1
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 SEPTEMBER 30, 1998
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 0-18322
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
------ ------
Transitional Small Business Disclosure Format (Check one):
Yes No x
------ ------
2
ENEX CONSOLIDATED PARTNERS, L.P.
BALANCE SHEET, SEPTEMBER 30, 1998
- -------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,136,431
Accounts receivable - oil & gas sales 653,670
Receivable from litigation settlement 280,050
Other current assets 92,520
-----------
TOTAL CURRENT ASSETS 2,162,671
-----------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 10,640,632
Less accumulated depreciation and depletion 2,058,467
-----------
PROPERTY, NET 8,582,165
-----------
TOTAL $10,744,836
===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 334,702
Payable to general partner 238,717
-----------
TOTAL CURRENT LIABILITIES 573,419
-----------
LIMITED PARTNERS' CAPITAL SUBJECT
TO REDEMPTION 10,126,477
GENERAL PARTNER CAPITAL 44,940
-----------
TOTAL $10,744,836
===========
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
I-1
3
ENEX CONSOLIDATED PARTNERS, L.P.
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
ENEX CONSOLIDATED PREDECESSOR ENEX CONSOLIDATED PREDECESSOR
PARTNERS, L.P. PARTNERSHIPS PARTNERS, L.P. PARTNERSHIPS
----------------- ------------ ----------------- ------------
(UNAUDITED) QUARTER QUARTER NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
------------- ------------- ------------- ------------
REVENUES:
Oil and gas sales $1,312,730 $2,425,763 $4,553,827 $7,634,183
Gas plant sales - 195,287 17,733 806,692
Gain from sale of property 547,052 - 1,051,673 5,940
Other revenues - 1,100 1,432 22,100
Interest income 27,797 14,359 31,429 15,624
---------- ---------- ---------- ----------
TOTAL REVENUES 1,887,579 2,636,509 5,656,094 8,484,539
---------- ---------- ---------- ----------
EXPENSES:
Depreciation, depletion and amortization 431,645 279,145 1,363,658 1,327,558
Lease operating expenses 730,967 899,257 2,148,628 2,643,098
Gas plant purchases 50,666 172,406 58,832 611,776
Production taxes 67,036 135,644 229,453 424,225
General and administrative:
Allocated from general partner 177,310 207,743 659,037 966,041
Direct expenses 24,274 94,731 149,447 153,080
---------- ---------- ---------- ----------
TOTAL EXPENSES 1,481,898 1,788,926 4,609,055 6,125,778
---------- ---------- ---------- ----------
NET INCOME 405,681 847,583 1,047,039 2,358,761
---------- ---------- ---------- ----------
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
I-2
4
ENEX CONSOLIDATED PARTNERS, L.P.
COMBINED HISTORICAL STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1997
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
- -------------------------------------------------------------------------------
LIMITED
PARTNERS'
GENERAL CAPITAL
PARTNER'S SUBJECT TO
TOTAL CAPITAL REDEMPTION
------------ ------------ ----------
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
------------ ----------- ------------
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
------------ ----------- ------------
Consolidated Balance, December 31, 1997 12,871,381 71,135 12,800,246
CASH DISTRIBUTIONS (3,747,003) (125,166) (3,621,837)
NET INCOME 1,047,039 98,971 948,068
CONSOLIDATED BALANCE, SEPTEMBER 30, 1998 $ 10,171,417 $ 44,940 $ 10,126,477
============ =========== ============
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
I-3
5
ENEX CONSOLIDATED PARTNERS, L.P.
STATEMENTS OF CASH FLOW
- --------------------------------------------------------------------------------
ENEX CONSOLIDATED PREDECESSOR
PARTNERS, L.P. PARTNERSHIPS
----------------- ------------
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,047,039 $ 2,358,761
----------- -----------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation, depletion and amortization 1,363,658 1,327,558
Gain on sale of property (1,051,673) (5,940)
(INCREASE) DECREASE IN:
Accounts receivable - oil & gas sales 671,010 565,705
Other current assets (87,180) 172,452
INCREASE (DECREASE) IN:
Accounts payable (152,879) (528,739)
Payable to general partner 183,786 (501,234)
----------- -----------
TOTAL ADJUSTMENTS 926,722 1,029,802
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,973,761 3,388,563
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 1,973,063 5,940
Property additions - development costs (205,829) (239,581)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES 1,767,234 (233,641)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (3,747,003) (3,564,417)
----------- -----------
NET (DECREASE) IN CASH (6,008) (409,495)
----------- -----------
CASH AT BEGINNING OF YEAR 1,142,439 923,596
----------- -----------
CASH AT END OF PERIOD $ 1,136,431 $ 514,101
=========== ===========
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
I-4
6
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. Effective July 1, 1998 the Company sold its
interest in the Brown 1 and 2 wells for $8,000. A gain of $4,171 was
recognized on the sale. Effective September 1, 1998 the Company sold
its interest in numerous properties in a August 1998 auction for
$929,063. A gain of $542,881 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.
I-5
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
THIRD QUARTER 1998 COMPARED TO THIRD QUARTER 1997
Oil and gas sales for the third quarter decreased from $7,634,183 in 1997 to
$4,553,827 in 1998. This represents a decrease of $3,080,356 (40%). Oil sales
decreased by $661,062 (47%). A 24% decline in oil production reduced sales by
$330,591. A 31% decrease in the average oil sales price reduced sales by an
additional $330,471. Gas sales decreased by $460,121 (44%). A 32% decrease in
gas production decreased sales by $330,839. A 18% decrease in the average gas
sales price reduced gas sales by an additional $129,282. 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 third quarter of 1998, compared to $195,287
in the third 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 $899,257 in the third quarter of 1997 to
$730,967 in the third quarter of 1998. The decrease of $168,290 (19%) is
primarily due to the sale of the Lake Decade and Mcbride acquisitions in 1997.
Depreciation and depletion expense increased from $279,145 in the third quarter
of 1997 to $431,645 in the third quarter of 1998. This represents an increase of
$152,500 or (55%). The changes in production, noted above, reduced depreciation
and depletion expense by $90,604. This was offset by a 129% increase in the
depletion rate which increased depletion $243,104. The rate increase was
primarily due to the downward revisions of the oil and gas reserves during
December 1997.
Effective July 1, 1998 the Company sold its interest in the Brown 1 and 2 wells
for $8,000. A gain of 4,171 was recognized on the sale. Effective September 1,
1998 the Company sold its interest in numerous properties in a August 1998
auction for $929,063. A gain of $542,881 was recognized on the sale.
General and administrative expenses decreased from $302,474 in the third quarter
of 1997 to $201,584 in the third quarter of 1998. This decrease of $100,890
(33%) is primarily due to a reduction in staff as a result of the Consolidation
of the Company in June 1997.
I-6
8
FIRST NINE MONTHS IN 1998 COMPARED TO FIRST NINE MONTHS IN 1997
Oil and gas sales for the first nine months decreased from $7,634,183 in 1997 to
$4,553,827 in 1998. This represents a decrease of $3,080,356 (40%). Oil sales
decreased by $2,005,993 (45%). A 17% decrease in oil production reduced sales by
$762,544. A 12% decrease in the average oil sales price decreased oil sales an
additional $1,243,449. Gas sales decreased by $1,074,363 (33%). A 24% decrease
gas production decreased sales by $779,804. A (12%) decrease in the average gas
sales price decreased gas sales by an additional $294,559. 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 $806,692 in the first nine months of 1997 to
$17,733 the first nine months of 1998. This represents a decrease of $806,692 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 $2,643,098 in the first nine months of
1997 to $2,148,628 in the first nine months of 1998. The decrease of $494,470
(19%) is primarily due to the sale of the Lake Decade and Mcbride acquisitions
in 1997.
Depreciation and depletion expense decreased from $1,327,558 in the nine months
of 1997 to $1,363,658 in the first six months of 1998. This represents a
increase of $36,100 (3%). The changes in production, noted above, reduced
depreciation and depletion expense by $393,306. This was offset by a 5% increase
in the depletion rate which increased depletion $429,406. 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.
Effective July 1, 1998 the Company sold its interest in the Brown 1 and 2 wells
for $8,000. A gain of 4,171 was recognized on the sale. Effective September 1,
1998 the Company sold its interest in numerous properties in a August 1998
auction for $929,063. A gain of $542,881 was recognized on the sale.
General and administrative expenses decreased from $1,119,121 in the first nine
months of 1997 to $808,484 in the first nine months of 1998. This decrease of
$310,637 (28%) is primarily due to a reduction in staff as a result of the
Consolidation of the Company in June 1997.
I-7
9
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 into Middle Bay Oil Company. A special meeting of the stockholders of
Enex was held on August 20, 1998. At the meeting, Middle Bay
and Enex declined to complete the proposed merger due to changed market
conditions.
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.
I-8
10
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 is one exhibit to this report.
27 Financial Data Schedule (for SEC use only).
(b) The Company filed no reports on Form 8-K during the
quarter ended September 30, 1998
II-1
11
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
----------------------------
General Partner
By: /s/ Frank C. Turner II
\ ----------------------------
Frank C. Turner II
Vice President, Chief
Financial Officer
November 12, 1998 By: /s/ Larry W. Morris
---------------------------
Larry W. Morris
Controller