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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
AMENDMENT V
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from...............to...............
Commission file number 0-9378
ENEX RESOURCES CORPORATION
(Name of small business issuer in its charter)
Delaware 93-0747806
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Rockmead Drive
Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)(Zip Code)
Issuer's telephone number: (713) 358-8401
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the
Exchange Act:
Common Stock, $.05 par value
(Title of class)
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
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[x]
State issuer's revenues for its most recent fiscal year. $7,950,373
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange Act)
$6,639,844 at March 1, 1996.
Applicable Only to Corporate Registrants
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At March 1, 1996 -
1,372,297.
Documents Incorporated by Reference:
NONE
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<PAGE>
TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1995
ENEX RESOURCES CORPORATION
Item No. Part I Page
- -------- -------- ------
1 Description of Business I-1
2 Description of Property I-4
3 Legal Proceedings I-8
4 Submission of Matters to a Vote of Security Holders I-8
Part II
---------
5 Market for Common Equity and
Related Stockholder Matters II-1
6 Management's Discussion and Analysis
or Plan of Operation II-2
7 Financial Statements and Supplementary Data II-7
8 Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure II-26
Part III
-----------
9 Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act III-1
10 Executive Compensation III-4
11 Security Ownership of Certain
Beneficial Owners and Management III-6
12 Certain Relationships and Related Transactions III-8
13 Exhibits and Reports on Form 8-K III-8
Signatures S-1
<PAGE>
PART I
Item 1. Description of Business
General
Enex Resources Corporation ("Enex" or the "Company") was incorporated
on August 17, 1979 in Colorado. On June 30, 1992, the Company reincorporated in
Delaware. The Company is engaged in the business of acquiring interests in
producing oil and gas properties and managing oil and gas income limited
partnerships. The Company's operations are concentrated in a single industry
segment.
The Company's principal executive offices are maintained at 800 Rockmead
Drive, Three Kingwood Place, Kingwood, Texas 77339. The telephone number at
these offices is (713) 358-8401. The Company has no regional offices.
As of March 1, 1996, the Company and one of its subsidiaries, Enex
Securities Corporation, employed 24 persons. All employees are engaged on a
full-time basis.
Since 1982, the Company has financed most of its oil and gas
activities through the public sale of interests in limited partnerships formed
to purchase and hold working interests and other operating and non operating
interests in producing oil and gas properties (the "Partnerships"). Until 1986,
most of the Company's ownership of proved reserves was derived through the
purchase of producing properties by the Partnerships. The Company acts as
general partner in, and contributes capital to, each such Partnership. As
general partner, the Company has a 10% interest in the net revenues and gains
generated by properties owned by these Partnerships, which, in most instances,
will increase to 15% should the limited partners receive distributions in total
equal to their aggregate subscriptions. As general partner, the Company is
obligated to periodically offer to repurchase the interests of those limited
partners electing to present their interests to the Company, except for
interests in the Partnerships in Programs I, V and VI.
Prior to 1993, 55 Partnerships commenced operations with aggregate
investor subscriptions of $222.5 million received from 68,678 investors,
including reinvestors. Producing property acquisitions for those Partnerships
totaled approximately $199.6 million.
During 1994, one Partnership commenced operations with aggregate
subscriptions of $1.0 million received from 461 investors, including
reinvestors. Producing property acquisitions for the Partnership totaled
approximately $1.1 million, including $.1 million from borrowed funds. During
1995, four partnerships, with aggregate investor subscriptions totaling $33.0
million, were liquidated. Aggregate investor subscriptions through December 31,
1995 in all Partnerships totaled $223.5 million. The properties include
interests in more than 11,000 wells in 14 states. In addition to these
Partnership activities, the Company owns and manages oil and gas producing
properties for its own account.
Prior to May 1994, the Company marketed interests in the oil and gas
partnerships it sponsored through its subsidiary, Enex Securities Corporation, a
registered broker-dealer and member of the National Association of Securities
Dealers, Inc., and through other registered broker-dealers. As the distributor
of such interests, Enex Securities Corporation received commissions,
substantially all of which were paid to dealers and others, and received other
selling expense allowances.
I-1
<PAGE>
Approximately 40% of the Company's estimated future net revenues from
proved reserves at December 31, 1995 is attributable to its interests in the
Partnerships and approximately 60% is attributable to the properties owned
directly by the Company.
In acquiring properties for its own account, the Company is required
to avoid conflicts of interest with the Partnerships for which it acts as
general partner. Such requirements may restrict the Company's operations for its
own account. The Company is also contingently liable for partnership
obligations.
Competition
The business of exploring for, developing and producing oil and gas
is intensely competitive. The Company competes with companies which have greater
financial resources, larger staffs and labor forces, more equipment for
exploration and longer operating experience than the Company. The oil and gas
industry is dominated by a number of companies with greater assets and resources
than the Company.
Marketing and Prices
The marketing and prices of oil and gas found and produced by the
Company are affected by a number of factors which are beyond the Company's
control, the exact nature of which cannot be accurately predicted. These factors
include the quantity and price of crude oil imports, fluctuating supply and
demand, the availability of adequate pipeline and other transportation
facilities, the marketing of competitive fuels, state and federal regulation of
oil and gas production, and distribution and other matters affecting the
availability of a ready market. All of these factors are extremely volatile. In
addition, in recent years there have been surpluses in crude oil and natural gas
supplies which have caused a decline in oil and gas prices.
Environmental and Conservation Regulation
State regulatory authorities in the states in which the Company owns
producing properties are empowered to make and enforce regulations to prevent
waste of oil and gas and to protect correlative rights and opportunities to
produce oil and gas between owners of a common reservoir. Each of such
regulatory authorities also regulates the amount of oil and gas produced by
assigning allowable rates of production, which may be increased or decreased in
accordance with supply and demand. Requirements regarding the prevention and
clean-up of pollution and similar environmental matters are also generally
applicable.
The existence of such regulations has had no material adverse effect
on the Company's operations to date, and the cost of compliance has not yet been
material. There are no material administrative or judicial proceedings arising
under such laws or regulations pending against the Company. The Company is
unable to assess or predict the impact that compliance with environmental and
pollution control laws and regulations may have on its future operation, capital
expenditures, earnings or competitive position.
I-2
<PAGE>
Recent Tax Laws
In General. The operations of the Company are affected by federal
income tax laws, particularly those provisions of the Internal Revenue Code of
1986, as amended, which provide certain tax benefits to owners of economic
interests in oil and gas properties. In general, the major sources of federal
income tax deduction available to the Company are the deductions for the greater
of cost depletion or percentage depletion, if available, depreciation of
tangible lease and well equipment and the deduction for intangible drilling and
development costs.
The Company is subject to regular income tax at graduated rates up to
a maximum 34% rate. Additionally, the Company may also be subject to the
corporate alternative minimum tax which is imposed at a rate of 20%. Tax
preference items which may cause the Company to incur the alternative minimum
tax include the following:
* the excess of accelerated depreciation over depreciation using the
alternative minimum tax lives and method
* the limitation on the deduction of net operating losses to 90% of the
Company's alternative minimum taxable income (with the disallowed
portion of the net operating loss carried over to other years)
* 75% of the excess of the Company's adjusted current earnings over its
alternative minimum taxable income (determined without regard to such
adjustment and prior to reduction by operating losses.)
Item 2. Description of Property
Oil and Gas Properties
Until 1986, the Company had acquired most of its interests in
producing oil and gas properties through purchases made by the Partnerships.
Prior to 1993, the Partnerships acquired approximately $199.6 million of
producing oil and gas properties. No properties were acquired for the
Partnerships in 1993. A total of $1.1 million was spent on Partnership property
acquisitions in 1994. The Company, as general partner, in most instances, has a
10% interest in the net revenues and gains generated by properties owned by
these Partnerships, which, in most instances, increases to 15% should the
limited partners receive distributions in total equal to their aggregate
subscriptions.
In addition to Partnership activities, the Company owns interests in
378 oil and gas productive properties for its own account, and is the operator
of 161 properties. The total properties for its own account and the Partnerships
include interests in more than 12,000 producing wells in 14 states.
I-3
<PAGE>
The producing oil and gas properties in which the Company owns
interests are all located within the United States. The Company's interests in
these properties (including properties in which the Company's interest is
derived through the Partnerships for which it acts as general partner*) at
December 31, 1995 are summarized below:
* As general partner, the Company generally has a 10% interest in the net
revenues and gains generated by the Partnerships' properties, which, in most
instances, increases to 15% should the limited partners receive distributions in
total equal to their aggregate subscriptions. In most instances, the Company has
purchased additional interests in each Partnership which entitle the Company to
an additional 3% to 53% of each Partnership's net income and capital. Unless
otherwise indicated, quantitative information contained in this report regarding
the Company's oil and gas properties, the production therefrom and related data
includes the Company's indirect interest in the properties owned by the
Partnerships.
<TABLE>
<CAPTION>
Developed Acres Undeveloped Acres
Gross Net Gross Net
<S> <C> <C> <C> <C>
Working Interests 380,985 17,884 6,529 3,610
Royalty Interests 598,925 2,751 21,222 5,005
</TABLE>
"Developed acres" are acres spaced or assigned to productive wells.
"Undeveloped acres" are those leased acres on which wells have not been
drilled or completed to a point that permits the production of commercial
quantities of oil and gas, regardless of whether such acreage contains proved
reserves.
A "gross acre" is an acre in which an interest is owned. The number of
gross acres is the total number of acres in which such interest is owned.
A "net working interest acre" is deemed to exist when the sum of
fractional working interests owned in gross acres equals one. The number of net
working interest acres is the sum of fractional working interests owned in gross
acres expressed as a whole number.
A "net royalty acre" is deemed to exist when the sum of fractional royalty
interests owned in gross acres equals one. The number of net royalty acres is
the sum of fractional royalty interests owned in gross acres expressed as a
whole number.
I-4
<PAGE>
Property Acquisitions
The following acquisitions were made for the Company during 1994:
McBride acquisition. Working interests in forty-one wells located in
Caldwell and Bastrop Counties, Texas, were purchased in two
transactions. The first transaction, for $663,493, was effective
January 1, 1994. The second, for $134,900, was effective May 1, 1994.
Larto Lake acquisition. Working interests in seven oil wells located
primarily in Catahoula Parish, Louisiana, were purchased from a
managed limited partnership effective October 1, 1994 for $199,928.
Florida acquisition. Working interests in three wells located in
Hendry County, Florida, were purchased from a managed limited
partnership for $99,196 effective November 1, 1994.
The following acquisitions were made for the Company during 1995:
East Seven Sisters acquisition. Royalty interests in the Gorman Gas
Unit in Duval County, Texas were purchased from four managed limited
partnerships effective December 1, 1995 for $660,290.
Blair acquisition. Working interests in nine wells located in WWW
Field, Ward County, Texas were purchased from two managed limited
partnerships effective December 1, 1995 for $18,450.
Comite acquisition. Overriding royalty interests in four gas wells
located in East Baton Rouge Parish, Louisiana, were purchased from
four managed limited partnerships for $89,880 effective December 1,
1995.
Net Oil and Gas Production
The following table shows for the years ended December 31, 1995, 1994
and 1993, the approximate production attributable to the Company's oil and gas
interests including interests derived through the Company's interests in the
Partnerships. The figures in the table represent "net production"; i.e.,
production owned by the Company or the Partnerships and produced to the
Company's interest after deducting royalty and other similar interests. All
production occurred in the United States.
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Crude oil and condensate (Bbls) 200,778 194,467 157,440
Natural gas - leasehold or royalty (Mcf) 1,671,517 1,435,593 1,285,512
Natural gas liquids (Bbls) (1) 35,388 22,916 18,648
Natural gas - gas plant sales (Mcf) (1) 230,899 143,820 105,564
</TABLE>
I-5
<PAGE>
The following table sets forth the Company's average sales price per
barrel of oil, per Mcf of gas, per barrel of natural gas liquids ("NGL"), per
Mcf of gas plant gas sales and average production cost per unit produced for the
years ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -----
Average sales price per Bbl of crude oil and
<S> <C> <C> <C>
condensate $ 15.82 $ 14.74 $ 15.38
Average sales price per Mcf of natural gas 1.64 1.94 2.20
Average production cost per equivalent barrel of
production 5.49 5.35 4.99
Average sales price per Bbl of NGL (1) 9.07 8.06 9.53
Average sales price per Mcf of gas plant gas (1) 1.51 1.71 1.67
Average production cost per equivalent Bbl of
NGL production (1)(2) 6.89 9.84 (3) 7.17
</TABLE>
(1) Natural gas liquids production and gas plant gas sales were obtained
through gas processing plant ownership rather than through leasehold
ownership.
(2) Includes cost of gas purchased at plants for processing.
(3) Includes the recognition of processing charges related to a lawsuit
brought against the Company's interest in a gas plant. Without such
charges, the average production cost would have been $7.11 per
equivalent Bbl of NGL production in 1994.
The following table shows, as of December 31, 1995, the approximate
number of gross and net producing oil and gas wells in which the Company own
interests, including wells in which the Company's interest is derived through
its interests in the Partnerships:
<TABLE>
<CAPTION>
Productive Oil Wells Productive Gas Wells
Net Working Net Net Working Net
Gross Interest Royalty Gross Interest Royalty
Wells Wells Wells Wells Wells Wells
<S> <C> <C> <C> <C> <C> <C>
11,432 64.30 3.40 1,198 52.52 19.72
</TABLE>
"Productive wells" are producing wells and wells capable of production,
including shut-in wells.
A "gross well" is a well in which an interest is held. The number of gross
wells is the total number of wells in which an interest is owned.
A "net working interest (`W.I.') well" is deemed to exist when the sum of
fractional interests owned in gross W.I. wells equals one. The number of net
W.I. wells is the sum of the fractional interests owned in gross W.I. wells,
expressed as whole numbers and fractions thereof.
I-6
<PAGE>
A "net royalty well" is deemed to exist when the sum of fractional
interests owned in gross royalty wells equals one. The number of net royalty
wells is the sum of the fractional interests owned in gross royalty wells,
expressed as whole numbers and fractions thereof.
Oil and Gas Reserves
Proved oil and gas reserves reported herein for the Company are based
primarily on engineering studies performed by the Company's engineering staff.
Proved oil and gas reserves reported herein for the Partnerships and for the
Company's share of such Partnership reserves are based primarily on engineering
studies performed by the petroleum engineering consulting firm of H. J. Gruy and
Associates, Inc. The reserves included in this report are estimates only and
should not be construed as exact quantities. Future conditions may affect
recovery of estimated reserves and revenues, and all reserves may be subject to
revision as more performance data becomes available. The proved reserves used in
this report conform to the applicable definitions promulgated by the Securities
and Exchange Commission. No major discovery or other favorable or adverse event
that is believed to have caused a significant change in the estimated proved
reserves has occurred since December 31, 1995.
Drilling Activities
In 1995, 1994 and 1993, the Company did not participate in any
significant developmental drilling for its own account or as an operator of
Partnership properties.
Current Activities
The Company is continuing to acquire interests in producing oil and
gas properties and to operate properties both for its own account and for its
managed limited partnerships.
Offices
The Company's corporate headquarters are at 800 Rockmead Drive, Three
Kingwood Place, Kingwood, Texas, where it leases 13,354 square feet of office
space for itself and on behalf of Enex Securities Corporation.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the Company
or any of its subsidiaries are a party or to which any of their properties are
subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
I-7
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The principal market where the Company's common stock is traded is the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ").
Price Range of Common Stock
The following table shows the range of closing prices for the common stock in
the over-the-counter market for each quarter during the Company's past two
fiscal years, as reported by the NASDAQ National Market System. The quotations
represent prices in the over-the-counter market between dealers in securities
and do not include retail markup, markdown or commissions and do not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
1995 1994
Period High Low High Low
----------------- -------------------
<S> <C> <C> <C> <C>
First Quarter . . . . . . . . . . . . . . . . . . 10 1/4 8 1/4 8 1/2 7 1/2
Second Quarter . . . . . . . . . . . . . . . . 10 1/2 8 1/2 11 1/4 7 1/2
Third Quarter . . . . . . . . . . . . . . . . . . 9 1/2 7 3/4 13 10 1/2
Fourth Quarter . . . . . . . . . . . . . . . . . 9 7 3/4 12 9/16 8 1/4
</TABLE>
Number of Equity Security Holders
Number of Record Holders
(as of March 1, 1996)
Title of Class -----------------------------
Common Stock ($.05 par value) 1,107*
(*) Includes "nominee" or "street" name holders of record.
Dividends
The Company continued to pay a $.10 per common share semi-annual dividend in
July and December of 1995. The Company paid its first semi-annual dividend in
June 1994. The Company also increased the dividends paid in 1994 to $.20 per
common share. In 1993 the Company paid a cash dividend of $.19 per common share
to shareholders. The payment of future cash dividends will depend on the
Company's earnings, financial condition, capital requirements and other factors,
although the Company intends to continue with regular dividends.
II-1
<PAGE>
<TABLE>
<CAPTION>
Item 6. Managements Discussion and Analysis or Plan of Operation
Selected Financial Data
(Dollar amounts in thousands, except per share data)
Selected Statement of Operations Data 1995 1994 1993 1992 1991
-------- ------------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Total revenues $ 7,950 $ 6,871 $ 6,247 $ 7,880 $ 6,543
Earnings before income taxes $ 870 $ 630 $ 968 $ 1,268 $ 671
Net income $ 1,269 $ 1,051 $ 932 $ 1,141 $ 833
Net income per primary share $ 0.90 $ 0.75 $ 0.69 $ 0.82 $ 0.58
Cash dividend declared per
common share $ 0.20 $ 0.20 $ 0.19 $ 0.15 $ 0.12
Selected Balance Sheet Data
Total assets $ 18,827 $ 19,236 $ 15,177 $ 17,698 $ 18,257
Long-term debt, excluding current
maturities $ - $ 974 $ 259 $ 401 $ 745
Stockholders' equity $ 15,462 $ 14,214 $ 13,259 $ 12,343 $ 12,448
Stockholders' equity per share $ 11.65 $ 11.02 $ 10.60 $ 10.04 $ 8.62
Statistical:
Cumulative number of limited
partnerships formed 57 57 56 56 55
Cumulative amount of limited
partnership capital raised $ 223,500 $223,500 $ 222,489 $ 222,489 $ 221,258
Proved reserves at December 31:
Barrels of oil (000's) 907 1,089 633 765 550
Bcf of gas 11.57 12.45 10.56 7.79 8.25
Standardized measure of discounted
future net cash flows of proved oil
and gas reserves at December 31 $ 15,179 $ 13,448 $ 10,718 $ 9,280 $ 9,393
</TABLE>
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II-2
<PAGE>
In 1995, Enex increased net income by reducing general and administrative
expenses by over 27%. This allowed Enex to dramatically reduce its long-term and
short-term debt, despite historically low prices for natural gas. At December
31, 1995, Enex had a debt-to-equity ratio of just 5% and a current ratio of 3.01
with no long-term debt.
Liquidity and Capital Resources
Operating activities provided cash flow of $2,541,845 in 1995 as compared to
$2,341,038 in 1994 and $2,285,514 in 1993. The higher cash flow in 1995 was due
to a $1,000,933 decrease in accounts receivable in 1995 as compared to a
$377,758 increase in 1994 and an $86,248 decrease in accounts receivable in
1993.
Enex's primary focus, in 1995, was the efficient management of its properties
and partnerships to allow debt to be reduced. The Company was able to repay a
net of $1,074,000 of its long-term debt in 1995. In 1994 and 1993, the Company
borrowed a net $974,127 and $237,380, respectively, of long-term debt in order
to finance the purchase of oil and gas properties and additional interests in
its managed limited partnerships.
In 1995, proceeds from the sale of property added $991,623 to the cash flow from
operating activities. Proceeds added from the sale of properties were $45,392
and $26,627 in 1994 and 1993, respectively. Receipts collected on notes
receivable from managed limited partnerships added $49,816 and $310,312 in 1995
and 1994, respectively, while an increase in notes receivable from managed
limited partnerships used $253,480 in 1993.
A significant portion of Enex's cash flow was reinvested in oil and gas
properties. A total of $1,927,925 $2,990,574 and $2,413,418 was used for the
acquisition and development of oil and gas properties during 1995, 1994 and
1993, respectively. In 1995, Enex acquired royalty interests in the Gorman gas
unit in Duval County, Texas, overriding royalty interests in four gas wells
located in East Baton Rouge Parish, Louisiana and working interests in nine
wells located in WWW Field, Ward County, Texas from managed limited partnerships
for $660,290, $89,880 and $18,450, respectively. In 1994, Enex acquired over
320,000 equivalent barrels of oil reserves through the purchase of interests in
managed limited partnerships for $1,271,377. The Company also obtained working
interests in 41 wells in McBride Field, in Caldwell and Bastrop Counties, Texas
for $798,393. These wells, which are operated by the Company, have development
potential which will allow the Company to increase future production. The
Company also purchased working interests in the Larto Lake and Florida
acquisitions in 1994 for $199,928 and $99,196, respectively. In 1993, the
Company acquired working interests in nine gas wells located in San Patricio
County, Texas and 17 gas wells and two oil wells located primarily in Freestone
County, Texas. The Company used operating cash flow and net proceeds of $349,385
from the sale of mortgage-backed securities to finance all but $237,380 of these
purchases, which was borrowed from a bank.
The Company continued to pay a semi-annual dividend to its shareholders in 1995.
This $.20 per share dividend utilized $268,200 in 1995. In 1994, the Company
utilized $259,681 to initiate the payment of a semi-annual dividend, increasing
the dividend payment to $.20 per share. A $.19 per share dividend used $239,491
in 1993.
In addition to the property acquisitions made in 1994 and 1993, the Company also
continued its stock repurchase program. The Company utilized $171,845 to
purchase 19,161 shares of its common stock in 1994 and $159,881 to purchase
20,071 shares in 1993.
II-3
<PAGE>
Prepaid expenses and other current assets increased to $697,664 at December 31,
1995 from $421,406 at December 31, 1994. This represents an increase of $276,258
$. This increase is primarily the result of prepaid expenses related to the
liquidation of six managed limited partnerships and the consolidation of 34
managed limited partnerships, which were both in progress at December 31, 1995.
Such prepaid expenses include legal and accounting fees and the allocation of
the staff time of the General Partner's personnel incurred in the preparation of
SEC filings and other data utilized in the liquidation of six partnerships and
for the consolidation of 34 partnerships.
As a result of the higher net income and reduction of debt, working capital
increased to $2,296,842 at December 31, 1995, from $1,709,722 at December 31,
1994. At December 31, 1995, the Company's current ratio was 2.35 and it had no
long-term debt.
Results of Operations
Net income in 1995 increased to $1,269,400, from $1,051,476 in 1994 and $931,874
in 1993. This represents earnings per share of $.90 in 1995 as compared to $.75
in 1994 and $.69 in 1993. The increase in net income in 1995 as compared to 1994
was primarily the result of lower general and administrative expenses and a
larger gain from the sale of properties. The increase from 1993 to 1994 was
primarily attributable to lower income tax expense and higher revenues produced
in 1994.
Oil, gas and gas plant sales were $6,594,438 $ in 1995, $6,082,700 in 1994 and
$5,604,624 in 1993. Sales increased by $511,738 or 8% in 1995 from 1994. Oil
sales increased by $309,866 or 11% . A 3% increase in oil production increased
sales by $93,018 A 7% increase in the average oil sales price increased oil
sales by an additional $216,848. Gas sales decreased by $47,315 or 2%. A 16%
decrease in the average gas sales price reduced sales by $506,785. This decrease
was partially offset by a 15% increase in gas production. Gas plant sales
increased by $249,187 or 58%. . A 58% increase in gas plant production increased
sales by $242,067 . A 1% increase in the average gas plant products sales price
increased sales by an additional $7,120. The increases in production were
primarily the result of the recognition of the minority interest of Enex Program
I Partners, L.P. ("Program I") for the entire year in 1995, partially offset by
natural production declines. The changes in average sales prices correspond with
changes in the overall market for the sale of oil, gas and gas plant products.
Oil , gas and gas plant sales increased by $478,076 or 9% in 1994 from 1993. Oil
sales increased $444,233 or 18% in 1994 from 1993. A 24% increase in production
increased sales by$569,613 . This increase was partially offset by a 4% decrease
in average oil prices. Gas sales increased by $43,036 or 2% in 1994 from 1993. A
12% increase in gas production increased sales by $326,412. This increase was
partially offset by a 12% decrease in the average gas sales price. . Gas plant
sales increased by 7% or $62,302 . A 29% increase in gas plant production
increased sales by $105,269 . This increase was partially offset by a 9%
decrease in average gas plant prices. The increases in production were primarily
a result of the acquisition of additional interests in managed limited
partnerships and oil and gas properties purchased in 1994, as noted above.
Other revenues were $687,401 in 1995 as compared with $757,832 in 1994 and
$560,854 in 1993. Such revenues included rig rental revenues of $106,144,
$24,885 and $189,947 in 1995, 1994 and 1993,
II-4
<PAGE>
respectively, and gain recognized from the early receipt of notes receivable of
$393,980, $201,000 and $175,660 in 1995, 1994 and 1993, respectively. Also
included in the 1995 amount is mineral lease rental income of $105,686 to lease
2,113.73 acres in San Augustine County, Texas. Commission fee income of $45,089
was recorded in 1994. The decrease in other revenues from 1994 to 1995 and the
increase in other revenues from 1993 to 1994 was primarily due to the reversal
of a litigation contingency accrual, which was initially recorded in 1993, and
the recognition of a related receivable, plus accrued interest, from an
appellate court verdict which was rendered in December 1994 in favor of one of
the Company's managed limited partnerships. The Company's share of the
contingency reversal and receivable increased other income by $421,065 in 1994.
See Note 8 of the Notes to Consolidated Financial Statements for further
information. The receipt of unrecognized notes receivable was accelerated in
1995 as a result of the liquidation of four managed limited partnerships. As a
result, there is no longer an unrecognized notes receivable.
General and administrative expenses decreased to $1,689,742 in 1995 from
$1,751,773 in 1994. In 1993 such expenses were $1,590,128. This represents a
decrease of $62,031 or 4 % from 1994 to 1995. The decrease was primarily a
result of lower employee compensation and legal expenses. The increase from 1993
to 1994 was primarily the result of the additional interests acquired in managed
limited partnerships in 1994. These purchases added approximately $175,000 to
general and administrative expenses. The 1993 general and administrative
expenses included the recognition of a litigation contingency accrued in the
third quarter of 1993. The Company's share of the contingency was $243,274, and
was accrued to reflect a judgement against one of the Company's managed limited
partnerships. The Company appealed the verdict and it was reversed in December
1994. The resultant income from the contingency accrual reversal was included in
other income, as discussed above. See Note 8 of the Notes to Consolidated
Financial Statements for further information.
Lease operating expenses were $2,322,509 in 1995 as compared to $2,009,175 in
1994 and $1,662,666 in 1993. Lease operating expenses increased by $313,334 or
16% from 1994 to 1995. This increase was primarily the result of the increases
in production, noted above. Lease operating expenses increased by $346,509 or 21
% from 1993 to 1994. This increase was primarily the result of operating costs
incurred on properties and partnership interests acquired in 1994. The
properties acquired during 1994 (McBride, Larto Lake and Florida acquisitions)
added $146,762 to lease operating expenses, while the additional partnership
interests acquired added approximately $250,000.
Depletion, depreciation and amortization expense ("DD&A") was $1,909,857 in
1995, $1,517,278 in 1994 and $1,375,191 in 1993. DD&A increased by $392,579 or
26% from 1994 to 1995. A 9% increase in the depletion rate increased DD&A by
$163,336 . The changes in production noted above, increased DD&A by an
additional $229,243. The increase in the depletion rate was primarily the result
of the acquisition of properties with a relatively higher depletion rate,
partially offset by an upward revision of the gas reserves during 1995. DD&A
increased by $142,087 or 10% from 1993 to 1994. The increases in production,
noted above, increased DD&A expense by $245,029 in 1994. This increase was
partially offset by a 6% decrease in the depletion rate. The decrease in the
depletion rate was primarily due to an upward revision of the oil reserves
during 1994 partially offset by a downward revision of the gas reserves, as a
result of lower gas market prices.
The company incurred $117,062 of net interest expense in 1995 and $116,858 in
1994. In 1993, the company recognized $7,889 of net interest income. Interest
expense increased in 1995 and 1994 from 1993 due to the additional debt utilized
to finance the purchase of property and partnership interests in 1994. The
Company reduced its long-term debt by $1,074,000 or 56% in 1995.
II-5
<PAGE>
The Company recognized an income tax credit of $399,658 and $421,125 in 1995 and
1994, respectively and income tax expense of $36,227 in 1993. This represents an
effective rate of 4% in 1993. The 1995 income tax credit and $160,389 of the
income tax credit recognized in 1994 was the recognition of a portion of the
Company's deferred tax asset that is expected to be realized in future years.
The credit recognized in 1994 was also a result of the Company filing amended
returns for $127,034 to reflect additional expenses allowed to the Company in
prior years and from the carryback of a tax net operating loss of $133,702. At
December 31, 1995, the Company had a substantial deferred tax asset of
$4,154,415. Due to uncertainties inherent in the oil and gas market, a valuation
allowance reserved all but $648,430 of the asset.
Future Outlook
In 1995, Enex reduced its debt by $1.074 million and has further decreased this
obligation to just $250,000 as of March 6, 1996. It is anticipated that the debt
will be completely repaid in the first half of 1996. This reduction was done
without the benefit of favorable gas prices throughout most of 1995, which were
at record low levels during the first half of 1995. After repayment of debt, the
Company will resume its stock buyback program which authorizes the Company to
purchase up to 50,000 shares of its common stock. The debt reduction further
strengthened Enex's financial position as evidenced by the Company's
debt-to-equity ratio of 5% and its current ratio of 2.35 to 1.0.
During 1995, four managed limited partnerships, which were operating at marginal
levels were liquidated. A major reorganization of the remaining managed limited
partnerships is planned for 1996. This restructuring will allow us to revamp
administrative processes, yielding further reductions in general and
administrative expenses.
Enex continues discussions with other oil and gas companies to effect a
corporate buyout or other form of business combination. The Company will also
increase the drilling of development locations on corporate and partnership
properties. Larger properties with future development potential as well as
current cash flow are sought by the Company.
Our philosophy remains the same - to increase shareholder value by acquiring and
developing oil and gas reserves at a reasonable cost. This philosophy continues
to provide an attractive rate of return on our investments as well as positions
the Company to capitalize on the great upside potential provided from oil and
gas price appreciation.
II-6
<PAGE>
Item 7. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
Enex Resources Corporation:
We have audited the accompanying consolidated balance sheets of Enex Resources
Corporation and its subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of Enex Resources
Corporation's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Enex Resources Corporation and
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995 in conformity with generally accepted accounting principles.
As discussed in Note 10, the accompanying consolidated financial statements as
of and for the years ended December 31, 1995 and 1994 have been restated.
DELOITTE & TOUCHE LLP
Houston, Texas
March 18, 1996
(February 22, 1997 as to Note 10)
II-7
<PAGE>
<TABLE>
<CAPTION>
ENEX RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994
- -----------------------------------------------------------------------------
ASSETS 1995 1994
-------------- -------------
(Restated) (Restated)
CURRENT ASSETS:
<S> <C> <C>
Cash and certificates of deposit $ 1,007,144 $ 647,485
Accounts receivable:
Managed limited partnerships 756,741 1,226,046
Oil and gas sales 862,529 772,154
Joint owners 325,816 368,297
Receivable from property sales 123,202 -
Notes receivable from managed limited
partnerships 16,902 66,718
Federal income tax receivable 98,614 232,989
Prepaid expenses and other current assets 697,664 421,406
Deferred tax asset 112,174 99,501
-------------- -------------
Total current assets 4,000,786 3,834,596
-------------- -------------
PROPERTY:
Oil and gas properties (successful efforts
accounting method) Proved mineral interests
and related equipment and facilities:
Direct ownership 8,134,074 7,598,999
Derived from investment in managed
limited partnerships 10,729,113 12,328,752
Furniture, fixtures and other (at cost) 341,507 327,364
-------------- -------------
Total property 19,204,694 20,255,115
Less accumulated depreciation,
depletion and amortization 7,250,769 7,916,650
-------------- -------------
Property, net 11,953,925 12,338,465
-------------- -------------
OTHER ASSETS:
Receivable from managed limited partnerships 2,171,636 2,655,172
Deferred tax asset 536,256 149,252
Other accounts receivable 156,252 241,065
Deferred organization expenses and other 8,233 17,387
-------------- -------------
Total other assets 2,872,377 3,062,876
-------------- -------------
TOTAL $ 18,827,088 $ 19,235,937
============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
- ------------------------------------------------------------------------------
II-8
<PAGE>
<TABLE>
<CAPTION>
ENEX RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994
- ---------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
-------------- --------------
(Restated) (Restated)
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 853,944 $ 1,174,874
Current portion of long-term debt 850,000 950,000
-------------- --------------
Total current liabilities 1,703,944 2,124,874
-------------- --------------
LONG-TERM DEBT:
Note payable to a bank - 974,000
COMMITMENTS AND
CONTINGENT LIABILITIES - -
-------------- --------------
TOTAL LIABILITIES 1,703,944 3,098,874
-------------- --------------
MINORITY INTEREST 1,660,932 1,923,551
-------------- --------------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized;
no shares issued
Common stock, $.05 par value;
10,000,000 shares authorized;
1,642,859 shares issued at December 31, 1995
and 1,627,859 shares issued at December 31, 1994 82,143 81,393
Additional paid-in capital 9,944,967 9,814,617
Retained earnings 7,041,773 6,040,573
Less cost of treasury stock;
315,136 shares at December 31, 1995 and
337,936 shares at December 31, 1994 (1,606,671) (1,723,071)
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY 15,462,212 14,213,512
-------------- --------------
TOTAL $ 18,827,088 $ 19,235,937
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
- ------------------------------------------------------------------------
II-9
<PAGE>
<TABLE>
<CAPTION>
ENEX RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
- ----------------------------------------------------------------------
1995 1994 1993
-------------- ------------- ------------
REVENUES: (Restated) (Restated)
<S> <C> <C> <C>
Oil and gas sales $ 5,924,664 $ 5,662,113 $ 5,246,339
Gas plant sales 669,774 420,587 358,285
Gain from sale of property 614,758 2,812 4,513
Other revenues 687,401 757,832 560,854
Interest income 53,776 27,594 77,053
-------------- ------------- ------------
Total revenues 7,950,373 6,870,938 6,247,044
-------------- ------------- ------------
EXPENSES:
General and administrative 1,689,742 1,751,773 1,590,128
Lease operating and other expenses 2,322,509 2,009,175 1,662,666
Gas purchases and
plant operating expenses 503,438 460,207 259,950
Production taxes 368,014 334,576 321,844
Depreciation, depletion and amortization 1,909,857 1,517,278 1,375,191
Interest expense 170,838 144,452 69,164
-------------- ------------- ------------
Total expenses 6,964,398 6,217,461 5,278,943
-------------- ------------- ------------
Earnings before minority interest
and income taxes 985,975 653,477 968,101
-------------- ------------- ------------
MINORITY INTEREST (116,233) (23,126) -
-------------- ------------- ------------
Earnings before income taxes 869,742 630,351 968,101
-------------- ------------- ------------
INCOME TAX EXPENSE (CREDIT)
Current - (260,736) 124,591
Deferred (399,658) (160,389) (88,364)
-------------- ------------- ------------
Net income tax expense (credit) (399,658) (421,125) 36,227
-------------- ------------- ------------
NET INCOME $ 1,269,400 $ 1,051,476 $ 931,874
============== ============= ============
PRIMARY EARNINGS PER SHARE $ 0.90 $ 0.75 $ 0.69
============== ============= ============
FULLY DILUTED EARNINGS PER SHARE $ 0.90 $ 0.75 $ 0.69
============== ============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
- -----------------------------------------------------------------------------
II-10
<PAGE>
ENEX RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------
Paid-in Retained Treasury
Shares Amount Capital Earnings Stock Total
------------ ------------ ------------- ----------- ------------- -------------
BALANCE,
<S> <C> <C> <C> <C> <C> <C>
January 1, 1993 1,572,930 $78,646 $9,503,868 $4,556,395 ($1,626,361) $12,512,548
Repurchase and retirement
of common shares (5,071) (253) (45,140) (45,393)
Exercise of stock options 32,000 1,600 98,150 99,750
Tax benefit from exercise
of stock options 53,611
Reissue 8,565 shares of
Treasury stock through SPP 20,260 40,684 60,944
Purchase of 15,000 shares
of Treasury stock (114,488)
Payment of $.19 per share
cash dividend (239,491) (239,491)
Net income 931,874 931,874
------------ ------------ ------------- ----------- ------------- -------------
BALANCE,
December 31, 1993 1,599,859 79,993 9,630,749 5,248,778 (1,700,165) 13,259,355
Exercise of stock options 28,000 1,400 89,850 91,250
Reissue 30,610 shares of
Treasury stock through SPP 94,018 148,939 242,957
Purchase of 19,161 shares
of Treasury stock (171,845) (171,845)
Payment of $.20 per share
cash dividend (259,681) (259,681)
Net income 1,051,476 1,051,476
------------ ------------ ------------- ----------- ------------- -------------
BALANCE,
December 31, 1994 1,627,859 81,393 9,814,617 6,040,573 (1,723,071) 14,213,512
Exercise of stock options 15,000 750 45,750 46,500
Reissue 22,800 shares of
Treasury stock through SPP 84,600 116,400 201,000
Payment of $.20 per share
cash dividend (268,200) (268,200)
Net income 1,269,400 1,269,400
------------ ------------ ------------- ----------- ------------- -------------
BALANCE,
December 31, 1995 1,642,859 $82,143 $9,944,967 $7,041,773 ($1,606,671) $15,462,212
============ ============ ============= =========== ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
- -----------------------------------------------------------------------------
II-11
<PAGE>
<TABLE>
<CAPTION>
ENEX RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
- ------------------------------------------------------------------------------
1995 1994 1993
------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES: (Restated) (Restated)
<S> <C> <C> <C>
Net income $ 1,269,400 $ 1,051,476 $ 931,874
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 1,909,857 1,517,278 1,375,191
Increase in deferred tax asset (399,677) (160,389) (88,364)
Noncash expense from stock purchase plan 201,000 242,957 60,944
Net gain on sale of property (614,758) (2,812) (4,513)
Minority interest share of net income after distributions (226,600) 23,126
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 1,000,933 (377,758) 86,248
(Increase) in prepaid expenses and other assets (277,380) (152,847) (59,339)
Increase (decrease) in accounts payable (320,930) 247,900 65,699
(Decrease) in other liabilities - (47,893) (82,226)
------------- ------------- ------------
Net cash provided by operating activities 2,541,845 2,341,038 2,285,514
------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 991,623 45,392 26,627
Property additions (1,927,925) (2,990,574) (2,413,418)
(Increase) decrease in notes receivable from
managed limited partnerships 49,816 310,312 (253,480)
Decrease in temporary investments - - 3,784,949
------------- ------------- ------------
Net cash provided (used) by investing activities (886,486) (2,634,870) 1,144,678
------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term debt - - (3,435,564)
Proceeds from issuance of long-term debt 260,000 2,805,583 1,215,690
Repayment of long-term debt (1,334,000) (1,831,456) (978,310)
Purchase of treasury stock - (171,845) (114,488)
Repurchase and retirement of capital stock - - (45,393)
Proceeds from exercise of stock options 46,500 91,250 99,750
Payment of cash dividend (268,200) (259,681) (239,491)
------------- ------------- ------------
Net cash provided (used) by financing activities (1,295,700) 633,851 (3,497,806)
------------- ------------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 359,659 340,019 (67,614)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 647,485 307,466 375,080
------------- ------------- ------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 1,007,144 $ 647,485 $ 307,466
============= ============= ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 176,089 $ 139,201 $ 72,389
Income taxes - - $ 140,344
Noncash transaction - Sale of oil and gas property $ 123,202
</TABLE>
See accompanying notes to consolidated financial statements.
- -----------------------------------------------------------------------------
II-12
<PAGE>
ENEX RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1995 (Restated)
- -----------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - Enex Resources Corporation (the "Company") acquires interests
in producing oil and gas properties and sponsors and manages oil and gas
income limited partnerships. At December 31, 1995, the Company served as
managing general partner for 41 publicly offered limited partnerships of
Enex Program I Partners, L.P., Enex Oil & Gas Income Programs II, III,
IV, V, VI, Enex Income and Retirement Fund, Enex 88-89 Income and
Retirement Fund, and Enex 90-91 Income and Retirement Fund
(collectively, the "Partnerships"). The Partnerships own $163 million,
at cost, of proved oil and gas properties in which the Company generally
has a 10% interest as the general partner in addition to its
proportional interest as a limited partner which ranges from 3% to 53%.
Accumulated depreciation and depletion for such oil and gas properties
at December 31, 1995 totalled $143 million.
In addition to Partnership activities, the Company owns interests in 378
productive oil and gas properties for its own account, and is the
operator of 161 properties. The total properties managed for its own
account and the Partnerships include interests in more than 12,000
producing wells in 14 states.
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of the Company, its wholly owned
subsidiaries, Enex Securities Corporation and Gulf-Tex Maintenance
Corporation and Enex Program I Partners, L.P. and the Company's pro rata
share of the assets, liabilities, revenues and expenses of the managed
limited partnerships in which it participates as the general partner.
The Company uses pro rata consolidation for those partnership in which
it owns less than a 50% interest and fully consolidates Enex Program I
Partners, L.P. in which it owns greater than 50% interest. The
equity of ninority partners in Enex Program I Partners, L.P. is shown
in the consolidated balance as "minority interest". All intercompany
balances and transactions have been eliminated in consolidation.
Uses of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of continent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting periods. Actual
results could differ from these estimates.
Accounts Receivable from Joint Owners - The General Partner, as operator
for jointly-owned properties, bills joint owners monthly for cost
expended by the General Partner for the joint owners' share of operating
costs and capital expenditures.
Other Accounts Receivable - The General Partner records, in
consolidation, distributions to limited partnerships which exceed their
pro rata ownership percentage as other accounts receivable.
Distributions to limited partners exceed their pro rata ownership
ercentage when distributions to the general partner have been curtailed.
II-13
<PAGE>
Oil and Gas Properties - The Company uses the successful efforts method
of accounting for its oil and gas operations. Under this method, the
costs of all development wells are capitalized. The costs of
unsuccessful exploratory wells are charged to earnings. Capitalized
costs are amortized on the units-of-production method based on
production and estimated total proved reserves. The Company has not
capitalized any internal costs into property. A ceiling test is
performed quarterly wherein total capitalized costs may not exceed
future undiscounted net revenues on a Company-wide basis. The
acquisition costs of unproved oil and gas properties are capitalized and
periodically assessed for impairment on an individual property basis.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long Lived Assets and for Long-Lived Assets to Be Disposed Of." This
statement requires that long-lived assets and certain identifiable
intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The Company has not
determined the effect on its financial position or results of operations
from the adoption of this statement in the first quarter of 1996.
Furniture, Fixtures and Other - The Company records expenditures for
furniture and fixtures at cost. Expenditures for improvements are
capitalized. Expenditures for maintenance and repairs are charged to
operations as incurred. The Company provides for depreciation of its
furniture, fixtures and other equipment using the straight-line method
over an estimated useful life not to exceed five years.
Deferred Organization Expenses - The Company's pro rata share of the
organization costs of the managed limited partnerships is being
amortized on a straight-line basis over a five-year period.
Commission Income - Through April 30, 1994, Enex Securities Corporation
("Securities") marketed interests in the Partnerships. Securities earned
a commission of up to 10% of solicited subscriptions of which up to 8%
was reallowed to soliciting dealers. Commission income was recognized
upon the attainment of a $1 million level of subscriptions for
Partnership interests and is presented in the accompanying consolidated
financial statements net of reallowed commissions of approximately
$92,000 and $9,000 in 1994 and 1993, respectively. Net commission income
is included in other revenues in the Consolidated Statements of Income.
Income Per Common Share - Primary and fully diluted earnings per common
share are based on the weighted average number of shares of common stock
and common share equivalents outstanding during the year. Common share
equivalents include common stock options. The weighted average number of
shares used to compute primary and fully diluted earnings per common
share was:
Primary Shares Fully Diluted Shares
---------------------- -----------------------
1995 1,416,474 1,416,474
1994 1,397,870 1,397,870
1993 1,346,511 1,350,958
II-15
<PAGE>
Managed Limited Partnerships - The Company serves as the general partner
to the Partnerships and also participates as a limited partner to the
extent of limited partnership interests purchased directly by the
Company.
The Company is generally entitled as general partner to 10% of
partnership production revenues less 10% of partnership expenses, other
than the costs of acquiring partnership properties. In most instances,
at such time as the limited partners receive distributions in total
equal to their aggregate subscriptions, the Company is entitled to 15%
of such net revenues. The Company recognizes its share of these net
revenues as they are sold.
If, after certain time periods, the aggregate purchase price of the
interests in certain programs plus cumulative distributions to the
limited partners does not equal limited partner subscriptions (the
"Deficiency"), the general partner will forego its 10% share of such
Program's net revenues. The foregone net revenues will be allocated to
the limited partners until such time as no Deficiency exists. During
1993, 1994 and 1995, the general partner's 10% share of Program II net
revenues, totaling $37,122, $41,119 and $64,046, respectively, was
allocated to the limited partners. During 1994 and 1995, the general
partner's 10% share of Program I net revenues, totaling $31,830 and
$99,154, respectively, was allocated to the limited partners.
In addition to the above, the Company is reimbursed for direct
expenditures made on behalf of the partnership operations. Overhead
billed to the managed limited partnerships, which is treated as a
reduction in general and administrative expenses, was $1,783,373,
$2,240,194, and $1,953,176 in 1995, 1994 and 1993, respectively.
Income Taxes - The Company uses the asset and liability method to
account for deferred income taxes, which focuses on the future tax
return consequences of temporary differences in determining the deferred
tax balances. Under this method, the deferred tax expense is calculated
as the change in the deferred tax balance sheet accounts during the
period. Temporary differences are measured at the balance sheet date and
are valued in accordance with current tax laws. See Note 4 for more
information.
Cash Flows - The Company presents its cash flows using the indirect
method and considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Reclassifications - Certain reclassifications have been made to the
prior year balances to conform to current year presentation.
2. COSTS REIMBURSABLE BY AND RECEIVABLE FROM
MANAGED LIMITED PARTNERSHIPS
Certain startup and ongoing general and administrative costs are
incurred by the Company on behalf of its managed limited partnerships.
These costs are allocated to the partnerships in accordance with the
Partnership Agreements and are reimbursed to the Company over a period
generally not to exceed five years. The anticipated receipt of such
receivables have been scheduled in accordance with projected future net
revenues and based upon historical collections. The receivables have
been classified as current or non-current in accordance with such
projections. The Company's balance sheet at December 31, 1995, also
reflects a note receivable from a managed limited partnership. This note
was a result of the company partially financing the purchase of an oil
and gas interest made by the limited partnership. The resulting note is
subject to a formal agreement with terms as discussed in Note 5, below.
II-15
<PAGE>
3. DEBT
The long-term debt at December 31, 1995 consisted of a $850,000 loan
from a bank under a $2.8 million revolving line of credit collaterized
by substantially all of the assets of the Company. The bank loan bore
interest at an average rate of 9.63% in 1995. The Company plans to repay
the remaining portion of the outstanding debt in the first half of 1996.
The long-term debt at December 31, 1994 consisted of a $1,924,000 loan
from a bank under a $5.925 million revolving line of credit collaterized
by substantially all of the assets of the Company. The bank loan bore
interest at an average rate of 8.16% in 1994. In 1995, the Company
repaid a net $1,074,000.
4. INCOME TAXES
Total income tax expense for 1995, 1994 and 1993 was different from the
amount computed by applying the federal statutory income tax rate of 34%
to earnings before income taxes for the following reasons:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- ----------
<S> <C> <C> <C>
Computed statutory tax expense $ 295,712 $ 214,319 $ 329,154
Increase (reduction) in taxes resulting from:
Reduction in unrecognized
deferred tax asset (697,250) (624,317) (300,473)
Utilization of Section 29 tax credit - - (14,080)
Other, net 1,880 (11,127) 21,626
---------- ----------- ----------
Actual income tax expense credit $ (399,658) $ (421,125) $ 36,227
========== =========== ==========
</TABLE>
The components of income tax expense (credit) are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ----------- ---------
<S> <C> <C> <C>
Income taxes currently payable (receivable) $ - $ (260,736) $ 124,591
Deferred income tax (credit) (399,658) (160,389) (88,364)
------------- ----------- ----------
Income tax expense (credit) $ (399,658) $ (421,125) $ 36,227
============= ========== =========
</TABLE>
II-16
<PAGE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amount used for income tax
purposes. The tax effects of significant items comprising the Company's
net deferred tax asset as of December 31, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
------------------ -------------------
Difference between tax and book net property
<S> <C> <C>
basis $ 4,613 $ 27,591
Difference between basis in managed limited
partnerships for financial reporting purposes and
income tax purposes 3,796,403 4,229,761
Intangible drilling costs which remain capitalized
for financial reporting purposes which were
deducted for federal income tax purposes (74,483) (53,836)
Net operating loss carryforward 478,565 293,772
(expires 2009-2010)
Timing difference from lawsuit contingency (50,683) (45,281)
----------------- -----------------
Gross deferred tax asset 4,154,415 4,452,007
Valuation allowance (3,505,985) (4,203,254)
----------------- -----------------
Net deferred tax asset recognized $ 648,430 $ 248,753
================= =================
</TABLE>
The difference in basis of the managed limited partnerships is
primarily the result of differences in the underlying properties of the
partnerships. The valuation allowance reserves the net deferred tax
asset due to uncertainties inherent in the oil and gas market. The
Company estimated the amount of future tax benefit to be received from
the deferred tax asset using estimated future net revenues and future
tax expenses. The remaining amount of the gross deferred tax asset is
reserved by a valuation allowance. The valuation allowance decreased by
$697,269 and $640,091 in 1995 and 1994, respectively.
II-17
<PAGE>
5. NOTES RECEIVABLE FROM MANAGED LIMITED PARTNERSHIPS
On December 3, 1990, a managed limited partnership borrowed $191,577
from the Company in order to finance workover costs. The Company
received monthly principal payments from the partnership on the
resulting demand note plus interest at the Company's borrowing rate of
prime plus three-fourths of one percent on the unpaid principal. The
note was repaid in 1994.
On August 8, 1991, in conjunction with the EAC Acquisition, the Company
acquired notes receivable from certain partnerships. The notes, which
accrue interest at prime plus three-fourths of one percent, were
recorded at their discounted realizable value. The gain recognized from
the early receipt of notes was $393,980, $201,000 and $175,660 in 1995,
1994, and 1993, respectively.
In 1993, five managed limited partnerships borrowed a total of $438,168
from the Company to repay bank debt and finance workover costs. The
Company received monthly principal payments from the partnerships on
the resulting demand notes plus interest at the Company's borrowing
rate of prime plus three-fourths of one percent on the unpaid
principal. In 1994, an additional $39,281 was borrowed by two limited
partnerships to finance workover costs. Principal payments of $322,345
were received during 1994. At December 31, 1994, the total outstanding
principal balance of the notes was $28,694. The notes were completely
repaid in the first half of 1995.
On December 29, 1994, in order to partially finance the purchase of a
property acquisition a managed limited partnership borrowed a net
$60,572 from the Company. The resulting note receivable bears interest
at the Company's borrowing rate of prime plus three-fourths of one
percent, or a weighted average of 9.76% during 1995 (9.25% at both
December 31, 1994 and 1995.). Principal payments of $31,049 were
received on the note receivable in 1995. At December 31, 1995, the
outstanding principal balance was $29,523.
6. COMMON STOCK OPTIONS
The Company has an incentive stock option plan and a nonqualified stock
option plan, which authorize the issuance of options to purchase up to
362,000 shares of common stock to directors, officers and key
employees. The Company has also granted options not covered by a plan.
The options expire at various dates through 2003 and are exercisable at
prices ranging from $3 - $8 per share. The exercise price of any
options granted may not be less than the fair market value of the
Company's stock at the date of the grant. The following table
summarizes the Company's stock option activity:
<TABLE>
<CAPTION>
1995 1994 1993
Number Average Number Average Number Average
of shares price of shares price of shares price
------------ ------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 209,000 $ 4.69 237,000 $ 4.52 234,000 $ 3.42
Granted - - - - 55,000 8.00
Exercised (15,000) 3.10 (28,000) 3.26 (32,000) 3.12
------------ ------------- -------------- ------------- -------------- --------------
Outstanding, end of year 194,000 $ 4.81 209,000 $ 4.69 237,000 $ 4.52
============ ============= ============== ============= ============== ==============
Exercisable at end of year 194,000 $ 4.81 209,000 $ 4.69 182,000 $ 4.68
============ ============= ============== ============= ============== ==============
</TABLE>
II-18
<PAGE>
On May 19, 1992, the Company's shareholders approved the Enex Resources
Corporation Employee Stock Purchase Program (the "SPP"). All full-time
employees, officers and directors are eligible for participation in the
SPP, which provides for the monthly contribution of shares of the
Company's common stock equal to 50% of a participant's open market
purchases of the Company's common stock for the preceding month (the
"Stock Contribution"). The Stock Contribution is limited to a maximum
of 2,500 shares per participant per SPP year. Each Stock Contribution,
although immediately vested, is held in escrow for a six month holding
period prior to its distribution to the participant. During 1995, 1994
and 1993, 22,800, 30,610 and 8,565 shares, respectively, were
contributed to participants in the SPP. The Company recognized an
expense of $201,000, $242,957 and $60,944 from the SPP in 1995, 1994
and 1993, respectively.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), which sets forth accounting and disclosure
requirements for stock based compensation arrangements. As allowed by SFAS
123, the Company has elected to continue to account for stock option grants
in accordance with APB opinion No. 25; consequently, the issuance of SFAS
123 which will have no effect on the Company's financial condition or
results of operations when it is implemented.
7. LEASE COMMITMENTS
The Company is the lessee under noncancelable operating leases for
office space and equipment. The following is a schedule of the
Company's remaining future rental requirements under the leases as of
December 31, 1995:
1996 $ 213,558
1997 176,109
1998 13,368
1999 8,912
--------------
Total payments required $ 411,947
--------------
Rent expense for all operating leases was $211,038, $254,004 and
$265,666 for the years ended December 31, 1995, 1994 and 1993,
respectively.
8. LITIGATION SETTLEMENTS
The Company and one of its managed limited partnerships, Enex Program I
Partners, L.P. ("Program I"), in which the Company owns general and
limited partnership interests, were named as parties to a lawsuit filed
by Texas Crude, Inc. ("Texas Crude"). Texas Crude sought to recover
legal and other fees totaling $600,000. In August 1993, a judgement was
granted in favor of Texas Crude for $414,203, plus interest by the
101st Judicial District Court of Texas. During the third quarter of
1993 Program I accrued a liability for $504,350 related to this
judgement, of which $243,274 was the Company's share.
The Company appealed the verdict and filed a counterclaim for funds
that were wrongfully withheld by Texas Crude. In December 1994, the
Fifth District Court of Appeals reversed the judgement of the trial
court and rendered judgement in favor of the Company and Program I.
Accordingly, the liability, initially recognized in 1993, was reversed
in 1994 and Program I established a receivable for $254,588, of
which the Company's share is $133,180.
II-20
<PAGE>
9. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is committed to offer to repurchase the limited partners'
interests in its managed limited partnerships formed under the Programs
(except for Programs I,V and VI) at annual intervals. The purchase
price is based primarily on reserve reports prepared by independent
petroleum engineers, reduced by a risk factor. Generally, for the first
three annual purchase offers after the formation of a partnership, the
Company's annual repurchase obligation is limited to the lesser of 10%
to 25% of initial partnership subscriptions or $1,000,000 per
partnership. As of December 31, 1995, such commitments totaled
$3,952,698. During 1995, 1994 and 1993, the Company paid cash to
repurchase limited partner interests as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ------------ ---------
<S> <C> <C> <C>
Program I $ 43,409 $ 750,019 $ 469,369
Program II 23,607 130,441 88,710
Program III 8,544 66,061 70,901
Program IV 7,847 98,351 17,899
Program V 13,875 63,730 58,424
Program VI 393 7,222 -
Income and Retirement Fund 12,232 73,264 11,044
88-89 Income and Retirement Fund 5,987 43,022 2,014
90-91 Income and Retirement Fund 10,653 39,267 3,848
---------- ------------ ---------
TOTAL $ 126,547 $ 1,271,377 $ 722,209
========== ============ =========
</TABLE>
As general partner, the Company is contingently liable for all debts
and actions of the managed limited partnerships. However, in
management's opinion, the existing assets of the limited partnerships
are sufficient to satisfy any such partnership indebtedness.
The Company has an employment agreement with its founder and President,
Gerald B. Eckley. The agreement, which was amended on May 19, 1992,
provides that Mr. Eckley will be paid a minimum salary of $240,000 per
year for a five year term. As long as Mr. Eckley is employed by the
Company, the agreement will be automatically extended every May 19th
for an additional year. The agreement provides for compensation
continuation benefits in the event of Mr. Eckley's death or disability.
If Mr. Eckley terminates the agreement following a change of control of
the Company or because of a breach of the material provisions of the
agreement or because performance of his duties becomes hazardous to his
health, he will remain entitled to the full base compensation then in
effect as severance pay until the normal expiration of the agreement.
II-20
<PAGE>
10. RESTATEMENT
In connection with a review by the Staff of the Securities and Exchange
Commission ("Staff") of the Company's filing on Form 10-K for the year ended
December 31, 1995, the Company had discussions with the Staff regarding whether
its investment in one majority owned partnership should be accounted for on the
pro rata consolidation method or the full consolidation method. The Company owns
a 53% interest in one partnership, Enex Program I Partners L.P. The Company's
ownership percentage in its other 40 publicly offered limited partnerships is
below 50%. The Company has historically used the pro rata consolidation method
for all investments in limited partnerships, regardless of ownership percentage,
as research indicated it was industry practice to do so. The Company,
upon further examination of this issue and questions from the Staff, concluded,
however, it was not industry practice and that other accounting literature,
which requires full consolidation of majority-owned partnerships was proper and
the use of pro rata consolidation for an over 50% interest in a limited
partnership was an error in the application of an accounting principle.
Accordingly, the Company has restated its consolidated
financial statements to fully consolidate its interest in Enex Program
I Partners, L.P. for the periods in which it owned a majority interest,
namely the period from December 1, 1994 to December 31, 1995. The
change to the full consolidation method causes a change in the
presentation of most of the previously reported amounts in the
consolidated financial statements of the Company for the periods
mentioned, but it does not cause any difference in the historically
reported amounts of net income, earnings per share or stockholders'
equity.
The effects of the restatement are summarized as follows:
Consolidated Statements of Income
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994
As As
Previously As Previously As
Reported Restated Reported Restated
--------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Revenues $6,391,769 $7,950,373 $6,743,212 $6,870,938
Expenses 5,522,027 6,964,398 6,112,861 6,217,461
Earnings Before Income Taxes 869,742 860,742 630,351 630,351
Minority Interest - 116,233 - 28,126
Net Income 1,269,400 1,269,400 1,051,476 1,051,476
Primary Earnings Per Share .90 .90 .75 .75
Fully Diluted Earnings Per .90 .90 .75 .75
Share
</TABLE>
II-21
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
For the years ended December 31,
1995 1994
As As
Previously As Previously As
Reported Restated Reported Restated
---------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Current Assets $4,740,779 $4,000,786 $4,376,649 $3,834,596
Property - Net 9,580,418 11,953,925 10,032,184 12,338,465
Total Assets 17,037,322 18,827,088 17,230,644 19,235,937
Current Liabilities 1,575,110 1,703,944 2,043,132 2,124,874
Long-term Debt - - 974,000 974,000
Total Liabilities 1,575,110 1,703,944 3,017,132 3,098,874
Minority Interests - 1,660,932 - 1,923,551
Stockholders Equity 15,462,212 15,462,212 14,213,512 14,213,512
</TABLE>
II-22
<PAGE>
Proved Oil and Gas Reserves Quantities (Unaudited)
The following presents an estimate of the Company's proved oil and gas reserve
quantities. Oil reserves are stated in barrels and natural gas reserves in
thousand cubic feet ("Mcf"). All of the Company's reserves are located within
the United States.
<TABLE>
<CAPTION>
Oil Natural Gas
PROVED DEVELOPED AND UNDEVELOPED RESERVES: (Barrels) (Mcf)
--------------- ---------------
<S> <C> <C>
January 1, 1993 765,297 7,790,537
Revisions of previous estimates (78,008) 1,281,240
Purchases of minerals in place 107,164 2,775,978
Sales of minerals in place (3,623) (413)
Production (157,440) (1,285,512)
--------------- ---------------
December 31, 1993 633,390 10,561,830
Revisions of previous estimates 167,620 (672,816)
Purchases of minerals in place 490,774 4,022,385
Sales of minerals in place (8,130) (29,767)
Production (194,467) (1,435,593)
--------------- ---------------
December 31, 1994 1,089,187 12,446,039
Revisions of previous estimates (6,586) 711,925
Purchases of minerals in place 31,887 727,929
Sales of minerals in place (6,841) (643,277)
Production (200,778) (1,671,517)
--------------- ---------------
December 31, 1995 906,869 11,571,099
=============== ===============
Minority Interest in Developed and
Undeveloped Reserves 84,895 2,373,524
=============== ===============
PROVED DEVELOPED RESERVES:
December 31, 1993 630,987 10,393,884
=============== ===============
December 31, 1994 995,637 12,290,064
=============== ===============
December 31, 1995 808,829 11,407,758
=============== ===============
Minority Interest in Proved Developed Reserves 84,895 2,373,524
=============== ================
</TABLE>
II-23
<PAGE>
ENEX RESOURCES CORPORATION
SUPPLEMENTARY OIL AND GAS INFORMATION
- -----------------------------------------------------------------------------
Costs Incurred
The following costs were incurred in connection with the Company's oil and gas
activities for the years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ------------ ------------
Acquisition of proved mineral interests
<S> <C> <C> <C>
and related equipment and facilities $ 411,545 $ 2,415,803 $2,000,625
Development costs 1,516,380 551,488 354,313
</TABLE>
Capitalized Costs
The following presents the Company's capitalized costs at December 31, relating
to its oil and gas activities:
1995 1994
------------ ------------
Proved mineral interests and
related equipment and facilities $ 18,863,187 $ 19,927,751
Accumulated depreciation,
depletion and amortization 6,967,242 7,652,829
II-24
<PAGE>
Standardized Measure of Discounted Future Net Cash Flows and Changes Therein
Relating to Proved Oil and Gas Reserves at December 31, 1995, 1994 and 1993
(Unaudited)
- ---------------------------------------------------------------
The following presents the Company's standardized measure of discounted future
net cash flows as of December 31:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- ----------------
<S> <C> <C> <C>
Future cash inflows $ 39,963,675 $ 38,142,479 $ 31,790,790
Future production and development costs (15,363,195) (15,330,091) (11,854,142)
--------------- --------------- ----------------
Future net cash flows before income taxes 24,600,480 22,812,388 19,936,648
10% annual discount (9,421,006) (8,606,239) (7,991,008)
Future income taxes, net of 10%
annual discount - (758,358) (1,227,681)
--------------- --------------- ----------------
Standardized measure of future
discounted net cash flows of proved
oil and gas reserves $ 15,179,474 $ 13,447,791 $ 10,717,959
=============== =============== ================
Minority interest in standardized measure of
future discounted net cash flows of proved
oil and gas reserves $ 2,783,461 $ 3,013,127 $ -
=============== =============== ================
</TABLE>
The future net cash flows were computed using year-end prices and costs and
year-end statutory tax rates that relate to proved oil and gas reserves in which
the Company has an interest.
The following presents the principal sources of change in the standardized
measure of discounted future net cash flows during 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
------------- -------------- --------------
Sales and transfers of oil and gas
<S> <C> <C> <C>
produced, net of production costs $ (3,234,141) $ (3,318,362) $ (3,261,829)
Net changes in prices and production
costs 2,316,665 (1,740,278) 265,663
Purchases of minerals in place 815,480 5,552,744 2,590,014
Sales of minerals in place (580,008) (97,533) (12,196)
Revisions of previous quantity estimates 582,703 236,046 704,128
Accretion of discount 1,420,615 1,194,564 1,044,400
Net change in income taxes 758,358 469,323 (63,470)
Changes in production rates (timing)
and other (347,989) 433,328 171,462
------------- -------------- --------------
Change in standardized measure of
discounted future net cash flows $ 1,731,683 $ 2,729,832 $ 1,438,172
============= ============== ==============
</TABLE>
II-25
<PAGE>
In addition to the above presented oil and gas reserves, the
Company also has interests in certain gas processing plants
and gas gathering systems. The total estimated future
production of plant products is 293,892 barrels. The
discounted future net cash flows (net of estimated future
income taxes) relating to the Company's interests in these
facilities are estimated to be approximately $795,818 . The
minority interest in this future production is 137,456 barrels
and $372,212 of the discounted future net cash flows.
This valuation procedure does not purport to represent the
fair market value of the Company's oil and gas properties. An
estimate of fair market value would also take into account,
among other factors, anticipated changes in future prices of
oil and gas and related development and production costs and
the likelihood of future recoveries of oil and gas quantities
different from the current estimate of proved reserves.
------------------------------------------------------------
II-26
<PAGE>
Item 8. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
Not applicable
II-27
<PAGE>
Part III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
------------------------------------------------------------------
Information related to this Item has been omitted pursuant to General
Instruction E(3). Such information is incorporated herein by reference to the
Proxy Statement for the 1996 Annual Meeting of Shareholders, which is intended
to be filed with the Securities and Exchange Commission pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this report.
Item 10. Executive Compensation
Information related to this Item has been omitted pursuant to General
Instruction E(3). Such information is incorporated herein by reference to the
Proxy Statement for the 1996 Annual Meeting of Shareholders, which is intended
to be filed with the Securities and Exchange Commission pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this report.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Information related to this Item has been omitted pursuant to General
Instruction E(3). Such information is incorporated herein by reference to the
Proxy Statement for the 1996 Annual Meeting of Shareholders, which is intended
to be filed with the Securities and Exchange Commission pursuant to Regulation
14A within 120 days after the end of the fiscal year covered by this report.
Item 12. Certain Relationships and Related Transactions
See Note 1 to the Consolidated Financial Statements for information
regarding the Company's stock repurchase from EDP.
Not Applicable
Item 13. Exhibits and Reports on Form 8-K Sequential
Page No.
--------------
(a) Exhibits
(3) (a) Certificate of Incorporation of the Company as
currently in effect. Incorporated by reference to
the Registrant's Current Report on Form 8-K
dated June 30, 1992 where the same appeared as
Exhibit 2.
(b) By-Laws of the Company as currently in effect.
Incorporated by reference to the Registrant's
Current Report on Form 8-K, dated June 30, 1992,
where the same appeared as Exhibit 3.
III-1
<PAGE>
(4) (a) Articles Four, Six, Seven, Fourteen, Fifteen,
Seventeen and Twenty of the Company's Certificate
of Incorporation and Article II of the Company's
By-Laws. See Exhibits 3(a) and 3(b).
(b) Form of Rights Agreement dated as of September 4,
1990 between the Company's predecessor-in-interest,
Enex Resources Corporation, a Colorado corporation
(the "Predecessor")and American Securities Transfer,
Incorporated, as Rights Agent, which includes as
exhibits thereto the Form of Rights Certificate and
the Summary of Rights to Purchase Common Stock.
Incorporated by reference to the Predecessor's
Current Report on Form 8-K, dated as of September 4,
1990, where the same appeared as Exhibit 4.
(9) Not Applicable
(10) (a) Employment Agreement between the Company and Gerald
B. Eckley, as amended May 19, 1992. Incorporated by
reference to the Predecessor's Current Report on
Form 8-K dated May 19, 1992, where the same appeared
as Exhibit 2.
(b) Enex Employees Stock Purchase Program. Incorporated
by reference to the Registration Statement on Form
S-8 in Registration Statement No. 33-48644 filed
with the Securities and Exchange Commission on
March 22, 1993, where the same appeared as Exhibit 4.
(c) 1991 Non-qualified Stock Option Award Program.
Incorporated by reference to the Registration
Statement on Form S-8 in Registration Statement No.
33-60086 filed with the Securities and Exchange
Commission on March 22, 1993, where the same
appeared as Exhibit 4.
(d) 1990 Non-qualified Stock Option Plan. Incorporated
by reference to the Registration Statement on Form
S-8 in Registration Statement No. 33-60084 filed
with the Securities and Exchange Commission on
March 22, 1993, where the same appeared as Exhibit 4.
(e) 1984 Incentive Stock Option Plan and 1979 Employees
Non-qualified Stock Option Plan. Incorporated by
reference to the Registration Statement on Form S-8
in Registration Statement No. 2-93688 filed with the
Securities and Exchange Commission on July 1, 1992,
where the same appeared as Exhibits 4(a) and 4(b).
(11) Not Applicable
(13) Not Applicable
(18) Not Applicable
(19) Not Applicable
III-2
<PAGE>
(22) Subsidiaries of Registrant. Incorporated by
reference to Annual Report Form 10-K filed with the
Securities and Exchange Commission on March 16, 1992.
(23) Not Applicable
(24) Not Applicable
(25) Not Applicable
(28) Not Applicable
(29) Not Applicable
(b) Reports on Form 8-K
No current report on Form 8-K was filed by the Company during the last
quarter of the period covered by this report.
III-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
Enex Resources Corporation
Statement re: Computation of Per Share Earnings
For the year ended December 31, 1995
Primary Fully-diluted
Earnings per Earnings per
Share Share
-------------------------------
<S> <C> <C>
Net Income $1,269,400 $1,269,400
-------------------------------
Divided By:
Weighted average shares 1,323,204 1,323,204
Plus: Common Stock Equivalents 93,270 93,270
-------------------------------
(for stock options - treasury stock method)
Adjusted weighted average shares 1,416,474 1,416,474
-------------------------------
Earnings per Share $0.90 $0.90
===============================
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 11
Enex Resources Corporation
Statement re: Computation of Per Share Earnings
For the year ended December 31, 1994
Primary Fully-diluted
Earnings per Earnings per
Share Share
-------------------------------
<S> <C> <C>
Net Income $1,051,476 $1,051,476
-------------------------------
Divided By:
Weighted average shares 1,284,409 1,284,409
Plus: Common Stock Equivalents 113,461 113,461
-------------------------------
(for stock options - treasury stock method)
Adjusted weighted average shares 1,397,870 1,397,870
-------------------------------
Earnings per Share $0.75 $0.75
===============================
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 11
Enex Resources Corporation
Statement re: Computation of Per Share Earnings
For the year ended December 31, 1993
Primary Fully-diluted
Earnings per Earnings per
Share Share
--------------------------------
<S> <C> <C>
Net Income $931,874 $931,874
--------------------------------
Divided By:
Weighted average shares 1,243,277 1,243,277
Plus: Common Stock Equivalents 103,234 107,681
--------------------------------
(for stock options - treasury stock method)
Adjusted weighted average shares 1,346,511 1,350,958
--------------------------------
Earnings per Share $0.69 $0.69
================================
</TABLE>
<PAGE>
EXHIBIT 24
Consent of Independent Auditors
Enex Resources Corporation:
We consent to the incorporation by reference of our report dated March 18, 1996,
appearing in this Annual Report on Form 10-KSB of Enex Resources Corporation for
the year ended December 31, 1995 in the Enex Employee Stock Purchase Plan filed
in Registration Statement No. 33-48644 on Form S-8 on March 22, 1993; in the
1984 Incentive Stock Option Plan and 1979 Employees Non-qualified Stock Option
Plan filed in Registration Statement No. 2-93688 on Form S-8 on July 1, 1992; in
the 1990 Non-Qualified Stock Option Plan filed in Registration Statement No.
33-60084 on Form S-8 on March 22, 1993 and the 1991 Non- Qualified Stock Option
Award Program filed in Registration Statement No. 33-60086 on Form S-8 on March
22, 1993.
DELOITTE & TOUCHE, LLP
Houston, Texas
March 27, 1997
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ENEX RESOURCES CORPORATION
March 27, 1997 By: /s/ G. B. Eckley
---------------------------
G. B. Eckley, President
In accordance with the Exchange Act, this report has been signed below on
March 27, 1997, by the following persons in the capacities indicated.
ENEX RESOURCES CORPORATION
By: /s/ G. B. Eckley President, Chief Executive
Officer and Director
----------------------
G. B. Eckley
/s/ R. E. Densford Vice President, Secretary, Treasurer, Chief
Financial Officer and Director
----------------------
R. E. Densford
/s/ James A. Klein Controller and Chief Accounting Officer
----------------------
James A. Klein
S-1
<PAGE>
/s/ Robert D. Carl, III
---------------------------------
Robert D. Carl, III Director
/s/ Martin J. Freedman
---------------------------------
Martin J. Freedman Director
/s/ William C. Hooper, Jr.
---------------------------------
William C. Hooper, Jr. Director
/s/ Tom Shorney
---------------------------------
Tom Shorney Director
/s/ Stuart Strasner
---------------------------------
Stuart Strasner Director
S-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000314864
<NAME> Enex Resources Corporation
<S> <C>
<PERIOD-TYPE> year
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-START> jan-01-1995
<PERIOD-END> dec-31-1995
<CASH> 1007144
<SECURITIES> 0
<RECEIVABLES> 2993642
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4000786
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