second quarter of 1998, compared to
$210,708 in the second quarter of 1997. This was primary due to the sale of the
Dover Hennessey Gas Plant which was effective January 1, 1998.
Lease operating expenses decreased from $910,704 in the second quarter of 1997
to $729,023 in the second quarter of 1998. The decrease of $181,681 (20%) is
primarily due to the sale of the Lake Decade and Mcbride acquisitions in 1997.
Depreciation and depletion expense decreased from $523,900 in the second quarter
of 1997 to $455,269 in the second quarter of 1998. This represents a decrease of
$68,631 or (13%). The changes in production, noted above, reduced depreciation
and depletion expense by $145,812. This was partially offset by a 20% increase
in the depletion rate. The rate increase was primarily due to the downward
revisions of the oil and gas reserves during December 1997.
Effective June 1, 1998 the Company sold its interest in the Corkscrew
acquisition for $36,000. A loss of $167,302 was recognized on the sale.
General and administrative expenses decreased from $360,214 in the second
quarter of 1997 to $200,385 in the second quarter of 1998. This decrease of
$159,829 (44%) is primarily due to a reduction in staff as a result of the
Consolidation of the Company in June 1997.
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FIRST SIX MONTHS IN 1998 COMPARED TO FIRST SIX MONTHS IN 1997
Oil and gas sales for the first six months decreased from $5,200,270 in 1997 to
$3,241,097 in 1998. This represents a decrease of $2,560,995 (38%). Oil sales
decreased by $1,344,931 (45%). A 14% decrease in oil production reduced sales by
$422,861. A 35% decrease in the average oil sales price decreased oil sales an
additional $922,070. Gas sales decreased by $614,242 (28%). A 20% decrease gas
production decreased sales by $442,226. A (10%) decrease in the average gas
sales price decreased gas sales by an additional $172,016. The changes in the
average oil and gas sales price correspond with changes in the overall market
for the sale of oil and gas. The price of oil and gas were lower in 1998 vs
1997. The decreases in oil and gas production were primarily the result of
natural production declines.
Gas plant sales decreased from $619,555 in the first six months of 1997 to
$17,733 the first six months of 1998. This represents a decrease of $601,822 or
97%. This decrease was due primarily to the sale of the Dover Hennessey Gas
Plant, which was effective January 1, 1998.
Lease operating expenses decreased from $1,743,841 in the first six months of
1997 to $1,417,661 in the first six months of 1998. The decrease of $326,180
(19%) is primarily due to the sale of the Lake Decade and Mcbride acquisitions
in 1997.
Depreciation and depletion expense decreased from $1,048,413 in the six months
of 1997 to $932,013 in the first six months of 1998. This represents a decrease
of $116,400 (11%). The changes in production, noted above, reduced depreciation
and depletion expense by $277,994. This was partially offset by a 3% increase in
the depletion rate. The rate increase was primarily due to downward revisions of
the oil and gas reserves during December 1997.
Effective January 1, 1997, the Company sold its interests in the Perkins well in
the Burkholder acquisition for $5,940. A gain of $5,940 was recognized on this
sale.
Effective January 1, 1998, the Company sold its interest in the Dover Hennessey
Gas Plant for $1,000,000. A gain of $671,923 was recognized on the sale.
Effective June 1, 1998 the Company sold its interest in the Corkscrew
acquisition for $36,000. A loss of $167,302 was recognized on the sale.
General and administrative expenses decreased from $816,647 in the first six
months of 1997 to $606,900 in the first six months of 1998. This decrease of
$209,747 (26%) is primarily due to a reduction in staff as a result of the
Consolidation of the Company in June 1997.
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CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations is a primary 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 1997 to 1998 are primarily due to the
changes in oil and gas sales described above, and the sale of oil and gas
properties. 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 provided by operating, financing and investing 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 after
the 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.
In February 1998, Middle Bay Oil Company, Inc., an independent oil and gas
producer, announced a tender offer for all of the outstanding shares of Enex
Resources Corporation ("Enex"), the Company's general partner. The tender offer
was accepted by a majority of Enex shareholders and was completed on March 27,
1998.
On July 17, 1998, the Securities and Exchange Commission declared effective a
registration statement filed under the Securities Act of 1933 for the merger of
Enex Resources Corporation into Middle Bay Oil Company. A special meeting of the
stockholders of Middle Bay Oil Company will be held on August 20, 1998. Middle
Bay intends to issue common stock for the remaining shares of Enex that is not
currently owned.
As of June 30, 1998 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) Exhibit 27 (for SEC use only).
(b) The Company filed no reports on Form 8-K during the
quarter ended June 30, 1998
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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 CONSOLIDATED PARTNERS, L.P.
--------------------------------
(Registrant)
By: ENEX RESOURCES CORPORATION
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General Partner
By: /s/ Frank C. Turner II
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Frank C. Turner II
Vice President, Chief
Financial Officer
August 11, 1998 By: /s/ Larry W. Morris
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Larry W. Morris
Controller