SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT O
FILED BY A PARTY OTHER THAN THE REGISTRANT X
CHECK THE APPROPRIATE BOX:
X PRELIMINARY PROXY STATEMENT
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY {AS PERMITTED BY RULE
14A-6(E)(2)}
DEFINITIVE PROXY STATEMENT
DEFINITIVE ADDITIONAL MATERIALS
SOLICITING MATERIAL PURSUANT TO RULE 14A-11(C) OR RULE 14A-12
ENEX OIL & GAS INCOME PROGRAM II-5, L.P.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ENEX RESOURCES CORPORATION
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
O $125 PER EXCHANGE ACT RULES 0-11(C)(1)(II), 14A-6(I)(1),
OR 14A-6(J)(2).
O $500 PER EACH PARTY TO THE CONTROVERSY PURSUANT TO EXCHANGE
ACT RULE 14A-6(I)(3).
X FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(4)
AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION
APPLIES:
$500 "UNITS" OF LIMITED PARTNERSHIP INTERESTS
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(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
12,229
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(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11:. {SET FORTH
THE AMOUNT ON WHICH THE FILING FEE IS CALCULATED AND
STATE HOW IT WAS DETERMINED.}:
$124,698 {ESTIMATED PROCEEDS OF SALE OF PARTNERSHIP PROPERTIES}
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(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
$124,698
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(5) TOTAL FEE PAID:
$25.00
- --------------------------------------------------------------------------------
O FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS
O CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE
ACT RULE 0-11(A)(2) AND IDENTIFY THE FILING FOR WHICH OFFSETTING FEE WAS PAID
PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR
THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
(1) AMOUNT PREVIOUSLY PAID:
- --------------------------------------------------------------------------------
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.
- --------------------------------------------------------------------------------
(3) FILING PARTY:
- --------------------------------------------------------------------------------
(4) DATE FILED:
- --------------------------------------------------------------------------------
<PAGE>
CONFIDENTIAL,
FOR USE OF THE SECURITIES AND EXCHANGE COMMISSION ONLY
- ------------------------------------------------------
- ------------------------------------------------------
ENEX
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ENEX OIL & GAS INCOME PROGRAM II-5, L.P.
ENEX OIL & GAS INCOME PROGRAM II-6, L.P.
Three Kingwood Place
Suite 200
800 Rockmead Drive
Kingwood, Texas 77339
NOTICE OF SPECIAL MEETINGS
To Be Held On xxxxxxxx xx, 1996
To Our Limited Partners:
Special Meetings of the limited partners (the "Limited
Partners") of Enex Oil & Gas Income Program II-5 L.P. and Enex Oil & Gas Income
Program II-6 L.P., both Texas limited partnerships (the "Partnerships" or
individually a "Partnership"), have been called for , , 1996 at the offices of
Enex Resources Corporation (the "General Partner") at Three Kingwood Place, 800
Rockmead Drive, Kingwood, Texas 77339. Only Limited Partners of record of one or
more of the Partnerships at the close of business on , 1996 are entitled to
notice of and to vote at the Meetings or any adjournments thereof. The Limited
Partners of each Partnership will be asked to vote on a proposal to sell its
assets and, thereafter, dissolve and liquidate their Partnership in accordance
with the applicable provisions of their Partnership Agreement.
You will find a detailed explanation of the proposal,
including its purpose, anticipated benefits and conditions in the attached Proxy
Statement. Please read it carefully. We think you will conclude that the
proposal to sell the Partnership's assets is in the best interests of the
Limited Partners of each Partnership. After considering each Partnership's
financial condition and prospects, the Board of Directors of the General Partner
has unanimously approved the proposed transactions as being in the best
interests of the Limited Partners. The affirmative vote of a
majority-in-interest of the Limited Partners is required to approve the proposal
for each Partnership. The General Partner will vote all of the limited
partnership interests it owns (approximately 22.7% in Enex Oil & Gas Income
Program II-5, L.P. and 22.5% in Enex Oil & Gas Income Program II-6, L.P.) in
favor of the proposal.
It is very important that you cast your votes on this matter
promptly, regardless of the size of your holdings. Hence, even if you plan to
attend the Special Meetings in person, we urge you to complete, sign and return
the enclosed proxy (or proxies) as soon as possible in the enclosed envelope in
order to assure the presence of a quorum at each of the meetings. Any proxy may
be revoked at any time before it is exercised by following the instructions set
forth on page one of the accompanying Proxy Statement.
BY ORDER OF THE GENERAL PARTNER,
ENEX RESOURCES CORPORATION
GERALD B. ECKLEY
President,
General Partner
, 1996
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<PAGE>
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- ------------------------------------------------------
ENEX
- ------------------------------------------------------
ENEX OIL & GAS INCOME PROGRAM II-5, L.P.
ENEX OIL & GAS INCOME PROGRAM II-6, L.P.
Three Kingwood Place
Suite 200
800 Rockmead Drive
Kingwood, Texas 77339
PROXY STATEMENT
Solicitation and Voting of Proxies
This Proxy Statement is furnished in connection with the
solicitation on behalf of Enex Resources Corporation ("Enex" or the "General
Partner") of proxies to be voted at special meetings (each a "Special Meeting")
of the limited partners (the "Limited Partners") of Enex Oil & Gas Income
Program II-5, L.P., and Enex Oil & Gas Income Program II-6, L.P., both Texas
limited partnerships (the "Partnerships" or, individually, a "Partnership"), to
be held on , 1996.
The Board of Directors of the General Partner has fixed the
close of business on , 1996 as the record date for the determination of Limited
Partners of record entitled to notice of and to vote at the Special Meetings.
The Limited Partners of each Partnership will be asked to vote on a proposal to
sell its assets and, thereafter, dissolve the Partnership and liquidate it in
accordance with the applicable provisions of its Amended Certificate and
Agreement of Limited Partnership ("Partnership Agreement").
The presence, in person or by proxy, of the holders of a
majority-in-interest of the issued and outstanding limited partnership interests
("Interests") of a Partnership entitled to vote will constitute a quorum for the
transaction of business by that Partnership. A proxy in the accompanying form
which is properly signed, dated and returned to the General Partner and not
revoked will be voted in accordance with instructions contained therein. If
Interests are held in joint name, a proxy signed by one of the joint owners or
by a majority of the joint owners will be voted in accordance with the
instructions contained therein. If no instructions are indicated, proxies will
be voted for the proposal recommended by the Board of Directors of the General
Partner. Proxies will be received and tabulated by the General Partner for each
Partnership. Votes cast in person will be tabulated by an election inspector
appointed by the General Partner.
Limited Partners who execute proxies may revoke them at any
time prior to their being exercised by delivering written notice to the
Secretary of the General Partner at the above address or by subsequently
executing and delivering another proxy at any time prior to the voting. Mere
attendance at a Special Meeting will not revoke the proxy, but a Limited Partner
present at a Special Meeting may revoke his proxy and vote in person.
The approximate date on which this Proxy Statement and the
accompanying proxy or proxies will first be mailed to Limited Partners is ,
1996.
The date of this Proxy Statement is , 1996
----------------------
1
<PAGE>
Expenses of Solicitation
The cost of soliciting proxies, which will primarily include
expenses in connection with the preparation and mailing of this Proxy Statement
and all papers which now accompany or may hereafter supplement it, will be borne
by the Partnerships pro rata in accordance with the estimated liquidation value
of their respective assets (see Table 1 below). This basis for allocation was
chosen over others (such as the number of Unitholders of each Partnership or the
amount of each Partnership's original capital or allocating one-half of the
costs to each Partnership) because the largest share of the costs of this
solicitation consist of counsel fees in connection with the preparation of this
Proxy Statement. In the General Partner's opinion, these costs are most
equitably allocated in accordance with the value of the Partnerships' assets.
The solicitation will be made by mail. The General Partner
will supply brokers or persons holding Interests of record in their names or in
the names of their nominees for other persons, as beneficial owners, with such
additional copies of proxies, and proxy materials as may reasonably be requested
in order for such record holder to send one copy to each beneficial owner, and
will, upon request of such record holders, reimburse them for their reasonable
expenses in mailing such material.
Certain directors, officers and employees of the General
Partner, not especially employed for this purpose, may solicit Proxies, without
additional remuneration therefor, by mail, telephone, telegraph or personal
interview.
TABLE OF CONTENTS
Solicitation and Voting of Proxies......................................... 1
Expenses of Solicitation................................................... 2
Summary ......................................................... 3
Special Factors ......................................................... 4
The Proposal ......................................................... 8
Reasons for the Proposed Transactions..................................... 11
Partnership Operations and Financial Condition ............................ 11
Fairness of the Proposed Transactions..................................... 12
Potential Benefits to the Partners......................................... 13
Record Date, Voting and Security Ownership of Certain Beneficial Owners
and Management........................................................... 14
Certain Transactions....................................................... 15
Dissenters' Rights......................................................... 15
Federal Income Tax Consequences............................................. 15
Description of Business.................................................... 16
Description of Property and Oil and Gas Reserves........................... 16
Valuation of Oil and Gas Properties......................................... 17
2
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Principal Executive Offices and Telephone Number............................ 18
Information Concerning the General Partner.................................. 18
Other Matters .......................................................... 18
Documents Incorporated By Reference........................................ 19
The following discussion is intended to highlight certain
information contained elsewhere herein and, accordingly, should be read in
conjunction with such information. It is not a complete statement of all
material features of the matters being submitted to Limited Partners for their
approval and is qualified in its entirety by this Proxy Statement and each
Partnership's Annual Report on Form 10-KSB and Quarterly Reports on Form 10-QSB
which accompany this Proxy Statement. LIMITED PARTNERS ARE URGED TO READ THE
PROXY STATEMENT AND THE ANNUAL AND QUARTERLY REPORTS IN THEIR ENTIRETY.
SUMMARY
Person Soliciting Proxies....... Enex Resources Corporation (the "General
Partner")
Date of Special Meetings......... xxxxxxxx xx, 1996
Time and Place...................... 2:00 P.M. local time, at the General
Partner's principal executive offices
located at Three Kingwood Place, Suite
200, 800 Rockmead Drive, Kingwood,
Texas 77339
Record Date........................... xxxxxxxx xx, 1996
Class of Securities Entitled
to Vote........................... Limited Partnership Interests in each
Partnership
Enex Oil & Gas Income Program
Units of Limited Partnership Interest.... II-5, L.P. II-6, L.P.
---------- ----------
Outstanding on the Record Date and Entitled to Vote* 12,229 11,097
Number of Limited Partners.......................... 1,751 1,789
Units of Limited Partnership Interest Beneficially
Owned by the General Partner....................... 2,773 2,500
Percentage Interest Beneficially Owned by the
General Partner.................................. 22.6745 % 22.5305 %
Percentage of Remaining Limited Partnership Interests
3
<PAGE>
Needed to Approve the Proposal.................... 27.3256 % 27.4696 %
Estimated Fair Market Value of Oil & Gas Reserves**...$114,787 $94,259
Estimated Liquidation Value of Oil & Gas Reserves*** $124,698 $104,362
- ------------------------------------
* The aggregate amount of the Limited Partners' initial subscriptions divided
by $500.
** The fair market value of each Partnership was determined by H.J. Gruy and
Associates, Inc. as of June 30, 1995, as described below in "Description of
Property and Oil and Gas Reserves", and adjusted by the General Partner for
intervening operations through September 30, 1995.
*** The liquidation value of each Partnership was determined by the General
Partner from the prices included in the "Third Party Offers" described below.
Additionally, Gerald B. Eckley, President of the General Partner owns 4 units or
a 0.0357% Interest in Enex Oil & Gas Income Program II-6, L.P., which he will
vote in favor of the proposal. No other executive officer or director of the
General Partner owns an interest in any of the Partnerships. The General Partner
knows of no other person who has beneficial ownership of more than 5% of the
interests in any of the Partnerships.
SPECIAL FACTORS
Proposal to Sell the Partnerships' Assets:
Due to the magnitude of the offers received from unaffiliated
third party bidders for working interests owned by other partnerships managed by
the General Partner in the same properties in which Enex Oil & Gas Income
Program II-5, L.P and II-6, L.P. own working interests (the "Third Party
Offers"), the failure of oil and gas prices to return to their levels of the
early 1980s, the depletion of each Partnership's oil and gas reserves (see "Oil
and Gas Reserves" attached as Tables B and B-1), the Partnerships' inability to
generate sufficient cash flow from operations, to consistently maintain regular
cash distributions to the Limited Partners, and the ongoing costs of operating
each Partnership (see Table 1 and "Partnership Operations and Financial
Conditions" below and "Selected Financial Data" attached as Table A and "General
and Administrative Costs" attached as Table E), the General Partner has
determined that it is in the best interests of the Limited Partners to sell the
Partnerships' assets and, thereafter, dissolve and liquidate the Partnerships.
In light of the above-described circumstances, Limited Partners
of each Partnership will be asked to consider and vote upon a proposal to sell
its assets and, thereafter, dissolve and liquidate the Partnership in accordance
with the provisions of its Partnership Agreement (the "Proposal"). Adoption of
the Proposal by each Partnership requires the affirmative vote of a majority in
interest of the Limited Partners of such Partnership. Because of the amount of
Limited Partner interests of each Partnership held by the General Partner, the
Proposal could be approved by a Partnership without the affirmative vote of a
majority of the interests held by all other Limited Partners of such
Partnership. If the Proposal is adopted, the assets will be sold and the
proceeds of sale allocated to the Partners' capital accounts in accordance with
the provisions of the Partnership Agreements. The General Partner will not
purchase any Partnership properties. If the
4
<PAGE>
Partnerships' assets are not sold pursuant to the Proposal described herein, the
Partnerships will continue to be managed by the General Partner on an ongoing
basis.
The primary benefits to the Limited Partners of the proposed
sales are: 1) the receipt of a liquidating cash distribution from the
Partnership and 2) the potential to realize favorable tax consequences (see
"Federal Income Tax Consequences" below). The primary benefit to the General
Partner would be the retirement of Enex Oil & Gas Income Program II-6, L.P.'s
indebtedness to the General Partner ($39,111 at September 30, 1995) and its
participation as a Limited Partner to the extent of its limited partnership
interest in the consequences of the liquidation in the same manner as all other
Limited Partners.
The General Partner considered, as alternatives to liquidation,
consolidating the Partnerships with other partnerships managed by the General
Partner and continuing to manage the Partnerships on an ongoing basis. However,
the Board of Directors of the General Partner, a majority of whose members are
not employees of the General Partner or any affiliates of the General Partner,
has unanimously approved the proposed asset sales as being fair and in the best
interests of the Limited Partners based on the following factors, in order of
their significance: (i) the amount of proceeds expected to be received from the
sale of the Partnerships' oil and gas properties; and (ii) the potential of the
Limited Partners to realize favorable tax consequences. These factors are
discussed in detail under the captions "The Proposal to Dissolve and Liquidate,"
"Federal Income Tax Consequences," "Reasons for the Proposed Transactions,"
"Fairness of the Proposed Transactions" and "Valuation of Oil and Gas
Properties" below. No director or group of directors has retained an
unaffiliated representative to act solely on behalf of the Limited Partners for
the purposes of negotiating the terms of the proposed asset sales or to prepare
a report concerning the fairness of such sales. No firm offer has been made by
any person during the preceding 18 months regarding the merger or consolidation
of any of the Partnerships, the sale or transfer of all or any substantial part
of the assets of any Partnership or securities of any Partnership which would
enable the holder thereof to exercise control of such Partnership. However,
unaffiliated third parties have recently purchased from other partnerships
managed by the General Partner working interests in the same oil and gas
properties in which working interests are owned by Enex Oil & Gas Income Program
II-5, L.P. and II-6, L.P. The prices paid by such third parties were higher than
the fair market values for those properties that had been determined as of June
30, 1995 by H.J. Gruy and Associates, Inc. ("Gruy"), an independent petroleum
consulting firm engaged by the General Partner. Even though there are no
assurances, the General Partner believes that the working interests owned by
Enex Oil & Gas Income Program II-5, L.P. and II-6, L.P. can also be sold at
comparable sales prices, after adjusting for intervening operations. This
estimated sales price for each property is listed in Table 1 and is included in
the calculation of the liquidation value for each Partnership.
Federal Income Tax Consequences:
In general, the General Partner believes that, with respect to
individuals who are citizens or residents of the United States, for federal
income tax purposes the proposed sales of each Partnership's assets will result
in a capital loss to the Unitholders of each Partnership. In addition to the
capital loss, each Partnership will have a net operating loss from the
Partnership's current year of operation which will be deductible by the
Unitholders.
If the proceeds of sale are equal to the estimated liquidation
value of the assets of a Partnership, the General Partner believes the
Unitholders will have a 1996 tax loss per $500 Unit of limited partnership
interest outstanding approximately equal to the amounts shown below:
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<PAGE>
1996 Loss
Per $500 Unit
Enex Oil & Gas Income Program II-5, L.P. $54.11
Enex Oil & Gas Income Program II-6, L.P. $51.88
Unitholders may also have suspended passive losses from prior
years which may be utilized in the current year to offset income from other
sources. The following amounts per $500 Unit of limited partnership interest
outstanding indicate the passive loss generated prior to 1996 which a Unitholder
has available for use in the current year if he or she is an original investor
and has never utilized any of the Partnership's passive losses in prior years.
Passive Loss
Per $500 Unit
Enex Oil & Gas Income Program II-5, L.P. $211.95
Enex Oil & Gas Income Program II-6, L.P. $236.26
Appraisal Report:
Quantitative information regarding each Partnership's oil and
gas reserves is included in Item 2 of each Partnership's 1994 Form 10-KSB
accompanying this Proxy Statement and in Tables B, B-1, C and D attached hereto.
Included in this information are fair market valuations of the properties of
each Partnership prepared by Gruy. Gruy has been preparing reserve estimates for
each of the Partnership's oil and gas reserves since the inception of each
Partnership's operations. Gruy was selected by the General Partner for this task
based upon its reputation, experience and expertise in this area. In 1995 and
1994, Enex Oil & Gas Income Program II-5, L.P., and II-6, L.P. paid Gruy a total
of $1,080 and $982, respectively, in fees for annual reserve report valuations.
In 1995, these Partnerships paid Gruy a total of $750 for the fair market
valuations described in this Proxy Statement. In addition, Gruy has received
compensation from the General Partner and other limited partnerships of which
Enex is the general partner during the past two years in the aggregate amount of
$123,398.
Gruy has estimated for each oil and gas property in which the
Partnerships own interests, as of June 30, 1995, the recoverable units of oil
and gas and the undiscounted and discounted future net cash flows by year
commencing July 1, 1995 and continuing through the estimated productive lives of
the properties. The Limited Partners should be aware Gruy's reserve estimates
are estimates only and should not be construed as being exact amounts. Gruy
estimated each property's oil and gas reserves, applied certain assumptions
regarding price and cost escalations, applied a 10% discount factor for time and
the following discount factors for risk, location, type of ownership interest,
operational characteristics and other factors: 33% to 34% for proved developed
producing reserves and 39% for proved developed nonproducing reserves. See
"Valuation of Oil and Gas Properties" and Table B-1 below. Gruy allocated the
estimates among the Partnerships on a pro-rata basis in accordance with their
respective ownership interest in each of the properties evaluated. See Tables C
and D. The resulting value for each Partnership as adjusted by the General
Partner for intervening operations through September 30, 1995 is included in
Table B and is labelled Fair Market Value of Oil and Gas Reserves. Gruy's
estimate of the fair market value of the oil and gas properties of Enex Oil &
Gas Income Program II-5, L.P., and Enex Oil & Gas Income Program II-6, L.P., as
adjusted by the General Partner for intervening operations through September 30,
1995, is $114,787 and $94,259, respectively.
6
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No instructions were given and no limitations were imposed by
the General Partner on the scope of or methodology to be used in preparing the
fair market valuations by Gruy. All information provided by Enex and used by
Gruy in preparing such valuations were verified and corroborated through sources
unaffiliated with Enex. The fair market valuation report prepared by Gruy is
available for inspection and copying at the office of the General Partner during
regular business hours by any interested Limited Partner or his representative
who has been so designated in writing. A copy of such report will be mailed to
any interested Limited Partner or his representative upon written request.
7
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The Proposal
At the Special Meetings, the Limited Partners of each
Partnership will be asked to consider and vote upon the Proposal (i.e., to sell
each Partnership's assets and, thereafter, dissolve and liquidate each
Partnership in accordance with the provisions of its Partnership Agreement, as
described herein). Upon the sale of substantially all of each Partnership's
assets and the subsequent winding up and termination of the business and affairs
of each Partnership, (i) all proceeds of sale will be allocated to the Partners
in accordance with provisions of the Partnership Agreement and the Partners'
capital accounts adjusted accordingly and (ii) the value of the remaining
non-cash assets of the Partnership shall be determined (as provided below) and
the Partners' capital accounts adjusted as if such remaining assets had been
sold at a price equal to such value and the applicable allocations had been
made. The expenses related to dissolving and liquidating each Partnership will
be deducted from the proceeds of the sale of Partnership oil and gas properties.
These costs are estimated to be approximately $6,725, and $6,850, for Enex Oil &
Gas Income Program II-5, L.P. and II-6, L.P., respectively, with the principal
expenses being legal fees incurred in connection with the preparation of this
Proxy Statement and related materials, solicitation expenses, and printing
costs. If it becomes necessary to engage the services of a broker or other agent
to facilitate the sale of the Partnerships' properties, customary commissions
and selling fees will have to be incurred, however. According to the Partnership
Agreements, such proceeds of all sales and remaining assets are to be
distributed as follows:
(i) all of the Partnership's debts and liabilities to persons
other than the General Partner and the Limited Partners (collectively, the
"Partners"), which are immaterial in amount, shall be paid and discharged in
their order of priority, as provided by law;
(ii) all of the Partnership's debts and liabilities to the
Partners shall be paid and discharged; and
(iii) any remaining cash and other assets of the Partnership
shall be distributed to the Partners in proportion to and in payment of the
positive balances in their respective capital accounts, with the effect of
bringing such capital accounts to zero.
The amount of the potential proceeds from the sale of each
Partnership's oil and gas properties and other assets has been estimated and
included in the calculation of the liquidation value of each Partnership. See
Table B-1. See Tables B and C for quantitative information regarding proved oil
and gas reserves, estimated future net cash flows, and discounted future net
cash flows of each Partnership's oil and gas reserves as of June 30, 1995
prepared by Gruy. Similar quantitative and cash flow information is shown for
each Partnership as of December 31, 1994, 1993 and 1992.
Gruy has also prepared a fair market valuation as of June 30,
1995 for every oil and gas property owned by each Partnership which the General
Partner has adjusted for intervening operations through September 30, 1995 (see
Table B-1). Because of the difficulty of estimating oil and gas reserves, the
proceeds of a sale may not always reflect the full value of the properties to
which they relate. Such estimates are merely appraisals of value and may not
correspond to realized value. Based upon the Third Party offers, though, the
General Partner believes that sales proceeds will, in the aggregate, exceed
these fair market values. Every reasonable effort will be made by the General
Partner to sell the Partnerships' properties for the highest possible price.
Qualified potential buyers will be sought out, informed of the availability of
the properties for purchase, and distributed a sales brochure. These potential
buyers will include, but not be limited to, the purchasers of similar interests
in the same properties, operators of the properties, other non-operating owners
of the properties, and companies and/or persons known to own or be interested in
owning the types of properties available.
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The General Partner will not bid on any Partnership properties
but will prepare a bid package to be furnished to potential purchasers. The bid
packages will include sufficient information for prospective bidders to
reasonably determine values for the properties. A copy of the bid package will
be mailed to any Unitholder who notifies the General Partner that he or she is
interested in bidding on any Partnership properties. Additional data will be
available in the data room set up at the General Partner's office whereby
potential bidders will be able to review in detail the General Partner's records
and files pertaining to the properties. In addition, pursuant to the provisions
of the Texas Revised Uniform Limited Partnership Act (the "Texas Act"), each
Partnership is required to make available certain information to Limited
Partners at such Partnership's principal office, including such information
regarding the business, affairs and financial condition of such Partnership as
is just and reasonable for the Limited Partners to examine and copy. At all
times, and in particular in effectuating the Proposal if approved, the General
Partner has acted and will continue to act in accordance with its fiduciary
duties as a general partner of a limited partnership governed by the Texas Act
and applicable common law principles.
In all cases, each Partnership property will be sold for the
highest possible price. Based upon the Third Party offers, the General Partner
estimates that the proceeds to be received by each Partnership for its oil and
gas properties will total approximately $127,000 for Enex Oil & Gas Income
Program II-5, L.P.; and $104,000 for Enex Oil & Gas Income Program II-6, L.P.
All net cash proceeds of the proposed property sales will be used first to
retire Partnership indebtedness (including $39,111 owed to the General Partner
by Enex Oil & Gas Income Program II-6, L.P.) and the remaining cash proceeds
will be distributed to the Partners in accordance with the liquidation
provisions of the Partnership Agreements described above.
For additional information concerning the Partnerships'
properties , see "Description of Property and Oil and Gas Reserves" below.
9
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<TABLE>
<CAPTION>
TABLE 1
Enex Oil & Gas Income Program
II-5, L.P. II-6, L.P.
Estimated Liquidation Value of
Oil and Gas Reserves (1)
Property Name:
<S> <C> <C> <C>
Newport ............................. $ 42.463 $ 40.338
Blair ............................... 2,050 --
Hanson .............................. 82,235 64,024
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Total .......................................... $126,748 $104,362
Cash on hand (2) ............................ .. 3,035 6,649
Accounts Receivable (2) ...................... 23,846 20,576
Other Assets (2) ................................ 508 480
-------- --------
Liquidation Value of Assets ..................... $154,137 $132,067
Less:
Liability to General Partner (2) .... -- 39,111
Liability to others (2) ............. 10,619 13,344
-------- --------
Partnership Net Liquidation Value .............. $143,518 $ 79,612
======== ========
</TABLE>
(1) The estimated liquidation value of each Partnership's oil and gas
reserves was based upon offers received from unaffiliated third parties for
similar working interests owned by other partnerships managed by the General
Partner.
(2) Assets and liabilities per each Partnership's respective Form 10-QSB as
of September 30, 1995.
As shown above, the estimated liquidation value of each Partnership's oil
and gas reserves and other assets is greater than the outstanding debt owed by
each Partnership. Therefore, the General Partner believes there will be
sufficient proceeds from the sale of Partnership properties to pay the
Partnerships' debts and distribute the excess cash to the Partners.
To the General Partner's knowledge, consummation of the Proposal is not
subject to compliance with any federal or state regulatory requirements other
than those applicable to the solicitation of proxies pursuant to this Proxy
Statement. Following the proposed sales and the dissolution and liquidation of
the Partnerships,
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the registration of the Limited Partnership Interests of the Partnerships under
Section 12(g) of the Exchange Act and the Partnerships' obligations to file
reports pursuant to Section 15(d) of the Exchange Act will terminate.
Reasons for the Proposed Transactions:
On December 30, 1995, the limited partners of four partnerships managed by
the General Partner, Enex Oil & Gas Program II-1, L.P., II-2, L.P., II-3, L.P.
and II-4, L.P. voted to dissolve and liquidate their partnerships in accordance
with their Partnership Agreements. The General Partner solicited bids from
unaffiliated third parties to purchase the oil and gas properties owned by these
four partnerships, including interests in the Newport, Blair and Hanson
properties. Bids were received and working interests in certain of these
properties were sold. The prices paid were higher than the fair market values
for those properties that had been determined by Gruy as of June 30, 1995. Enex
Oil & Gas Income Program II-5, L.P. and II-6, L.P. also own working interests in
the Newport, Blair and Hanson properties. As a result of these property sales,
the General Partner began evaluating Enex Oil & Gas Income Program II-5 L.P.'s
and II-6 L.P.'s prospects, including the sale of substantially all of their
properties. Even though there are no assurances, the General Partner believes
that the working interests owned by Enex Oil & Gas Income Program II-5, L.P. and
II-6, L.P. can also be sold at comparable sales prices after adjusting for
intervening operations. After a review of each Partnership's cash flow from
operations, indebtedness, the estimated fair market values of its properties,
and its estimated liquidation value which included the estimated proceeds from
the sale of its oil and gas properties based upon the Third Party Offers, as
well as the prospects for improvement in market prices of oil and gas, officers
of the General Partner advised the Board of Directors of the General Partner
(the "Board") in January 1996 that the Partnerships' assets should be sold. They
further advised the Board that a sale of assets would more than likely provide
the Limited Partners with a liquidating cash distribution and the potential for
favorable tax consequences.
Due to the failure of oil and gas prices to return to their levels of the
early 1980s, the depletion of each Partnership's oil and gas reserves (see "Oil
and Gas Reserves" attached as Tables B and B-1), the Partnerships' inability to
generate sufficient cash flow to consistently maintain regular cash
distributions to their Limited Partners, the ongoing costs of operating each
Partnership (see "Partnership Operations and Financial Condition" below and
"General and Administrative Costs" attached as Table E), and the prices included
in the Third Party Offers for working interests owned by other partnerships
managed by the General Partner in the same properties in which Enex Oil and Gas
Program II-5, L.P. and Enex Oil and Gas Program II-6, L.P. own working
interests, the General Partner has determined that it is in the best interests
of the Limited Partners to approve the proposed asset sales and dissolve and
liquidate their Partnerships.
Partnership Operations and Financial Condition
Enex Oil & Gas Income Program II - 5, L.P.
Cash flow provided by operating activities for the nine months ended
September 30, 1995 was $2,550. As a result, cash distributions were not made in
1995. Only two quarterly cash distributions have been made since April 1990 due
to the lack of available cash flow.
11
<PAGE>
Enex Oil & Gas Income Program II - 6, L.P.
Cash flow provided by operating activities for the nine months ended
September 30, 1995 was $17,159. Of this amount, $8,069 was paid on the note owed
to the General Partner. As a result, no cash distributions were made in 1995.
The Partnership has not made a distribution since April 1990. At September 30,
1995 it had $52,455 in debt of which $39,111 was owed to the General Partner.
Both Partnerships
If oil and gas prices were to increase significantly, the future revenues
from the oil and gas produced would increase and would more than likely allow
distributions to be reinstated. However, the General Partner believes that the
prices expected to be received for the sale of the Partnerships' properties are
more than the future cash flows from these properties after deducting for
ongoing general and administrative costs and discounting for time, risk and
other factors. Therefore, the General Partner believes it is in the best
interests of the Limited Partners to sell the properties and dissolve the
Partnerships.
Fairness of the Proposed Transactions
At its January 1996 meeting, the Board (a majority of whose members are not
employees of the General Partner or any affiliates of the General Partner)
considered the Proposal and, as alternatives, consolidating the Partnerships
with other partnerships with other partnerships managed by the General Partner
and continuing to manage the Partnerships on an ongoing basis.
Consolidating the Partnerships. Because any consolidation of partnerships
managed by the General Partner or with the General Partner would be based on the
net fair market value of a partnership's assets less liabilities, the General
Partner believes, based upon the prices included in the Third Party Offers
(which exceed Gruy's fair market valuation of the Partnerships' properties as
adjusted by the General Partner for intervening operations through September 30,
1995), that the Partners would receive more value by selling their assets than
they would in such a consolidation. Consolidating these two Partnerships was
also considered. Although the aggregate general and administrative expenses of
the Partnerships would be slightly reduced by such a transaction, the reductions
would not be sufficient to cause the consolidated Partnership to generate
sufficient cash flow to maintain regular cash distributions to its Partners.
Continuing the Management of the Partnerships. The General Partner
concluded that the estimated liquidation value of the Partnerships based upon
the prices included in the Third Party Offers and the Partnerships' inability to
generate sufficient cash flow from operations to maintain regular cash
distributions to their Partners makes their continued operation less attractive
than selling the Partnerships' properties and distributing the net proceeds
remaining after payment of indebtedness.
The Board unanimously approved the Proposal as being fair and in the best
interests of the Limited Partners based on the following factors, in order of
their significance: (i) the amount of proceeds expected to be received from the
sale of each Partnership's oil and gas properties, and (ii) the potential of the
Limited Partners to realize favorable tax consequences.
All members of the General Partner's Board of Directors were present at all
meetings at which the proposed transactions were considered. If the Partnerships
are not liquidated and dissolved pursuant to the
12
<PAGE>
Proposals described herein, the General Partner will continue to manage the
Partnerships on an ongoing basis.
The General Partner also considered whether the consideration or benefit to
the Limited Partners from the proposed transactions constitutes fair value in
relation to current market prices, historical market prices, net book value,
going concern value, liquidation value, and the estimated fair market values
prepared by Gruy. The General Partner believes that alternative methods of
valuing the Partnership properties, such as using current or historical market
prices, prices recently paid by the General Partner for units of limited
partnership interest in the Partnerships ($9.83 and $5.84 per Unit for Enex Oil
& Gas Income Program II-5, L.P. and II-6, L.P., respectively), net book value,
going concern value or Gruy's fair market value would not result in a higher
valuation of Partnership properties than the values the General Partner expects
to realize through the sale of the Partnerships' oil and gas properties to
unaffiliated third party buyers at the prices comparable to those included in
the Third Party Offers. See Table B-1.
Potential Benefits to the Partners
To the Limited Partners
The primary benefits of the proposed transactions to the Limited Partners
are: 1) the receipt of a liquidating cash distribution from the Partnership, and
2) the potential to realize favorable tax consequences (see "Federal Income Tax
Consequences" below). The General Partner believes there are no detriments of
the transactions to the Limited Partners, other than the potential loss of
income that might be earned in the future if oil and gas prices rise
significantly.
Enex owns by far the largest limited partnership interest in each
Partnership (see "Record Date, Voting and Security Ownership of Certain
Beneficial Owners and Management"). If the Proposals are approved Enex will
participate as a Limited Partner to the extent of its limited partnership
interest in the consequences of the proposed transactions in the same manner as
all other Limited Partners.
To the General Partner
As General Partner, Enex will benefit from the proposed transactions by
collecting the amounts owed to it by Enex Oil & Gas Income Program II-6, L.P.
immediately upon the sale of such Partnership's properties instead of collecting
such amounts over a more extended period of time. And, even though the General
Partner believes that the risk is minimal, the proposed asset sales and
subsequent liquidation and dissolution will eliminate the General Partner's risk
that such amounts owed to it could, in the future, become uncollectible.
Upon the liquidation of the Partnerships, the General Partner will also
cease to incur the ongoing expenses of administering and operating the
Partnerships. Actual administrative expenses paid by the General Partner for
each Partnership in 1994 and the first six months of 1995, as well as estimates
of such expenses for 1995 and 1996, are set forth in Table E. Expenses
associated with the Partnerships' reporting obligations under the Securities and
Exchange Act of 1934, as amended, the preparation of annual tax reports, and
annual audits, comprise a significant portion of such administrative expenses.
Even though the Partnerships have, on an ongoing basis, been able to reimburse
the General Partner for these expenses, the liquidation and dissolution of the
Partnerships will eliminate any risk that these amounts may not be collectible
in the future.
13
<PAGE>
Record Date, Voting and Security Ownership of Certain Beneficial Owners and
Management
As of the Record Date, the Partnerships had the following numbers of
"Units" of limited partnership interest (i.e., the aggregate amount of the
Limited Partners' initial subscriptions divided by $500) outstanding and
entitled to vote (in each case the number of Units represents 100% of the
outstanding limited partnership interests of the Partnership):
Number of
Units
Enex Oil & Gas Income Program II-5, L.P. 12,229
Enex Oil & Gas Income Program II-6, L.P. 11,097
From January 1, 1993 to the date hereof, the General Partner has purchased
an aggregate of 1,666 and 1,805 Units of Enex Oil & Gas Income Program II-5,
L.P. and Enex Oil & Gas Income Program II-6, L.P., respectively (including
approximately 21 Units of II-5 and 23 Units of II-6 during the past sixty (60)
days), at an average purchase price per Unit of $9.83, and $5.84, respectively,
in accordance with its annual offer to repurchase such interests as required by
the Partnership Agreements.
Approval of the Proposal for each Partnership requires the affirmative
vote of the holders of a majority-in-interest of that Partnership. The term "the
holders of a majority-in-interest" refers to Limited Partners (including the
General Partner) holding more than fifty percent of the limited partnership
interests of all the Limited Partners of that Partnership. With respect to the
proposal, abstentions will be included in determining the presence of a quorum,
and will be treated as votes cast against the proposal. "Broker non- votes" will
be deemed absent for purposes of determining the presence of a quorum and will
be treated as votes cast against the proposal. Any unmarked proxies, including
those submitted by brokers and nominees, will be voted in favor of the
applicable proposal.
The following table sets forth for each Partnership, as of the Record
Date, the number and percentage of Units beneficially owned by the General
Partner and by Gerald B. Eckley, President of the General Partner. No other
executive officer or director of the General Partner owns an interest in either
of the Partnerships. The General Partner knows of no other person who has
beneficial ownership of more than 5% of the outstanding limited partnership
interests in either of the Partnerships.
<TABLE>
<CAPTION>
Enex Oil and Gas Income Program
II-5, L.P. II-6, L.P.
<S> <C> <C>
Units Beneficially Owned by the General Partner 2,773 2,500
Percentage Beneficially Owned by the General Part 22.6745 % 22.5305 %
Units Beneficially Owned by Mr. G. B. Eckley . -- 4
Percentage Beneficially Owned by Mr. G. B. Eckley -- .0357 %
</TABLE>
The General Partner and Mr. Eckley intend to vote all of the
Units they own in favor of the Proposals. Therefore, for each Partnership, if
the following percentages of the outstanding Units are voted by other Limited
Partners in favor of the Proposal, it will be approved:
14
<PAGE>
Percentage of Units
Needed to Approve
Proposal
Enex Oil & Gas Income Program II-5, L.P. 27.3256%
Enex Oil & Gas Income Program II-6, L.P. 27.4339%
Certain Transactions
The following amounts relate to transactions between the
General Partner and the Partnerships which have occurred since January 1, 1993:
<TABLE>
<CAPTION>
Allocated General & Administrative
Expenses
1993 1994 9 months 1995
---- ---- ------------
<S> <C> <C> <C>
Enex Oil & Gas Income Program II-5, L.P. $17,492 $20,470 $12,821
Enex Oil & Gas Income Program II-6, L.P. $16,642 $17,917 $11,238
</TABLE>
The Partnerships reimburse the General Partner for
administrative costs incurred on their behalf. Administrative costs allocated to
the Partnerships are computed on a cost basis in accordance with standard
industry practices by allocating the time spent by the General Partner's
personnel among all projects and by allocating rent and other overhead on the
basis of the relative direct time charges. The General Partner believes that
these amounts are less than administrative charges customarily charged other
partnerships because the General Partner manages 39 other partnerships and is,
therefore, able to allocate such similar charges over a larger base of
partnerships.
Dissenters' Rights
Limited Partners will not have, nor be entitled to, any
dissenters' or appraisal rights with respect to the Proposals under the
Partnership Agreements or under applicable law. Generally, in the absence of a
breach of the General Partner's fiduciary duty (i.e., to act fairly and in the
best interests of the Partnerships and their Limited Partners), Limited Partners
who object to the Proposal will have no remedy available to them under state law
or under the Partnership Agreements if the percentage of Units needed to approve
the Proposal vote for it (see "Record Date, Voting and Security Ownership of
Certain Beneficial Owners and Management" above).
Federal Income Tax Consequences
In general, the General Partner believes that, with respect to
individuals who are citizens or residents of the United States, for federal
income tax purposes the proposed sale of each Partnership's assets will result
in a capital loss to the Unitholders of each Partnership. In addition to the
capital loss, each Partnership will have a net operating loss from the
Partnership's current year of operation which will be deductible.
If the consideration received in the proposed asset sales is
equal to the estimated liquidation value of the Partnerships' assets, the
General Partner believes that the Unitholders will have a 1996 loss per $500
Unit outstanding approximately equal to the amounts shown below:
15
<PAGE>
1996 Loss
Per $500 Unit
Enex Oil & Gas Income Program II-5, L.P. $52.62
Enex Oil & Gas Income Program II-6, L.P. $50.52
Unitholders may also have suspended passive losses from prior
years which may be utilized in the current year to offset income from other
sources. The following amounts per $500 Unit outstanding indicate the passive
loss generated prior to 1996 which a Unitholder has available for use in the
current year if he or she is an original investor and has never utilized any of
the Partnership's passive losses in prior years.
Passive Loss
Per $500 Unit
Enex Oil & Gas Income Program II-5, L.P. $211.95
Enex Oil & Gas Income Program II-6, L.P. $236.26
To calculate a Unitholder's passive loss, he must determine the
number of $500 Units he owns by dividing his original investment by $500. This
number multiplied by the passive loss shown above for the appropriate
Partnership will determine the Unitholder's passive loss for that Partnership.
An original investor who has not utilized passive losses in prior years, may use
such passive loss amount in the current year to offset income from other sources
if the Proposal is adopted for his or her Partnership.
The actual tax consequences to any Unitholder will depend on
the Unitholder's own tax circumstances. No legal opinion concerning the tax
consequences of the proposed transactions has been obtained by the General
Partner. The foregoing discussion of the potential federal income tax
consequences of the proposed liquidation of the Partnerships has been prepared
by Robert E. Densford, Vice President-Finance, Secretary and Treasurer of the
General Partner and James A. Klein, Controller of the General Partner, both of
whom are certified public accountants. NEVERTHELESS, EACH UNITHOLDER SHOULD
CONSULT HIS OR HER OWN TAX ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF THE
PROPOSED TRANSACTIONS.
Description of Business
The Partnerships were formed under the Uniform Limited
Partnership Act of the State of Texas and subsequently became subject to the
Texas Revised Uniform Limited Partnership Act. The Partnerships are engaged in
the oil and gas business through the ownership of various interests in producing
oil and gas properties. For further information, see Item 1 of each
Partnership's 1994 Form 10-KSB accompanying this Proxy Statement.
Description of Property and Oil and Gas Reserves
A summary of each Partnership's property acquisitions and
quantitative information regarding the Partnership's oil and gas reserves is
included in Item 2 of each Partnership's 1994 Form 10-KSB accompanying this
Proxy Statement and in Table D. Certain oil and gas property reserve information
is also included in Tables B, B-1 and C attached hereto. Included in this
information are fair market valuations of the properties of each Partnership
prepared by Gruy. Gruy has been preparing reserve estimates for each of the
Partnership's oil and gas reserves since the inception of each Partnership's
operations. Gruy was selected by the General Partner for this task based upon
its reputation, experience and expertise in this area. Gruy is an international
petroleum consulting firm with offices in Houston and Dallas, Texas. Their staff
16
<PAGE>
includes petroleum engineers and geology consultants. Services they provide
include reserve estimates, fair value appraisals, geologic studies, expert
witness testimony and arbitration.
Valuation of Oil and Gas Properties
Gruy has estimated for each oil and gas property in which the
Partnerships own interests, as of June 30, 1995, the recoverable units of oil
and gas and the undiscounted and discounted future net cash flows by year
commencing July 1, 1995 and continuing through the estimated productive lives of
the properties. The Limited Partners should be aware that the reserves estimated
by Gruy include, in certain cases, estimates of probable reserves and possible
reserves in addition to proved reserves (including undeveloped reserves as well
as developed reserves, both producing and nonproducing) and, in any event, are
estimates only and should not be construed as being exact amounts. Gruy
estimated each property's oil and gas reserves, applied the assumptions
regarding price and cost escalations set forth below, applied a 10% discount
factor for time and the following discount factors for risk, location, type of
ownership interest, operational characteristics and other factors as follows:
Gruy applies a 25% discount factor to all proved developed oil and gas reserves,
including all of the Partnership properties, to reflect the risk inherent in
estimating such reserves and that associated with an investment therein. Gruy
may further discount the value of oil and gas reserves to the extent it
determines appropriate based on its consideration of the particular location,
type of interest, category of reserves and operational characteristics of such
reserves.
To the 25% discount factor mentioned above, Gruy applied the
following additional discount factors: (i) between 8% and 9% to the proved
developed producing reserves in the Blair, Hanson, and Newport properties; and
(ii) approximately 14% to the proved developed nonproducing reserves in the
Hanson property. The additional discount in (i) above was applied to the proved
developed producing reserves because these properties consist of working
interests which are burdened by operating costs. The proved developed
nonproducing reserves in the Hanson property were discounted an additional 14%
because development costs must be incurred to recover these nonproducing
reserves. See Table B-1. Gruy allocated the estimates among the Partnerships on
a pro-rata basis in accordance with their respective ownership interest in each
of the properties evaluated. See Tables C and D. The resulting value for each
Partnership, as adjusted by the General Partner for intervening operations
through September 30, 1995, is included in Table B and is labelled Fair Market
Value of Oil and Gas Reserves.
Future net revenues were estimated by Gruy using an oil price
of $17.00 per barrel and gas prices ranging from $1.60 per mcf to $1.63 per mcf,
such gas prices representing prices substantially as were in effect in June
1995. Future operating costs and capital expenditures were estimated by the
General Partner and utilized by Gruy in the future cash flow estimates. Prices
and costs were escalated as follows: Oil prices were escalated 5.2% in 1996,
5.0% in 1997, 4.3% in 1998 and 3.2% in 1999 and 3.3% each year thereafter to a
maximum of $30.69 per barrel. Natural gas prices were escalated 7.2% in 1996,
7.3% in 1997, 4.2% in 1998, and 3.0% each year thereafter to a maximum of $3.80
per thousand cubic feet (mcf). Operating expenses and future capital investments
were escalated at the rate of 3.0% per year until the year in which the primary
product reached its maximum price.
According to Gruy, for the estimation of the fair market value
of oil and gas properties there are basically two approaches; the income
approach and the market data approach. The income approach requires the
estimation of reserves, identification of their categories (proved, probable and
possible), a detailed cash flow projection and the proper application of risk
factors. The market data approach utilizes comparable sales of properties in the
area. The fair market value was estimated using the income approach as opposed
to the market data approach because it is difficult to identify sales of oil and
gas properties that are comparable in
17
<PAGE>
net reserves, product prices, location, operating expenses and operator
expertise (although the General Partner's estimated liquidation values are based
upon comparable sales data). For the proved producing properties, the discounted
future net revenue was reduced to a fair market value by multiplying by a
suitable fraction that accounts for the risk associated with an investment. For
proved developed non-producing reserves, a suitable risk factor is applied and
the present value of the capital investment required to initiate production is
subtracted from that value. This approach assumes that the capital is invested
with certainty and the resulting cash flow stream is burdened with the
uncertainty.
Principal Executive Offices and Telephone Number
The principal executive offices and telephone number of each Partnership
are as follows: c/o Enex Resources Corporation, Three Kingwood Place, Suite 200,
800 Rockmead Drive, Kingwood, Texas 77339, attention Corporate Secretary,
telephone: 713-358-8401.
Information Concerning the General Partner
Enex was incorporated on August 17, 1979 in Colorado. On June 30, 1992,
Enex reincorporated in Delaware. Enex is engaged in the business of acquiring
interests in producing oil and gas properties and managing oil and gas income
limited partnerships. Enex's operations are concentrated in this single industry
segment.
Enex'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. Enex has no regional offices.
OTHER MATTERS
Other Business
As of the date of this Proxy Statement, the only business which the General
Partner intends to present at the Special Meetings are the matters set forth in
the accompanying Notice of Special Meetings. The General Partner has no
knowledge of any other business to be presented at the Special Meetings. If
other business consisting of matters of which the General Partner has no current
knowledge or matters incident to the conduct of a Special Meeting is brought
before a Special Meeting, the persons named in the enclosed form of proxy will
vote according to their discretion.
Representatives of Deloitte & Touche LLP are expected to be present at the
Special Meetings. They will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
18
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
This Proxy Statement incorporates by reference the following documents
which have been filed by each Partnership with the Commission:
(1) Each Partnership's Annual Report on Form 10-KSB for the year ended December
31, 1994, copies of which accompany this Proxy Statement;
(2) Each Partnership's Quarterly Reports on Form 10-QSB for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995, copies of which
accompany this Proxy Statement.
The Proxy Statement specifically incorporates herein by reference the
information set forth in the following sections contained in each Partnership's
Annual Report on Form 10-KSB: Item 1-Business; Item 2-Properties; Item 3-Legal
Proceedings; Item 5-Market for Common Equity and Related Security Holder
Matters; Item 6-Management's Discussion and Analysis of Results of Operations
and Financial Condition; and Item 7-Financial Statements and Supplementary Data.
The following sections of the Quarterly Reports on Form 10-QSB are specifically
incorporated herein by reference: Item 1-Financial Statements (unaudited).
By Order of the Board of Directors
of the General Partner
ROBERT E. DENSFORD
Vice President-Finance,
Secretary and Treasurer
19
<PAGE>
<TABLE>
<CAPTION>
TABLE A
Selected
Financial
Data
Program II-5, L.P.
------------------------------------------------------
Nine months Year
ended ended
September 30, December 31,
------------- ----------------------------------------
1995 1994 1993 1992
<S> <C> <C> <C> <C>
Total revenues ........................ $ 50,363 $ 57,494 $ 112,396 $ 156,929
Net income (loss) from operations ..... $ 4,504 ($ 18,364) $ 9,447 ($ 13,185)
Other income - gain on sale of property -- -- -- $ 88,084
Net income (loss) ..................... $ 4,504 ($ 18,364) $ 9,447 $ 72,457
Net income (loss) per $500 unit ....... $ 0.37 ($ 1.50) $ 0.77 $ 5.93
Cash flow from operations ............. $ 2,550 $ 3,061 $ 47,679 $ 20,763
Cash flow from operations per $500 unit $ 0.21 $ 0.25 $ 3.90 $ 1.70
Limited Partners' capital ............. $ 97,829 $ 93,324 $ 144,749 $ 167,275
Limited Partners' capital per $500 unit $ 8.00 $ 7.63 $ 11.84 $ 13.68
Cash distributions .................... -- $ 33,061 $ 30,327 --
Debt payable to general partner ....... -- $ 2,537 $ 4,483 $ 1,407
Total debt ............................ $ 10,619 $ 15,915 $ 26,438 $ 16,842
</TABLE>
<TABLE>
<CAPTION>
TABLE A
Selected
Financial
Data
Program
II-6, L.P.
------------------------------------------------------
Nine months Year
ended ended
September 30, December 31,
-------------- --------------------------------------
1995 1994 1993 1992
<S> <C> <C> <C> <C>
Total revenues ........................ $ 40,694 $ 47,128 $ 89,786 $ 133,551
Net income (loss) from operations ..... $ 3,615 ($ 14,213) $ 155 ($ 18,532)
Other income - gain on sale of property -- -- -- $ 104,370
Net income (loss) ..................... $ 3,615 ($ 14,213) $ 155 $ 79,535
Net income (loss) per $500 unit ....... $ 0.33 ($ 1.28) $ 0.01 $ 7.17
Cash flow from operations ............. $ 17,159 $ 32,748 $ 25,691 $ 9,881
Cash flow from operations per $500 unit $ 1.55 $ 2.95 $ 2.32 $ 0.89
Limited Partners' capital ............. $ 46,859 $ 43,244 $ 57,457 $ 58,470
Limited Partners' capital per $500 unit $ 4.22 $ 3.90 $ 5.18 $ 5.27
Cash distributions .................... -- -- -- --
Debt payable to general partner ....... $ 39,111 $ 38,573 $ 44,627 $ 70,836
Total debt ............................ $ 52,455 $ 54,536 $ 64,337 $ 86,799
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE B
Oil and gas reserves
Program II-5, L.P.
------------------------------------------------------
At September 30, At December 31,
----------------- --------------------
<S> <C> <C> <C> <C>
Proved Reserves: 1995 1994 1993 1992
Oil (bbls) .............................. 7,375 9,804 8,146 10,028
Oil (bbls) per $500 unit ................ 0.60 0.80 0.67 0.82
Gas (mcf) ............................... 92,270 104,831 156,953 139,911
Gas (mcf) per $500 unit ................. 7.55 8.57 12.83 11.44
Estimated future net cash flows ............. $196,555 $ 234,296 $ 316,731 $ 317,911
Estimated future net cash flows per $500 unit $ 16.07 $ 19.16 $ 25.90 $ 26.00
Discounted (at 10%) future net cash flows ... $157,567 $ 191,107 $ 246,493 $ 239,834
Discounted (at 10%) future net cash
flows per $500 unit ..................... $ 12.88 $ 15.63 $ 20.16 $ 19.61
Fair market value of oil and gas reserves ... $103,786
Fair market value of oil
and gas reserves per $500 unit $8.49
</TABLE>
<TABLE>
<CAPTION>
TABLE B
Oil and gas reserves
Program II-6, L.P.
------------------------------------------------------
At September 30, At December 31,
---------------- ---------------------
<S> <C> <C> <C> <C>
Proved Reserves: 1995 1994 1993 1992
Oil (bbls) .............................. 5,883 8,154 7,072 8,602
Oil (bbls) per $500 unit ................ 0.53 0.73 0.64 0.78
Gas (mcf) ............................... 72,260 82,348 122,686 109,392
Gas (mcf) per $500 unit ................. 6.51 7.42 11.06 9.86
Estimated future net cash flows ............. $161,452 $193,821 $258,418 $265,168
Estimated future net cash flows per $500 unit $ 14.55 $ 17.47 $ 23.29 $ 23.90
Discounted (at 10%) future net cash flows ... $129,540 $157,909 $200,527 $200,208
Discounted (at 10%) future net cash
flows per $500 unit ..................... $ 11.67 $ 14.23 $ 18.07 $ 18.04
Fair market value of oil and gas reserves ... $ 84,917 --
Fair market value of oil
and gas reserves per $500 unit ......... $ 7.65
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE B-1
ENEX OIL & GAS INCOME PROGRAM II-5, L.P.
ESTIMATED
RESERVE TYPE OF DISCOUNTED (@ 10%) DISCOUNT FAIR MARKET LIQUIDATION
PROPERTY NAME CATEGORY(1) INTEREST(2) NET CASH FLOWS FACTORS(3) VALUE VALUE (4)
- ------------- ----------- ----------- -------------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
NEWPORT PDP WI $ 56,893 .66523 $ 37,847 $ 42,463
BLAIR PDP WI $ 3,085 .66459 $ 2,050 $ 2,050
HANSON PDP WI $ 62,135 .66817 $ 41,517 $ 45,589
PDNP $ 54,654 .61062 $ 33,373 $ 36,646
--------- - ---------
SUBTOTAL $ 74,890 $ 82,235
--------- - ---------
TOTAL $ 114,787 $ 126,748
========= = ========
</TABLE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM II-6, L.P.
ESTIMATED
RESERVE TYPE OF DISCOUNTED (@ 10%) DISCOUNT FAIR MARKET LIQUIDATION
PROPERTY NAME CATEGORY(1) INTEREST(2) NET CASH FLOWS FACTORS(3) VALUE VALUE (4)
- ------------- ----------- ----------- -------------------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
NEWPORT PDP WI $ 54,046 .66523 $ 35,953 $ 40,338
HANSON PDP WI $ 48,375 .66817 $ 32,323 $ 35,493
PDNP $ 42,551 .61063 $ 25,983 $ 28,531
--------- - ---------
SUBTOTAL $ 58,306 $ 64,024
--------- - ---------
TOTAL $ 94,259 $ 104,362
========= = =========
<FN>
(1) PDP = PROVED DEVELOPED PRODUCING RESERVES
PDNP = PROVED DEVELOPED NONPRODUCING RESERVES
(2) WI = WORKING INTEREST
(3) DISCOUNT FACTORS WERE DETERMINED BY H.J. GRUY AND ASSOCIATES AND CONSIDER
RISK, LOCATION, TYPE OF INTEREST, CATEGORY OF RESERVES AND OPERATIONAL
CHARACTERISTICS OF EACH PROPERTY.
(4) BASED ON OFFERS RECEIVED FROM UNAFFILIATED THIRD PARTIES FOR SIMILAR
INTERESTS OWNED BY OTHER PARTNERSHIPS MANAGED BY THE GENERAL PARTNER.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE C Working
PROPERTY
DETAIL
Working Interest% Revenue Interest %
------------------ ------------------
ACQUI-
SITION STATE FIELD OPERATOR NAME WELL NAME TYPE II-5 II-6 II-5 II-6
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Blair . TX WWW Blair Operating Company Schenecker Trust 01 OIL 1.2135 -- 0.9101 --
Blair . TX WWW Blair Operating Company Schenecker Trust 02 OIL 1.2135 -- 0.9101 --
Blair . TX WWW Blair Operating Company Schenecker Trust 03 OIL 1.2135 -- 0.9101 --
Blair . TX WWW Blair Operating Company Mathews 01 OIL 1.2500 -- 0.9375 --
Blair . TX WWW Blair Operating Company Mathews 02 OIL 1.2500 -- 0.9101 --
Blair . TX WWW Blair Operating Company Gaddie 03 OIL 1.1914 -- 0.9374 --
Blair . TX WWW Blair Operating Company Gaddie 04 OIL 1.2421 -- 0.9374 --
Blair . TX WWW Blair Operating Company Gaddie 05 OIL 1.1914 -- 0.9374 --
Blair . TX WWW Blair Operating Company Gaddie 06 OIL 1.1914 -- 0.9374 --
Hanson TX Coquat Hanson Minerals Co. Meider 02 GAS 1.5611 1.2154 0.9676 0.7533
Hanson TX Coquat Hanson Minerals Co. Meider 03 GAS 4.8968 3.8124 3.5915 2.7962
Hanson TX Coquat Hanson Minerals Co. Maguglin 01 GU GAS 1.5189 1.1826 0.7913 0.6160
Hanson TX George Buck Hanson Minerals Co. Aviators GU 01 GAS 0.3811 0.2967 0.3319 0.2584
Hanson TX George Buck Hanson Minerals Co. Aviators GU 03 GAS 1.0437 0.8126 0.7632 0.5942
Hanson TX Hampton Hanson Minerals Co. Arco Hampton 30 01 OIL 8.3191 6.4769 7.9863 6.2178
Hanson TX Malo Domingo Hanson Minerals Co. Samsel GU 01 GAS 0.7228 0.5627 0.5429 0.4227
Hanson TX Malo Domingo Hanson Minerals Co. Gordon Talk GU 01 GAS 0.8273 0.6441 0.6128 0.4771
Hanson TX Malo Domingo Hanson Minerals Co. Gordon Talk GU 02 GAS 4.3818 3.4115 3.4552 2.6900
Hanson TX Sanger S Hanson Minerals Co. Sanger Heirs 391 01 GAS 3.8582 3.0038 3.0355 2.3633
Hanson TX Sanger S Hanson Minerals Co. Sanger Heirs 391 02 GAS 5.5844 4.3478 3.0355 2.3633
Hanson TX Sanger S Hanson Minerals Co. Sanger Heirs 391 04 GAS 3.9520 3.0769 3.1094 2.4208
Hanson TX Sanger S Hanson Minerals Co. Sanger Heirs 392 01
(UT) GAS 3.9520 3.0769 3.1094 2.4208
Hanson TX Sanger S Hanson Minerals Co. Sanger Heirs 392 01
(LT) GAS 3.1094 2.4208
Newport TX Alexander Mineral Development Inc. Cooper 01 OIL 1.9487 1.8512 1.5381 1.4611
Newport TX Candice Mineral Development Inc. Shelton 83-1 GAS 4.2708 4.0571 3.2031 3.0428
Newport TX Grange Mineral Development Inc. Grange A 01 OIL 0.2460 0.2340 1.0092 0.9587
Newport TX Grange Mineral Development Inc. Grange A 02 OIL 1.2308 1.1692 1.0092 0.9587
Newport TX Grange Phillips Petroleum Corp. Grange D 01 OIL 0.2460 0.2340 1.0092 0.9587
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE D
GROSS AND NET PRODUCTIVE OIL AND GAS WELLS
AS OF JUNE 30, 1995
PRODUCTIVE OIL WELLS(1) PRODUCTIVE GAS WELLS(1)
----------------------------- -----------------------------
NET WORKING NET NET WORKING NET
PARTNERSHIP GROSS INTEREST ROYALTY GROSS INTEREST ROYALTY
WELLS(2) WELLS WELLS WELLS(2) WELLS WELLS
<S> <C> <C> <C> <C> <C> <C>
Enex Oil & Gas Income Program II-5,L.P. 16 0.269 - 12 0.310 -
Enex Oil & Gas Income Program II-6,L.P. 7 0.138 - 12 0.248 -
======= ========= ======= ====== ======= ======
TOTAL 16 0.407 - 12 0.558 -
======= ========= ======= ====== ======= ======
</TABLE>
(1) 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 the fractional ownership interests 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. A net royalty well is deemed to exist when the sum of
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.
(2) Totals for gross wells have been reduced to adjust for ownership by more
than one Partnership.
<TABLE>
<CAPTION>
GROSS AND NET PRODUCTIVE ACREAGE
AND UNDEVELOPED ACREAGE(1)
DEVELOPED(2)
WORKING INTEREST DEVELOPED (2)
ACREAGE(3) ROYALTY ACREAGE(3)
---------------- -------------------
GROSS NET GROSS NET
PARTNERSHIP ACRES(4) ACRES ACRES(4) ACRES
<S> <C> <C> <C> <C>
Enex Oil & Gas Income Program II-5,L.P. 5,458 105.06 - -
Enex Oil & Gas Income Program II-6,L.P. 5,098 83.76 - -
======= ======= ======= =======
TOTAL 5,458 188.82 - -
======= ======= ======= =======
<FN>
(1) The Partnerships have no undeveloped acreage.
(2) Developed acres are acres spaced or assigned to productive wells.
(3) 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 ownership of
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 whole numbers and fractions thereof. A net royalty acre is deemed
to exist when the sum of fractional ownership of 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 whole numbers and fractions
thereof.
(4) Totals for gross acres have been reduced to adjust for ownership by more
than one Partnership.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE E
General and Administrative Charges
Enex Oil & Nine Months Ended
Gas Income 1994 September 30, 1995 1995 Estimated 1996 Estimated
------------------ -------------------- -------------------- -------------------
Program Direct Costs Total Direct Costs Total Direct Costs Total Direct Costs Total
(1) (1) (1) (1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
II - 5, LP $7,516 $27,986 - $12,821 $3,293 $19,794 $3,622 $21,773
II - 6, LP $4,277 $22,194 - $11,238 $3,104 $18,096 $3,414 $19,906
<FN>
(1) Direct costs consist of tax preparation, audit and Securities Exchange Commission filing fees.
</FN>
</TABLE>
<PAGE>
- ------------------------------------------------------
ENEX
- ------------------------------------------------------
ENEX OIL & GAS INCOME PROGRAM II-5, L.P.
Three Kingwood Place
Suite 200
800 Rockmead Drive
Kingwood, Texas 77339
PROXY FOR SPECIAL MEETING OF LIMITED PARTNERS
TO BE HELD
xxxxxxxx xx, 1996
The undersigned hereby appoints GERALD B. ECKLEY, WILLIAM C. HOOPER, JR.
and ROBERT E. DENSFORD, and each or any of them, attorneys and proxies, with
full power of substitution, and authorizes them to vote all interests of Enex
Oil & Gas Income Program II-5, L.P., held of record by the undersigned on
xxxxxxxx xx, 1996, at the Special Meeting of Limited Partners to be held on
xxxxxxxx xx, 1996, and any adjournments thereof, hereby revoking all previous
proxies, with all powers the undersigned would possess if present, on all
matters mentioned in the Notice of Special Meeting dated xxxxxxxx xx, 1996, as
follows:
INSTRUCTIONS: MARK ONLY ONE BOX FOR EACH NUMBERED MATTER
(1) To sell the assets of Enex Oil & Gas Income Program II-5, L.P., a Texas
limited partnership, and thereafter to dissolve and liquidate the
Partnership.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) In their discretion, to vote upon such other business as may properly come
before the Meeting or any adjournments thereof.
20
<PAGE>
Please mark, date, sign and return this Proxy promptly, using the enclosed
envelope.
Dated , 1996
-------------------------------------
Month Day
Signature
-------------------------------
Signature
-------------------------------
Please sign exactly as name appears
hereon, indicating official position
or representative capacity, if any.
I plan to attend the meeting.
Yes [ ] No [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE GENERAL PARTNER
OF THE PARTNERSHIP
21
