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 June 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 0-13486
ENEX OIL & GAS INCOME PROGRAM II - 3, L.P.
(Exact name of small business issuer as specified in its charter)
Texas 76-0098590
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)
Issuer's telephone number:
(713) 358-8401
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes x No
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM II - 3, L.P.
BALANCE SHEET
JUNE 30,
ASSETS 1995
(Unaudited)
CURRENT ASSETS:
Cash $ 351
Accounts receivable - oil & gas sales 12,545
Other current assets 325
Total current assets 13,221
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 5,391,536
Less accumulated depreciation and depletion 5,226,397
Property, net 165,139
TOTAL $ 178,360
LIABILITIES AND PARTNERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 2,104
Current portion of note payable to general partner 31,883
Payable to general partner 53,097
Total current liabilities 87,084
NOTE PAYABLE TO GENERAL PARTNER 146,527
PARTNERS' (DEFICIT):
Limited partners (29,800)
General partner (25,451)
Total partners' (deficit) (55,251)
TOTAL $ 178,360
See accompanying notes to financial statements.
I-1
ENEX OIL & GAS INCOME PROGRAM II - 3, L.P.
STATEMENTS OF OPERATIONS
(UNAUDITED) QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
REVENUES:
Oil and gas sales $ 19,458 $ 24,422 $ 33,937 $ 36,112
EXPENSES:
Depreciation and depletion 4,813 5,905 8,505 9,358
Lease operating expenses 5,159 5,790 11,341 16,770
Production taxes 879 1,484 1,730 2,228
General and administrative 5,109 4,528 8,255 7,672
Total expenses 15,960 17,707 29,831 36,028
INCOME FROM OPERATIONS 3,498 6,715 4,106 84
OTHER EXPENSE:
Interest expense to gen ptr (4,367) (4,033) (8,714) (7,653)
NET INCOME (LOSS) $ (869) $ 2,682 $ (4,608) $ (7,569)
See accompanying notes to financial statements.
I-2
ENEX OIL AND GAS INCOME PROGRAM II - 3, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,608) $ (7,569)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and depletion 8,505 9,358
(Increase) decrease in:
Accounts receivable - oil & gas sales (3,546) 6,824
Increase (decrease) in:
Accounts payable (8,420) (11,787)
Payable to general partner 12,298 17,519
Total adjustments 8,837 21,914
Net cash provided by operating activities 4,229 14,345
CASH FLOWS FROM INVESTING ACTIVITIES:
Property (additions) credits - development (77) 192
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in note payable to general partner (4,286) (14,347)
NET INCREASE (DECREASE) IN CASH (134) 190
CASH AT BEGINNING OF YEAR 485 632
CASH AT END OF PERIOD $ 351 $ 822
Cash paid during the period for interest $ 8,714 $ 7,653
See accompanying notes to financial statements.
I-3
ENEX OIL & GAS INCOME PROGRAM II - 3, 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 $4,680 and $11,967 were made on the note payable
to the general partner the second quarter of 1995 and 1994,
respectively. Weighted average principal outstanding was $180,043 and
$206,245 for the second quarter of 1995 and 1994, respectively.
Outstanding principal bore interest at a weighted average rate of
9.73% during the second quarter of 1995 and 7.84% during the second
quarter of 1994.
Item 2. Management's Discussion and Analysis or Plan of Operation.
Second Quarter 1995 Compared to Second Quarter 1994
Oil and gas sales for the second quarter decreased from $24,422 in 1994 to
$19,458 in 1995. This represents a decrease of $4,964 (20%). Oil sales
increased by $1,497 or 15%. A 6% increase in oil production increased
sales by $582, while a 9% increase in average oil prices increased sales by
an additional $915. Gas sales decreased by $6,461 or 44%. A 35% decrease
in average gas prices reduced sales by $4,297, while a 15% decrease in gas
production reduced sales by an additional $2,164. 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,
partially offset by natural production declines. The decrease in gas
production was primarily the result of natural production declines.
Lease operating expenses decreased from $5,790 in the second quarter of
1994 to $5,159 in the second quarter of 1995. The decrease of $631 (11%)
is primarily due to changes in production, noted above.
Depreciation and depletion expense decreased from $5,905 in the second
quarter of 1994 to $4,813 in the second quarter of 1995. This represents
a decrease of $1,092 (18%). The changes in production, noted above,
reduced depreciation and depletion expense by $487. An 11% decrease in the
depletion rate reduced depreciation and depletion expense by an additional
$605. The decrease in the depletion rate was primarily a result of an
upward revision of the oil and gas reserves at December 31, 1994.
General and administrative expenses increased from $4,528 in the second
quarter of 1994 to $5,109 in the second quarter of 1995. This increase of
$581 (13%) is primarily due to more staff time being required to manage the
Company's operations.
First Six Months in 1995 Compared to First Six Months in 1994
Oil and gas sales for the first six months decreased from $36,112 in 1994
to $33,937 in 1995. This represents a decrease of $2,175 (6%). Oil sales
increased by $5,024 or 37%. A 21% increase in oil production increased
sales by $2,838, while a 13% increase in average oil prices increased sales
by an additional $2,186. Gas sales decreased by $7,199 or 32%. A 30%
decrease in average gas prices reduced sales by $6,462, while a 3% decrease
in gas production reduced sales by an additional $737. 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,
partially offset by natural production declines. The decrease in gas
production was primarily the result natural production declines partially
offset by the partial shut-in of production from the East Seven Sisters
acquisition to perform a workover in the first quarter of 1994.
Lease operating expenses for the first six months decreased from $16,770 in
1994 to $11,341 in 1995. The decrease of $5,429 (32%) is primarily due to
gas compression charges incurred by the Company in the first quarter of
1994 which related to 1993 production from the East Seven Sisters
acquisition. Such 1993 charges were fully paid during the first quarter of
1994.
Depreciation and depletion expense decreased from $9,358 in the first six
months of 1994 to $8,505 in the first six months of 1995. This represents
a decrease of $853 (9%). A 13% decrease in the depletion rate reduced
depreciation and depletion expense by $1,276. This decrease was partially
offset by the changes in production, noted above. The decrease in the
depletion rate was primarily a result of an upward revision of the oil and
gas reserves at December 31, 1994.
General and administrative expenses for the first six months increased from
$7,672 in 1994 to $8,255 in 1995. This increase of $583 (8%) 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. 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.
As of June 30, 1995, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
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 June 30, 1995.
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 - 3, 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
August 11, 1995 By: /s/ James A. Klein
James A. Klein
Controller and Chief
Accounting Officer
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 - 3, L.P.
(Registrant)
By:ENEX RESOURCES CORPORATION
General Partner
By:
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
August 11, 1995 By:
James A. Klein
Controller and Chief
Accounting Officer
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 351
<SECURITIES> 0
<RECEIVABLES> 12,545
<ALLOWANCES> 0
<INVENTORY> 325
<CURRENT-ASSETS> 13,221
<PP&E> 5,391,536
<DEPRECIATION> (5,226,397)
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<CURRENT-LIABILITIES> 87,084
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<OTHER-SE> (55,251)
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<SALES> 33,937
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<TOTAL-COSTS> 21,576
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