United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 0-13485
ENEX OIL & GAS INCOME PROGRAM II - 2, L.P.
(Exact name of small business issuer as specified in its charter)
Texas 76-0098589
(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)
Registrant's telephone number:
(713) 358-8401
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM II - 2, L.P.
BALANCE SHEET
- --------------------------------------------------------------------------------
September 30,
ASSETS 1995
-------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash ...................................................... $ 1,187
Accounts receivable - oil & gas sales ..................... 11,841
-----------
Total current assets ........................................ 13,028
-----------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities ..... 5,574,530
Less accumulated depreciation and depletion .............. 5,413,950
-----------
Property, net ............................................... 160,580
-----------
TOTAL ....................................................... $ 173,608
===========
LIABILITIES AND PARTNERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable ......................................... $ 2,003
Current portion of note payable to general partner ....... 4,165
Payable to general partner ............................... 40,020
-----------
Total current liabilities ................................... 46,188
-----------
NOTE PAYABLE TO GENERAL PARTNER ............................. 231,047
-----------
PARTNERS' (DEFICIT):
Limited partners ......................................... (77,808)
General partner .......................................... (25,819)
-----------
Total partners' (deficit) ................................... (103,627)
-----------
TOTAL ....................................................... $ 173,608
===========
<FN>
See accompanying notes to financial statements.
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</FN>
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM II - 2, L.P.
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------
(UNAUDITED) QUARTER ENDED NINE MONTHS ENDED
---------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
REVENUES:
<S> <C> <C> <C> <C>
Oil and gas sales .................... $ 14,083 $ 12,158 $ 35,105 $ 37,332
-------- -------- -------- --------
EXPENSES:
Depreciation and depletion ........... 2,765 2,555 7,064 7,476
Lease operating expenses ............. 4,716 1,085 10,137 13,040
Production taxes ..................... 990 852 2,036 2,485
General and administrative ........... 3,897 2,439 9,423 7,161
-------- -------- -------- --------
Total expenses ......................... 12,368 6,931 28,660 30,162
-------- -------- -------- --------
INCOME FROM OPERATIONS ................. 1,715 5,227 6,445 7,170
-------- -------- -------- --------
OTHER EXPENSE:
Interest expense to general partner .. (5,652) (4,980) (17,002) (14,097)
--------- -------- -------- --------
NET INCOME (LOSS) ...................... $ (3,937) $ 247 $(10,557) $ (6,927)
========= ========= ========= =========
<FN>
See accompanying notes to financial statements.
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</FN>
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL AND GAS INCOME PROGRAM II - 2, L.P.
STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------
(UNAUDITED)
NINE MONTHS ENDED
-----------------------------
September 30, September 30,
1995 1994
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss ...................................... $(10,557) $ (6,927)
--------- ---------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and depletion .................. 7,064 7,476
(Increase) decrease in:
Accounts receivable - oil & gas sales ....... (6,374) 2,490
Increase (decrease) in:
Accounts payable ........................... (5,816) (7,171)
Payable to general partner ................. 16,785 16,270
--------- ---------
Total adjustments ............................. 11,659 19,065
--------- ---------
Net cash provided by operating activities ..... 1,102 12,138
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable to general partner (1,998) (9,903)
--------- ---------
NET INCREASE (DECREASE) IN CASH ............... (896) 2,235
CASH AT BEGINNING OF YEAR ..................... 2,083 836
--------- ---------
CASH AT END OF PERIOD ......................... 1,187 $ 3,071
========= =========
Cash paid during the period for interest ...... $ 17,002 $ 14,097
========= =========
<FN>
See accompanying notes to financial statements.
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</FN>
</TABLE>
I-3
<PAGE>
ENEX OIL & GAS INCOME PROGRAM II - 2, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The interim financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of results for the
interim periods.
2. Principal payments of $3,020 were made on the note payable to the
general partner during the third quarter of 1994. Weighted average
principal outstanding was $235,220 and $239,578 during the third
quarter of 1995 and 1994, respectively. Outstanding principal bore
interest at a weighted average rate of 9.61% during the third quarter
of 1995 and 8.31% during the third quarter of 1994.
I-4
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Third Quarter 1995 Compared to Third Quarter 1994
Oil and gas sales for the third quarter increased from $12,158 in 1994 to
$14,083 in 1995. This represents an increase of $1,925 (16%). Oil sales
increased by $807 or 75%. A 75% increase in oil production increased sales by
$804, while average oil prices remained relatively unchanged. Gas sales
increased by $1,118 or 10%. A 9% increase in gas production increased sales by
$982. A 1% increase in average gas prices increased sales by an additional $136.
The changes in average prices correspond with changes in the overall market for
the sale of oil and gas. The higher oil production was primarily due to the
shut-in of production from the Steamboat acquisition in 1994 to perform a
workover. The increase in gas production was primarily the result of higher
production from the East Seven Sisters and Comite acquisitions which were both
shut-in during the third quarter of 1994 to perform workovers.
Lease operating expenses for the third quarter increased from $1,085 in 1994 to
$4,716 in 1995. The increase of $3,631 is primarily due to higher gas
compression charges incurred on the East Seven Sisters and Comite acquisitions
in the third quarter of 1995 as a result of the increase in gas production,
noted above.
Depreciation and depletion expense increased from $2,555 in the third quarter of
1994 to $2,765 in the third quarter of 1995. This represents an increase of $210
(8%). The changes in production, noted above, increased depreciation and
depletion expense by $328. This increase was partially offset by a 4% decrease
in the depletion rate. The decrease in the depletion rate is primarily a result
of an upward revision of the oil and gas reserves at December 31, 1994.
General and administrative expenses increased from $2,439 in the third quarter
of 1994 to $3,897 in the third quarter of 1995. This decrease of $1,458 is
primarily due to less staff time being required to manage the Company's
operations.
First Nine Months in 1995 Compared to First Nine Months in 1994
Oil and gas sales for the first nine months decreased from $37,332 in 1994 to
$35,105 in 1995. This represents a decrease of $2,227 (6%). Oil sales increased
by $2,075 or 73%. A 61% increase in oil production increased sales by $1,744,
while a 7% increase in average oil sales prices increased sales by an additional
$319. Gas sales decreased by $5,420 or 23%. A 26% decrease in average gas prices
reduced sales by $6,230. This decrease was partially offset by a 3% increase in
gas production. The changes in average prices correspond with changes in the
overall market for the sale of oil and gas. The higher oil production was
primarily due to the shut-in of production from the Steamboat acquisition in
1994 to perform a workover. The increase in gas production was primarily the
result of higher production from the East Seven Sisters and Comite acquisitions
which were both shut-in during the 1994 to perform workovers.
I-5
<PAGE>
Lease operating expenses decreased from $13,040 in the first nine months of 1994
to $10,137 in the first nine months of 1995. The decrease of $2,903 is primarily
due to higher gas compression charges on the East Seven Sisters acquisition paid
by the Company in the first quarter of 1994. Such 1993 charges were fully paid
in the first quarter of 1994. This increase was partially offset by higher gas
compression charges incurred on the East Seven Sisters and Comite acquisitions
in 1995 as a result of the increase in gas production, noted above.
Depreciation and depletion expense decreased from $7,476 in the first nine
months of 1994 to $7,064 in the first nine months of 1995. This represents a
decrease of $412 (6%). A 13% decrease in the depletion rate reduced depreciation
and depletion expense by $1,030. This decrease was partially offset by the
changes in production, noted above. The decrease in the depletion rate is a
result of an upward revision of the oil and gas reserves at December 31, 1994.
General and administrative expenses increased from $7,161 in 1994 to $9,423 in
1995. This increase of $2,262 (32%) is primarily due to more staff time being
required to manage the Company's operations.
CAPITAL RESOURCES AND LIQUIDITY
The Company discontinued the payment of distributions during 1990. Future
distributions are dependent upon, among other things, an increase in prices
received for oil and gas. The Company will continue to recover its reserves and
reduce its obligations in 1995 and 1996. Based upon current projected cash flows
from the properties, it does not appear that the Company will have sufficient
cash to pay its operating expenses, repay its debt obligations and pay
distributions.
Due to the failure of oil and gas prices to return to their levels of the early
1980's, the depletion of the Company's oil and gas reserves, the magnitude of
the amounts owed by the Company, the Company's inability to distribute cash to
their Limited Partners for more than five years, and the ongoing costs of
operating, the General Partner has determined that Partnership operations are
unlikely to be profitable for the foreseeable future. As a result the General
Partner is evaluating the Company and intends to present to the Limited Partners
a proposal to liquidate and dissolve the partnership.
As of September 30, 1995, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
I-6
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits to this report.
(b) The Company filed no reports on Form 8-K during the
quarter ended September 30, 1995.
II-1
<PAGE>
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 OIL & GAS INCOME
PROGRAM II - 2, L.P.
--------------------
(Registrant)
By:ENEX RESOURCES CORPORATION
--------------------------
General Partner
By: /s/ R. E. Densford
-------------------
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
November 11, 1995 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000757658
<NAME> Enex Oil & Gas Income Program II-2, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> dec-31-1995
<PERIOD-START> jan-01-1995
<PERIOD-END> sep-30-1995
<CASH> 1187
<SECURITIES> 0
<RECEIVABLES> 11841
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13028
<PP&E> 5574530
<DEPRECIATION> 5413950
<TOTAL-ASSETS> 173608
<CURRENT-LIABILITIES> 46188
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (103627)
<TOTAL-LIABILITY-AND-EQUITY> 173608
<SALES> 35105
<TOTAL-REVENUES> 35105
<CGS> 19237
<TOTAL-COSTS> 19237
<OTHER-EXPENSES> 9423
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (17002)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10557)
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<EPS-DILUTED> 0
</TABLE>
