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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from...............to...............
Commission file number 0-14233
ENEX PROGRAM I PARTNERS, L.P.
(Name of small business issuer in its charter)
New Jersey 76-0175128
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Rockmead Drive
Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (713) 358-8401
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Interest
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[x]
State issuer's revenues for its most recent fiscal year. $ 3,683,635
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock as of a specified date within
the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange
Act):
Not Applicable
Documents Incorporated By Reference:
None
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<PAGE>
TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1996
ENEX PROGRAM I PARTNERS, L.P.
Item No. Part I Page
- --------- ---------- -------
1 Description of Business I-1
2 Description of Property I-3
3 Legal Proceedings I-7
4 Submission of Matters to a Vote
of Security Holders I-7
Part II
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5 Market for Common Equity and
Related Security Holder Matters II-1
6 Management's Discussion and Analysis
or Plan of Operation II-2
7 Financial Statements and Supplementary
Data II-4
8 Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure II-15
Part III
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9 Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act III-1
10 Executive Compensation III-3
11 Security Ownership of Certain
Beneficial Owners and Management III-4
12 Certain Relationships and Related
Transactions III-4
13 Exhibits and Reports on Form 8-K III-4
Signatures S-1
<PAGE>
PART I
Item 1. Description of Business
General
Enex Program I Partners, L.P. (the "Company") was formed under
the New Jersey Uniform Limited Partnership Law (1976) on October 10, 1985 for
the purpose of combining the twelve Enex Oil and Gas Income Program I Texas
Limited Partnerships (the "Partnerships"). On December 31, 1985, all twelve
partnerships contributed all their assets, subject to liabilities, to the
Company. The Company is continuing to operate on a combined basis in the same
manner as the original individual Partnerships. The total exchange value (which
does not purport to be market value) of the net assets transferred to the
Company was approximately $68,991,000. Units of limited partnership interest in
the Company ("Units") were allocated to the Partnerships based upon the relative
exchange value of the net assets transferred to the Company. The limited
partners and general partner, Enex Resources Corporation ("Enex"), of the
Partnerships were allocated units in the Company in accordance with the
dissolution and termination provisions of each Partnerships' agreement of
limited partnership.
The Company is engaged in the oil and gas business through the
ownership of various interests in producing oil and gas properties, as detailed
in Item 2, below. If warranted, the Company may further develop its oil and gas
properties. However, the Company does not intend to engage in significant
drilling activities. Such activities may be conducted, however, as an incidental
part of the management of producing properties or with a view toward enhancing
the value of producing properties. In no event will the Company engage in
exploratory drilling, or use any of the limited partners' net revenues to fund
exploratory drilling activities. Any developmental drilling will be financed
primarily through third party borrowings or with funds provided from operations.
The expenses of drilling, completing and equipping and operating development
wells are allocated 90% to the limited partners and 10% to the general partner.
See Note 1 to the Financial Statements for information relating to the
allocation of costs and revenues between the limited partners and the general
partner, Enex. The Company's operations are concentrated in a single industry
segment.
The Company owns royalty interest on certain oil and gas
properties. A "royalty interest" is an interest retained by the lessor in the
lease and payable out of 100% of proceeds before deducting any other interests.
The Company also owns overriding royalty interests in certain oil and gas
properties. An "overriding royalty interest" is an interest in a property which
was carved out of the working interest that is not subject to most operating
costs associated with the property. The Company also owns working interests in
certain oil and gas properties. A "working interest" is a portion of the
operating interest which is subject to most of the costs associated with a well.
The principal executive office of the Company is maintained at
Suite 200, Three Kingwood Place, Kingwood, Texas 77339. The telephone number at
this office is (713) 358-8401. The Company has no regional offices.
The Company has no employees. On March 1, 1997, Enex and its subsidiaries
employed 23 persons.
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Marketing
The marketing of oil and gas produced by the Company is affected
by a number of factors which are beyond the Company's control, the exact nature
of which cannot be accurately predicted. These factors include the quantity and
price of crude oil imports, fluctuating supply and demand, pipeline and other
transportation facilities, the marketing of competitive fuels, state and federal
regulation of oil and gas production and distribution and other matters
affecting the availability of a ready market. All of these factors are extremely
volatile.
Dreyfus Energy, Inc., Exxon Company, USA and Koch Hydrocarbons,
Inc. accounted for 14%, 14% and 11%, respectively, of the Company's total sales
in 1996. Exxon Company, USA and Koch Hydrocarbons, Inc accounted for 14% and
10%, respectively, of the Company's total sales in 1995. No other purchaser
individually accounted for more than 10% of such sales. Although the Company
marketed a significant portion of its sales to the above noted companies, such a
concentration does not pose a significant risk due to the commodity nature of
the Company's products.
The operators of the Company's properties are noted in Item 2
below. Although a significant portion of the Company's properties were operated
by a limited number of operators, this concentration does not pose a significant
risk since the Company's rights are secured by joint operating agreements.
Environmental and Conservation Regulation
State regulatory authorities in the states in which the Company
owns producing properties are empowered to make and enforce regulations to
prevent waste of oil and gas and to protect correlative rights and opportunities
to produce oil and gas for owners of a common reservoir. Each of such regulatory
authorities also regulates the amount of oil and gas produced by assigning
allowable rates of production, which may be increased or decreased in accordance
with supply and demand. Requirements regarding the prevention and clean-up of
pollution and similar environmental matters are also generally applicable. The
costs, if any, the Company may incur in this regard cannot be predicted.
The existence of such regulations has had no material adverse
effects on the Company's operations to date, and the cost of compliance has not
yet been material. There are no material administrative or judicial proceedings
arising under such laws or regulations pending against the Company. The Company
is unable to assess or predict the impact that compliance with environmental and
pollution control laws and regulations may have on its future operations,
capital expenditures, earnings or competitive position.
Tax Laws
The operations of the Company are affected by the federal income
tax laws contained in the Internal Revenue Code of 1986, as amended (the
"Code"). Under the Code, generally, the Company will report income from the sale
of oil and gas, against which it may deduct its ordinary business expenses,
depletion, depreciation and intangible drilling and development costs.
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It is anticipated that most of the Company's income, if any, will
be from a "passive activity" for purposes of the Code. A passive activity
includes an activity in which the taxpayer does not materially participate,
including the ownership of a limited partnership interest, such as an interest
in the Company. "Passive income," however, does not include portfolio income
(i.e. dividend, interest, royalties, etc.). Although taxpayers generally may not
deduct losses or use tax credits derived from passive activities in an amount
greater than their income derived from such activities, if and to the extent
that the Company generates passive income, it will be available to offset the
limited partners' passive losses from other sources.
Partnerships with interests that are "publicly traded" are taxed
as corporations unless at least 90% of their income is "qualifying income."
Passive income or loss from publicly traded partnerships that are not taxed as
corporations generally cannot be applied against passive income or loss from
other sources. As stated in Item 5 of this Annual Report, there is no
established public trading market for the Company's limited partnership
interests. In addition, the Company derives more than 90% of its income from oil
and gas activities, which constitutes qualifying income from oil and gas
activities, which constitutes qualifying income within the meaning of section
7704(d) of the Code. Therefore, the Company should not be affected by the
publicly traded partnership rules.
In order to prevent the adverse tax consequences that would
affect the limited partners if the Company's limited partnership interests were
to become publicly traded in the future, the general partner may, after final
regulations have been issued by the Internal Revenue Service, submit to a vote
of limited partners a proposal to amend the Company's agreement of limited
partnership to provide, among other things, (a) that Enex shall have the right
to refuse to recognize any transfer of limited partnership interests if it
believes that such transfer occurred on a secondary market or the substantial
equivalent thereof; and (b) that all assignors and assignees of the limited
partnership interests shall be required to represent to Enex that any transfer
of limited partnership interests did not, to the best of their knowledge, occur
on a secondary market or the substantial equivalent thereof.
Item 2. Description of Property
On December 31, 1985, the Partnerships transferred all of their
assets to the Company, subject to corresponding liabilities. These properties
continue to be operated by the Company as they were operated by the
Partnerships. Presented below is a brief description of the Company's property
holdings, all of which were transferred to it by the Partnerships.
CHOATE, OAK GROVE AND LEACOCK acquisitions. The Enex Oil and Gas Income Program
I - Series 1 and 2 Partnerships each owned (a) fifty percent of the interest
acquired from Choate Oil Co. in 254 wells, three-quarters of which are oil wells
and all but two of which are located in Oklahoma, and four gas plants, of which
three are in Oklahoma and one is in Michigan; (b) both a working and a royalty
interest in a gas unit in Oak Grove Field, Simpson County, Mississippi; and (C)
an interest in the Leacock 2-21 gas well in Otsego County, Michigan, which feeds
the Michigan gas plant. The Oak Grove and Leacock acquisitions were retired in
1989 and 1992 respectively.
GRASS ISLAND acquisition. Series 1, 2 and 3 Partnerships owned working
interests, in 13 oil wells located in Calhoun County, Texas. The Grass Island
acquisition is operated by Petro Guard Co. The
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Company owned a 6.25% working interest in the Grass Island acquisition. In 1996,
the Company sold its interests in the Grass Island acquisition for $235,000. A
gain of $69,731 was recognized on the sale.
SHELL acquisition. The Series 3 Partnership owned working interests in six
individual oil wells and two large Smackover oil units, and royalty interests in
one gas and nine oil wells in six counties in Mississippi acquired from Shell
Oil Company. The Shell acquisition is operated by eight different oil and gas
companies. The Company owns working interests ranging from 11.14% to 24.91%. In
1996, the Company sold its interest in the E.M. Lane well for $57,970. A gain of
$31,310 was recognized on the sale.
BLACKHAWK acquisition. The Series 3 and 4 Partnerships each owned working
interests in six oil wells in the Blackhawk Field, Concordia Parish, Louisiana.
The Blackhawk acquisition is operated by Guido Production Co. Inc. The Company
owns a 25% working interest in the Blackhawk acquisition at December 31, 1996.
H.N.G. acquisition. The H.N.G. acquisition began with the purchase of overriding
royalty interests in over 300 gas wells in Texas, New Mexico, and Oklahoma and
culminated five transactions later with the last purchase of overriding royalty
interests in these properties. The Series 3, 7, 8, 9, 10, 11 and 12 Partnerships
each participated in one or more of these transactions. Effective September 1,
1995, the Company sold 85% of its future assignments from the HNG Drilling
Program to American Exploration Corp and Louis Dreyfus Natural Gas Corp. for
$742,662. A gain of $427,964 was recognized from the sale. The H.N.G.
acquisition is operated by eight different oil and gas companies. The Company
owns working interests ranging from .104% to 8.999% in the H.N.G. acquisition at
December 31, 1996.
ARNOLD AND WOOLF acquisition. The Series 4, 5, 6 and 7 Partnerships each owned a
portion of the working interests of Arnold and Woolf in 154 oil wells and 129
gas wells located in Texas, Louisiana, Mississippi, Alabama and Florida, and one
gas plant in Monroe County, Mississippi. The Arnold & Woolf acquisition is
operated by seven different oil and gas companies. The Company owns working
interests ranging from 2.50% to 6.25% in the Arnold & Woolf acquisition at
December 31, 1996.
SECOND BAYOU AND SCHLENSKER acquisition. The Series 4, 5, 6, 7 and 8
Partnerships each owned part of (a) an overriding royalty interests in
approximately 27,000 acres in the Second Bayou Field, Cameron Parish, Louisiana,
which at December 31,1984 included 30 gas wells; and (b) the working interests
in 16 oil and 41 gas wells located in five Texas counties and Vermilion Parish,
Louisiana, plus a production payment. The Second Bayou acquisition is operated
by Fina Oil & Gas Co. The Company owned a 5% overriding royalty interest in the
Second Bayou acquisition at December 31, 1996. The Schlensker acquisition is
operated by five different oil and gas companies. The Company owns working
interests ranging from 5.49% to 19.32% in the acquisition at December 31, 1996.
ESPERANCE POINT acquisition. The Series 5, 6, and 7 Partnerships each owned
working interests in four oil wells located in the Esperance Point Field in
Concordia Parish, Louisiana. The Esperance Point acquisition was sold to Wilcox
Energy Inc. effective July 1, 1995.
BLUE HOLE acquisition. The Series 7, 8, 9 and 10 Partnerships had each acquired
working interests in three oil wells, the Board of Education 1-S, 2-S and 3-S,
in Adams County, Mississippi. The Blue Hole acquisition was retired in 1991.
I-4
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EL TORO AND NORTHWEST ESPERANCE POINT acquisition. The Series 8 and 9
Partnerships' interests in the Northwest Esperance Point acquisition in
Concordia Parish, Louisiana each consisted of both royalty and working interests
in nine oil wells operated by El Toro Production Company. The Company owns a
5.77% royalty interest in the acquisition.
LAKE COCODRIE acquisition. The Series 8, 9 and 10 Partnerships each owned a
portion of the working interest of D&D Drilling Company, et. al in the Cocodrie
Lake acquisition in Concordia Parish, Louisiana. The Lake Cocodrie acquisition
is operated by Enex Resources Corporation. The Company owns working interests
ranging from 42.00% to 46.25% in the Lake Cocodrie acquisition.
EAST SEVEN SISTERS acquisition. The Series 8, 9, 10, 11 and 12 Partnerships had
each participated in one or more of a series of six transactions in which parts
of a mineral interest and the associated royalty interest in the Gorman Gas Unit
in the East Seven Sisters Field, Duval County, Texas were acquired. The East
Seven Sisters acquisition is operated by Vastar Resources Inc. The Company owns
a 9.81% royalty interest in the East Seven Sisters acquisition at December 31,
1996.
COMITE acquisition. The series 10, 11 and 12 partnerships each owned overriding
royalty interests in four gas wells in the Comite Field acquisition in East
Baton Rouge Parish, Louisiana. The Comite acquisition is operated by TGX Corp.
The Company owned overriding royalty interests ranging from 1.81% to 5.87% in
the Comite acquisition. In 1996, the Company sold its interests in the
acquisition for $55,100. A gain of $21,649 was recognized on the sale.
SHAMROCK, SUNBELT AND BURKHOLDER acquisitions. The Series 11 and 12 Partnerships
each owned (a) working and overriding royalty interests in nine oil wells
operated by Meng Operating and Exploration Company in Concordia Parish,
Louisiana; (b) a portion of the working interests in five oil wells operated by
O'Malley Production Company, Inc. in Concordia Parish, Louisiana and Adams and
Wilkinson Counties, Mississippi; and (C) a working interest in the Perkins 200
#1 Gas Unit in Ward County, Texas. The Shamrock and Sunbelt acquisitions were
retired in 1987 and 1989, respectively. The Burkholder acquisition is operated
by Samson Resources Co. The Company owns a 3.96% working interest in the
acquisition at December 31, 1996.
Oil and Gas Reserves
For quantitative information regarding the Company's oil and gas
reserves, please see Supplementary Oil and Gas Information and related tables
which follow the Notes to Financial Statements in Item 7 of this report. The
Company has not filed any current oil and gas reserve estimates or included any
such estimates in reports to any federal or foreign governmental authority or
agency, including the Securities and Exchange Commission.
Proved oil and gas reserves reported herein are based on
engineering reports prepared by the petroleum engineering consulting firm of H.
J. Gruy and Associates, Inc. The reserves included in this report are estimates
only and should not be construed as exact quantities. Future conditions may
affect recovery of estimated reserves and revenue, and all reserves may be
subject to revision as more performance data become available. The proved
reserves used in this report conform to the applicable definitions promulgated
by the Securities and Exchange Commission. No major discovery or other favorable
or adverse
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<PAGE>
event that could potentially cause a significant change in the estimated proved
reserves has occurred since December 31, 1996.
Net Oil and Gas Production
The following table shows for the years ended December 31, 1996
and 1995, the approximate production attributable to the Company's oil and gas
interests. The figures in the table represent "net production"; i.e., production
owned by the Company and produced to its interest after deducting royalty and
other similar interests. All production occurred in the United States.
1996 1995
Crude oil and condensate (Bbls) . . . . . . . . . . . 47,581 60,875
Natural gas (Mcf) . . . . . . . . . . . . . . . . . . 759,119 705,517
Natural gas liquids (Bbls) (1) . . . . . . . . . . . 34,465 35,581
Natural gas - gas plant sales (Mcf) (1) . . . . . . 232,825 230,902
The following table sets forth the Company's average sales price per
barrel of oil, per Mcf of gas, and average production cost per equivalent barrel
of production for the years ended December 31, 1996 and 1995.
1996 1995
Average sales price per barrel of oil . . . . . . . $ 20.16 $ 16.24
Average sales price per Mcf of gas . . . . . . . . . 2.38 1.71
Average production cost per equivalent
barrel of production . . . . . . . . . . . . . . . . 4.85 5.05
Average sales price per barrel of natural
gas liquids (1) . . . . . . . . . . . . . . . . . . 13.31 9.07
Average sales price per Mcf of gas plant
gas sales (1) . . . . . . . . . . . . . . . . . . . 1.96 1.51
Average production cost per equivalent
barrel of gas plant production (1)(2) . . . . . . 9.04 6.60
(1) Natural gas liquid production was obtained through gas
processing plant ownership rather than through leasehold
ownership.
(2) Includes cost of gas purchases.
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Item 3. Legal Proceedings
There are no material pending legal proceedings to which the Company
is a party or to which any of their properties are subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
I-7
<PAGE>
PART II
Item 5. Market for Common Equity and Related Security Holder Matters
Market Information
There is no established public trading market for the Company's
outstanding limited partnership interests.
Number of Equity Security Holders
Number of Record Holders
Title of Class (as of March 1, 1997)
----------------- ---------------------------
General Partner's Interests 1
Limited Partnership Interests 4,618
Dividends
The Company made cash distributions to partners of $5 and $4 per $500
investment in 1996 and 1995, respectively. The payment of future distributions
will depend on the Company's earnings, financial condition, working capital
requirements and other factors, although it is anticipated that periodic
distributions will be made in the future as cash becomes available.
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<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations
This discussion should be read in conjunction with the financial
statements of the Company and the notes thereto included in this Form 10-KSB.
Oil, gas and gas plant sales increased to $3,683,635 in 1996 from
$2,862,275 in 1995. This represents an increase of $821,360 or 29%. Oil sales
decreased by $29,117 or 3%. A 22% decrease in oil production due to natural
production declines caused sales to decrease by $215,853. This decrease was
partially offset by a 24% increase in the average oil sales price. Gas sales
increased by $606,776 or 50%. A 39% increase in the average gas sales price
increased revenues by $515,456. An 8% increase in gas production increased sales
by an additional $91,320. Sales of natural gas liquids and gas plant gas
increased by $243,701 or 36%. A 38% increase in the average gas plant products
sales price increased sales by $250,918. This increase was partially offset by a
1% decrease in production of gas plant products. The decreases in oil production
and the production of gas plant products were primarily a result of natural
production declines. The increase in gas production was primarily the result of
new gas wells drilled on the Dent acquisition. The changes in average sales
prices correspond with changes in the overall market for the sale of oil, gas
and gas plant products.
Lease operating expenses increased to $1,340,011 in 1996 from
$1,249,648 in 1995. The increase of $90,363 or 7% was primarily due to the
changes in production, noted above, including a $163,871 increase in gas
purchases for the gas plant.
Depreciation and depletion expense decreased to $626,840 in 1996
from $768,485 in 1995. This represents a decrease of $141,645 or 18%. A 17%
decrease in the depletion rate reduced depreciation and depletion expense by
$125,974. The changes in production, noted above, reduced depreciation and
depletion expense by an additional $15,671. The decrease in the depletion rate
was primarily a result of upward revisions of the gas reserves during December
1996 coupled with the lower property basis due to the recognition of a $125,097
impairment of property in the first quarter of 1996, as noted below.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires certain assets to be reviewed for impairment whenever events or
circumstances indicate the carrying amount may not be recoverable. Prior to this
pronouncement, the Company assessed properties on an aggregate basis. Upon
adoption of SFAS 121, the Company began assessing properties on an individual
basis, wherein total capitalized costs may not exceed the property's fair market
value. The fair market value of each property was determined by H. J. Gruy and
Associates, ("Gruy"). To determine the fair market value, 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 certain discount
factors for risk, location, type of ownership interest, category of reserves,
operational characteristics, and other factors. In the first quarter of 1996,
the Company recognized a non-cash impairment provision of $125,097 for certain
oil and gas properties due to changes in the overall market for the sale of oil
and gas and significant decreases in the projected production from certain of
the Company's oil and gas properties.
General and administrative expenses decreased to $859,393 in 1996
from $915,527 in 1995. This represents a decrease of $56,134 or 6% from 1995 to
1996. This decrease was primarily a result of less staff
II-2
<PAGE>
time being required to manage the Company's operations, coupled with a $42,487
decrease in direct expenses incurred by the Company in 1996.
Effective September 1, 1995, the Company sold 85% of its future
assignments from the HNG Drilling Program to American Exploration Corp and Louis
Dreyfus Natural Gas Corp. for $742,662. A gain of $427,964 was recognized from
the sale. Effective July 1, 1995, the Company sold its interests in the
Esperance Point acquisition to Wilcox Energy Co. for $1,465. A gain of $952 was
recognized from the sale. The impact of these sales on current and future
revenues is not expected to be material, as such interests represented less than
10% of historical and future net revenues.
In 1996, the Company sold its interests in the Comite acquisition
for $55,100. A gain of $21,649 was recognized on the sale. The Company also sold
its interest in the E.M. Lane well in the Shell acquisition for $57,970. A gain
of $31,310 was recognized on the sale of the E.M. Lane well. In 1996, the
Company also sold its interests in the Grass Island acquisition for $235,000. A
gain of $69,731 was recognized on the sale of the Grass Island acquisition. The
impact of these sales on current and future revenues is not expected to be
material, as such interests represented less than 10% of historical and future
net revenues.
Capital Resources and Liquidity
The Company's cash flow provided by operating, financing and
investing activities is a direct result of the amount of net proceeds realized
from the sale of oil and gas production. Accordingly, the changes in cash flow
from 1995 to 1996 are primarily due to the changes in oil and gas sales
described above. It is the general partner's intention to distribute
substantially all of the Company's available net cash flow to the Company's
partners.
The Company discontinued the payment of the distributions during
1990. In the fourth quarter of 1995, the Company paid a distribution of $730,913
to its limited partners. The distribution in 1995 was primarily a result of the
$744,127 of proceeds from the sale of properties, as noted above. Future
distributions are dependent upon, among other things, future prices received for
oil and gas remaining at satisfactory levels. The Company will continue to
recover its reserves and distribute to the limited partners, the net proceeds
realized from the sale of oil and gas production after payment of debt
obligations. The Company plans to repay the amount owed to the general partner
in 1997. It is anticipated that periodic distributions will be made in the
future as cash becomes available.
At December 31, 1996, the Company had no material commitments for
capital expenditures. The Company does not intend to engage in any significant
developmental drilling activity. The Company does not intend to purchase
additional properties or fund extensive development of existing oil and gas
properties, and as such; has no long-term liquidity needs. The Company's
projected cash flows from operations will provide sufficient funding to pay its
operating expenses and debt obligations.
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<PAGE>
Item 7. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
The Partners
Enex Program I Partners, L.P.:
We have audited the accompanying balance sheet of Enex Program I Partners, L.P.
(a New Jersey limited partnership) as of December 31, 1996 and the related
statements of operations, changes in partners' capital, and cash flows for each
of the two years in the period ended December 31, 1996. These financial
statements are the responsibility of the general partner of Enex Program I
Partners, L.P. Our responsibility is to express an opinion on the financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Enex Program I Partners, L.P. at December
31, 1996 and the results of its operations and its cash flows for each of the
two years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Houston, Texas
March 18, 1997
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ENEX PROGRAM I PARTNERS, L.P.
BALANCE SHEET, DECEMBER 31, 1996
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<TABLE>
<CAPTION>
ASSETS
1996
-------------
CURRENT ASSETS:
<S> <C>
Cash $ 410,488
Accounts receivable - oil & gas sales 560,704
Receivable from litigation settlement 280,050
Other current assets 126,261
-------------
Total current assets 1,377,503
-------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 79,128,259
Less accumulated depreciation and depletion 76,051,149
-------------
Property, net 3,077,110
-------------
TOTAL $ 4,454,613
=============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 268,847
Payable to general partner 21,495
-------------
Total current liabilities 290,342
-------------
PARTNERS' CAPITAL:
Limited partners 3,269,177
General partner 895,094
-------------
Total partners' capital 4,164,271
-------------
TOTAL $ 4,454,613
=============
</TABLE>
Number of $500 Limited Partner units outstanding 193,629
See accompanying notes to financial statements.
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II-5
<PAGE>
ENEX PROGRAM I PARTNERS, L.P.
STATEMENTS OF OPERATIONS
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
------------- --------------
REVENUES:
<S> <C> <C> <C>
Oil, gas and gas plant sales $ 3,683,635 2,862,275 $
------------- --------------
EXPENSES:
Depreciation and depletion 626,840 768,485
Impairment of property 125,097 -
Lease operating expenses 1,340,011 1,249,648
Production taxes 166,612 150,248
General and administrative:
Allocated from general partner 752,413 766,060
Direct expense 106,980 149,467
------------- --------------
Total expenses 3,117,953 3,083,908
------------- --------------
INCOME (LOSS) FROM OPERATIONS 565,682 (221,633)
------------- --------------
OTHER INCOME:
Other income - 12,091
Interest income 6,536 29,140
Gain on sale of property 122,690 428,916
------------- --------------
Other income, net 129,226 470,147
------------- --------------
NET INCOME $ 694,908 $ 248,514 $
============= ==============
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
II-6
<PAGE>
ENEX PROGRAM I PARTNERS, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PER $500
LIMITED
PARTNER
GENERAL LIMITED UNIT OUT-
TOTAL PARTNER PARTNERS STANDING
-------------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1995 $ 5,007,098 $ 973,491 $ 4,033,607 $ 21 $ $
CASH DISTRIBUTIONS (730,913) - (730,913) (4)
NET INCOME 248,514 - 248,514 1
-------------- ------------ ------------- ----------
BALANCE, DECEMBER 31, 1995 4,524,699 973,491 3,551,208 18
CASH DISTRIBUTIONS (1,055,336) (78,397) (976,939) (5)
NET INCOME 694,908 - 694,908 4
-------------- ------------ ------------- ----------
BALANCE, DECEMBER 31, 1996 $ 4,164,271 $ 895,094 $ 3,269,177 (1) $ 17 $ $
============== ============ ============= ==========
</TABLE>
(1) Includes 105,645 units purchased by the general partner as a limited
partner.
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
II-7
<PAGE>
ENEX PROGRAM I PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 694,908 $ 248,514
------------ ----------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and depletion 626,840 768,485
Impairment of property 125,097 -
Gain on sale of property (122,690) (428,916)
(Increase) decrease in:
Accounts receivable - oil & gas sales (180,297) (20,325)
Other current assets 5,179 (61,337)
Increase (decrease) in:
Accounts payable (6,608) 41,229
Payable to general partner (5,490) (58,342)
------------ ----------
Total adjustments 442,031 240,794
------------ ----------
Net cash provided by operating activities 1,136,939 489,308
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of properties 348,070 744,127
Property additions - development costs (399,553) (134,423)
------------ ----------
Net cash provided (used) by investing activities (51,483) 609,704
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (1,055,336) (730,913)
------------ ----------
NET INCREASE IN CASH 30,120 368,099
CASH AT BEGINNING OF YEAR 380,368 12,269
------------ ----------
CASH AT END OF YEAR $ 410,488 $ 380,368
============ ==========
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
II-8
<PAGE>
ENEX PROGRAM I PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
- ---------------------------------------------------------------
1. PARTNERSHIP ORGANIZATION
Enex Program I Partners, L.P. (the "Company"), a New Jersey
limited partnership, was formed on October 10, 1985 to effect a
consolidation of twelve existing partnerships. Total limited
partner contributions were $96,814,500, of which $976,378 was
contributed by Enex Resources Corporation ("Enex"), the general
partner.
Enex has been the general partner of the Company since its
inception, except for the period from April 18, 1990 until August
17, 1991 when Energy Development Company, an unrelated company in
Denver, Colorado was the general partner.
In accordance with the partnership agreement, the Company paid
commissions of $9,357,600 for solicited subscriptions to Enex
Securities Corporation, a subsidiary of Enex, and reimbursed Enex
for organization expenses of approximately $3,265,000.
Information relating to the allocation of costs and revenues
between Enex, as general partner, and the limited partners is as
follows:
Limited
Enex Partners
Commissions and selling expenses 100%
Company reimbursement of organization
expense 100%
Company property acquisition 100%
General and administrative costs 10% 90%
Costs of drilling and completing
development wells 10% 90%
Revenues from temporary investment of
partnership capital 100%
Revenues from producing properties 10% 90%
Operating costs (including general and
administrative costs associated with
operating producing properties) 10% 90%
At the point in time when the cash distributions to the limited
partners equal their subscriptions ("payout"), the costs of
drilling and completing development wells, revenues from
producing properties, general and administrative costs and
operating costs will be allocated 15% to the general partner and
85% to the limited partners.
In May 1994, as the aggregate purchase price of the interests in
the Company plus the cumulative distributions to the limited
partners did not equal limited partner subscriptions (the
"Deficiency"),
II-9
<PAGE>
the general partner forfeited its 10% share of the Company's net
revenues. The foregone net revenues will be allocated to the
limited partners until such time as no Deficiency exists.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Oil and Gas Properties - The Company uses the successful efforts
method of accounting for its oil and gas operations. Under this
method, the costs of all development wells are capitalized.
Capitalized costs are amortized on the units-of-production method
based on estimated total proved reserves. The acquisition costs
of proved oil and gas properties are capitalized and periodically
assessed for impairments.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," which requires certain assets to be reviewed for
impairment whenever events or circumstances indicate the carrying
amount may not be recoverable. Prior to this pronouncement, the
Company assessed properties on an aggregate basis. Upon adoption
of SFAS 121, the Company began assessing properties on an
individual basis, wherein total capitalized costs may not exceed
the property's fair market value. The fair market value of each
property was determined by H. J. Gruy and Associates, ("Gruy").
To determine the fair market value, 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 certain discount factors for risk, location,
type of ownership interest, category of reserves, operational
characteristics, and other factors. In the first quarter of 1996,
the Company recognized a non-cash impairment provision of
$125,097 for certain oil and gas properties due to changes in the
overall market for the sale of oil and gas and significant
decreases in the projected production from certain of the
Company's oil and gas properties.
The Company's operating interests in oil and gas properties are
recorded using the pro rata consolidation method pursuant to
Interpretation 2 of Accounting Principles Board Opinion 18.
Cash Flows - The Company has presented its cash flows using the
indirect method and considers all highly liquid investments with
an original maturity of three months or less to be cash
equivalents.
General and Administrative Expenses - The Company reimburses the
General Partner for direct costs and administrative costs
incurred on its behalf. Administrative costs allocated to the
Company 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.
Uses of Estimates - The preparation of the financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses
during the reporting periods. Actual results could differ from
these estimates.
II-10
<PAGE>
3. FEDERAL INCOME TAXES
General - The Company is not a taxable entity for federal income
tax purposes. Such taxes are liabilities of the individual
partners and the amounts thereof will vary depending on the
individual situation of each partner. Accordingly, there is no
provision for income taxes in the accompanying financial
statements.
II-11
<PAGE>
Set forth below is a reconciliation of net income as reflected in the
accompanying financial statements and net (loss) for federal income tax purposes
for the year ended December 31, 1996:
<TABLE>
<CAPTION>
Allocable to Per $500 Limited
--------------------------------
General Limited Partner Unit
TOTAL Partner Partners Outstanding
-------------- -------------- -------------- --------------
Net income as reflected in the
<S> <C> <C> <C> <C>
accompanying financial statements $ 694,908 $ - $ 694,908 $ 4
Reconciling items:
Intangible drilling costs capitalized
for financial reporting purposes
which were charged-off for federal
income tax purposes (287,793) - (287,793) (2)
Difference in gain on property sales for
federal income tax purposes and
the amount computed for financial
reporting purposes (331,010) (331,010) (2)
Difference in depreciation and depletion
computed for federal income tax
purposes and the amount computed
for financial reporting purposes (1,166,804) - (1,166,804) (6)
-------------- ----------- ------------- ----------
Net (loss) for federal
income tax purposes $ (1,090,699) $ 0 $ (1,090,699) $ (6)
============== =========== ============= ==========
</TABLE>
Net (loss) for federal income tax purposes is a summation of ordinary income
(loss), portfolio income (loss), cost depletion and intangible drilling costs as
presented in the Company's federal income tax return.
Set forth below is a reconciliation between partners' capital as reflected in
the accompanying financial statements and partners' capital for federal income
tax purposes as of December 31, 1996:
<TABLE>
<CAPTION>
Allocable to Per $500 Limited
-----------------------------------
General Limited Partner Unit
TOTAL Partner Partners Outstanding
------------ -------------- ----------------- ---------
Partners' capital as reflected in the
<S> <C> <C> <C> <C>
accompanying financial statements $4,164,271 $ 895,094 $ 3,269,177 $ 17
Reconciling items:
Intangible drilling costs capitalized
for financial reporting purposes
which were charged-off for federal
income tax purposes (1,618,003) (109,494) (1,508,509) (8)
Accumulated difference in property
sales for financial reporting purposes
and for federal income tax purposes (331,010) - (331,010) (2)
Difference in accumulated depreciation,
depletion and amortization for financial
reporting purposes and tax purposes 13,592,944 - 13,592,944 71
Commissions and syndication fees
capitalized for income tax purposes 9,357,600 - 9,357,600 48
Costs of consolidation 485,435 48,544 436,891 2
Other timing differences (547,396) 123,424 (670,820) (3)
------------ -------------- ----------------- ---------
Partners' capital for federal
income tax purposes $25,103,841 $ 957,568 $ 24,146,273 $ 125
============ ============== ================= =========
</TABLE>
II-12
<PAGE>
4. SIGNIFICANT PURCHASERS
Dreyfus Energy, Inc., Exxon Company, USA and Koch Hydrocarbons, Inc.
accounted for 14%, 14% and 10%, respectively, of the Company's total
sales in 1996. Exxon Company, USA and Koch Hydrocarbons, Inc.
accounted for 14% and 10%, respectively, of the Company's total sales
in 1995. No other purchaser individually accounted for more than 10%
of such sales.
5. LITIGATION SETTLEMENTS
The Company was named as a party to a suit filed by Texas Crude, Inc.
("Texas Crude"). In the suit, Texas Crude sought to recover legal and
other fees totaling $600,000. In August 1993, a judgement was granted
in favor of Texas Crude for $414,203 plus interest by the 101st
Judicial District Court of Texas. The Company recognized a contingent
liability at December 31, 1993 for $504,350.
The Company appealed the verdict and filed a counterclaim for funds
that were wrongfully withheld by Texas Crude. In December 1994, the
Fifth District Court of Appeals reversed the judgement of the trial
court and rendered judgement in favor of the Company, in which the
Company will recover $163,019 from Texas Crude plus interest.
Accordingly, the contingent liability, initially recognized in 1993,
was reversed in December 1994 and a receivable for $254,588 was
established.
Both the Company and Texas Crude have filed Motions for Rehearing,
which have been pending for more than a year. The accrued receivable
balance at December 31, 1996 was $280,050.
6. PROPERTY TRANSACTIONS
Effective September 1, 1995, the Company sold 85% of its future
assignments from the HNG Drilling Program to American Exploration
Corp. and Louis Dreyfus Natural Gas Corp. for $742,662. A gain of
$427,964 was recognized from the sale. Effective July 1, 1995, the
Company sold its interests in the Esperance Point acquisition to
Wilcox Energy Co. for $1,465. A gain of $952 was recognized from the
sale.
In 1996, the Company sold its interests in the Comite acquisition for
$55,100. A gain of $21,649 was recognized on the sale. The Company
also sold its interest in the E.M. Lane well in the Shell acquisition
for $57,970. A gain of $31,310 was recognized on the sale of the E.M.
Lane well. In 1996, the Company also sold its interests in the Grass
Island acquisition for $235,000. A gain of $69,731 was recognized on
the sale of the Grass Island acquisition.
7. The payable to the general partner primarily consists of general and
administrative expenses allocated to the Company by Enex for its
onging operations. The Company plans to repay the amounts owed to
the general partner during 1997.
II-13
<PAGE>
ENEX PROGRAM I PARTNERS, L.P.
SUPPLEMENTARY OIL AND GAS INFORMATION
FOR THE TWO YEARS ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------
Proved Oil and Gas Reserve Quantities (Unaudited)
The following presents an estimate of the Company's proved oil and gas reserve
quantities and changes therein for each of the two years in the period ended
December 31, 1996. Oil reserves are stated in barrels ("BBLS") and natural gas
in thousand cubic feet ("MCF"). The amounts per $500 limited partner unit do not
include a potential 5% reduction after payout. All of the Company's reserves are
located within the United States.
<TABLE>
<CAPTION>
Per $500 Per $500
Limited Natural Limited
Oil Partner Unit Gas Partner Unit
(BBLS) Outstanding (MCF) Outstanding
----------- --------- --------------- ----------
PROVED DEVELOPED AND
UNDEVELOPED RESERVES:
<S> <C> <C> <C> <C>
January 1, 1995 247,395 1 6,533,198 34
Revisions of previous estimates (4,722) - (172,631) (1)
Sales of minerals in place (285) - (580,261) (3)
Production (60,875) - (705,517) (4)
----------- --------- --------------- ----------
December 31, 1995 181,513 1 5,074,789 26
Revisions of previous estimates (757) - 1,366,556 7
Sales of minerals in place (21,808) - (38,104) -
Production (47,581) - (759,119) (4)
----------- --------- --------------- ----------
December 31, 1996 111,367 1 5,644,122 29
=========== ========= =============== ==========
PROVED DEVELOPED RESERVES:
January 1, 1995 247,395 1 6,533,198 34
=========== ========= =============== ==========
December 31, 1995 181,513 1 5,074,789 26
=========== ========= =============== ==========
December 31, 1996 111,367 1 5,644,122 29
=========== ========= =============== ==========
</TABLE>
II-14
<PAGE>
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable
II-15
<PAGE>
PART III
----------------------------------------------------------------------------
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The Company's sole General Partner is Enex Resources
Corporation, a Delaware corporation. The Company has no Directors or executive
officers. The Directors and executive officers of Enex are:
Gerald B. Eckley. Mr. Eckley, age 70, has served as a Director,
President and Chief Executive Officer of the General Partner since its formation
in 1979. He was employed by Shell Oil Company from 1951 to 1967 and served in
managerial capacities from 1959 to 1967. From 1967 to 1969, he was Director of
Fund Raising at the University of Oklahoma and from 1969 to 1971, was Vice
President of Land and Operations for Imperial American Management Company. In
1971, Mr. Eckley was a petroleum consultant and in 1972- 1973 was General
Counsel and Executive Director of the Oil Investment Institute. From 1973 to
1974, he was Manager of Oil Properties, Inc. and from 1974 to 1976, was Vice
President, Land and Joint Ventures for Petro- Lewis Corporation. From 1977 to
August 1979, Mr. Eckley was President of Eckley Energy, Inc., a company engaged
in purchasing and selling oil and gas properties. Mr. Eckley received an L.L.B.
degree from the University of Oklahoma in 1951 and a Juris Doctor degree from
the University of Oklahoma in 1970.
William C. Hooper, Jr. Mr. Hooper, age 59, has been a Director
of the General Partner since its formation in 1979 and is a member of the
General Partner's Audit and Compensation and Options Committees. In 1960 he was
a staff engineer in the Natural Gas Department of the Railroad Commission of
Texas, with principal duties involving reservoir units and gas proration. In
1961 he was employed by the California Company as a Drilling Engineer and
Supervisor. In 1963 he was employed as a Staff Engineer by California Research
Corporation and in 1964 rejoined the California Company as a project manager
having various duties involving drilling and reservoir evaluations. In 1966 he
was Executive Vice President for Moran Bros. Inc., coordinating and managing all
company activities, drilling operations, bidding and engineering. From 1970
until the present, he has been self-employed as a consulting petroleum engineer
providing services to industry and government and engaged in business as an
independent oil and gas operator and investor. From 1975 to 1987 he was also a
Director and President of Verna Corporation, a drilling contractor and service
organization. He received a B.S. degree in Petroleum Engineering in 1960 from
the University of Texas and an M.S. degree in Petroleum Engineering from that
same University in 1961.
Stuart Strasner. Mr. Strasner, age 67, was a Director of the
General Partner from its formation until October of 1986. He was reappointed to
the Board on April 19, 1990 to fill a vacancy. He is a member of the Audit
Committee. He is a professor of business law at Oklahoma City University and was
Dean of the law school at Oklahoma City University from July 1984 until June
1991. Prior to July 1984, Mr. Strasner was an attorney in private practice with
McCollister, McCleary, Fazio and Holliday in Oklahoma City, Oklahoma. From 1959
to 1974, he was employed by various banks, bank holding companies and an
insurance company in executive capacities. From 1974 to 1978, he was a
consultant to various corporations such as insurance companies, bank holding
companies and small business investment companies. From 1978 until late 1981, he
was Executive Director of the Oklahoma Bar Association, and from 1981 to 1983
was a Director and President of PRST Enterprises, Inc., a real estate
development company. Mr. Strasner holds an A.B. degree from Panhandle A&M
College, Oklahoma, and a J.D. degree from the University of Oklahoma. He is a
member of the Fellows of the American Bar Association and a member of the
Oklahoma Bar Association. Mr. Strasner is also a director of Health Images,
Inc., a public company which provides fixed site magnetic resonance imaging
("MRI") services.
Martin J. Freedman. Mr. Freedman, age 72, was one of the General Partner's
founders and a member of its Board of Directors as well as a board member of
Enex Securities Corporation until June of 1986. He was reappointed to the Board
on April 19, 1990 to fill a vacancy. He is a member of the
III-1
<PAGE>
Compensation and Options Committee. He is currently President of Freedman Oil &
Gas Company, engaged primarily in the management of its exploration and
producing properties, and the managing partner Martin J. Freedman & Company
which has an interest in approximately one hundred producing oil and/or gas
wells. Mr. Freedman is a lifetime member of the Denver Petroleum Club as well as
being a lifetime member of the Denver Association of Petroleum Landmen. He was
an officer and Director and/or founder of several former private and public
companies. Mr. Freedman entered the oil and gas business in 1954 when he joined
Mr. Marvin Davis of the Davis Oil Company. In 1956, he became President of
Central Oil Corporation, a company engaged in oil and gas exploration. From 1958
on, Mr. Freedman operated as Martin J. Freedman Oil Properties and was President
of Oil Properties, Inc., a private corporation. Mr. Freedman attended Long
Island University and New York University. He received a bachelor's degree in
Psychology and also attended New York University's graduate school.
James Thomas Shorney. Mr. Shorney, age 71, has been a Director
of the General Partner since April of 1990 and is a member of the Compensation
and Options Committee. He has been a petroleum consultant and
Secretary/Treasurer of the Shorney Company, a privately held oil and gas
exploration company, from 1970 to date. From 1970 to 1976, he also served as a
petroleum consultant in Land and Lease Research Analysis Studies for the GHK
Company. He was an oil and gas lease broker from 1962 to 1970 and employed by
Shell Oil Company in the Land Department from 1954 to 1962. Before joining Shell
Oil Company, he served as Public Information Officer in the U.S. Army Air Force
from 1950 to 1953 including attending Georgetown University Graduate School in
1952. Mr. Shorney graduated from the University of Oklahoma with a B.A. degree
in Journalism in 1950. From 1943 to 1945, he served in the U.S. Army Air Force
as an air crew member on a B-24 Bomber. Mr. Shorney is a member of the Oklahoma
City Association of Petroleum Landmen on which he has served as Director and
Secretary/Treasurer. He is an active member of the American Association of
Petroleum Landmen. In 1975, Mr. Shorney was first listed in the London Financial
Times' Who's Who in World Oil and Gas.
Robert D. Carl, III. Mr. Carl, age 43, was appointed a Director of the
General Partner on July 30, 1991 and is a member of the Audit Committee. He is
President, Chief Executive Officer and Chairman of the Board of Health Images,
Inc., a public company whose securities are traded on NYSE, which provides fixed
site magnetic resonance imaging ("MRI") services. From 1978 to 1981, Mr. Carl
also served as President of Carl Investment Associates, Inc. a registered
investment advisor. In 1981, Mr. Carl joined Cardio-Tech, Inc., as general
counsel and as an officer and Director. Upon the sale and reorganization of
Cardio-Tech, Inc. into Cardiopul Technologies in 1982, he served as its
Executive Vice President and as a Director. In March, 1985 he was elected
President, Chief Executive Officer and Chairman of Cardiopul Technologies which
spun off its non-imaging medical services business and changed its name to
Health Images, Inc. Mr. Carl received a B.A. in History from Franklin and
Marshall College, Lancaster, Pennsylvania in 1975 and a J.D. from Emory
University School of Law, Atlanta, Georgia in 1978. Mr. Carl is a trustee of
Franklin & Marshall College and is a member of the State Bar of Georgia.
On January 4, 1996, the SEC filed a complaint in the United
States District Court for the District of Columbia against Mr. Carl alleging
that Mr. Carl violated Section 16(a) of the Securities Exchange Act of 1934
("Exchange Act"), and Rule 16a-2 and 16a-3 (and former Rule 16a-1) thereunder,
by failing to timely file reports concerning thirty-eight securities
transactions in his mother's brokerage accounts involving shares of Health
Images, Inc. stock. The SEC took the position that because Mr. Carl (1) provided
substantial financial support to his mother, (2) commingled his mother's assets
with his own, (3) provided a substantial portion of the funds used to purchase
the shares in question, and (4) received from his mother a substantial portion
of the sales proceeds, he, therefore, had a pecuniary interest in, and was a
beneficial owner of, the shares in question.
III-2
<PAGE>
In response to the SEC's action, Mr. Carl disgorged to Health
Images, Inc. approximately $92,400 in short-swing profits from the trading in
his mother's account, plus interest thereon of approximately $52,600. The SEC
further requested the court to impose a $10,000 civil penalty against Mr. Carl
pursuant to Section 21(d)(3) of the Exchange Act. Without admitting or denying
the allegations in the complaint, Mr. Carl consented to the entry of a final
judgement imposing the $10,000 penalty. On January 12, 1996, a federal judge
entered the final judgement in this matter, and Mr. Carl has since filed amended
reports on Forms 4 and 5 reflecting these transactions in his mother's accounts.
In relation to the same matter, the SEC has issued an
administrative Order pursuant to Section 21C of the Exchange Act against Mr.
Carl, finding that he violated Section 16(a) and the rules thereunder and
requiring him to cease and desist from committing or causing any violation or
future violation of those provisions. Without admitting or denying allegations
in the SEC's Order, Mr. Carl consented to the entry of the Order.
Robert E. Densford. Mr. Densford, age 39, was appointed a Director of the
General Partner on September 11, 1991. He joined the General Partner as
Controller on May 1, 1985 and became Vice President- Finance, Secretary and
Treasurer on March 1, 1989. From January 1983 to April 1985, he was Senior
Accountant for Deloitte Haskins & Sells in Houston, Texas, auditing both closely
held and publicly owned oil and gas companies. From September 1981 to December
1982, he was a staff accountant for Coopers & Lybrand in Houston. Mr. Densford
is a C.P.A. and holds a B.B.A. degree in Accounting and an M.S. degree in Oil
and Gas Accounting from Texas Tech University and is a member of the American
Institute of Certified Public Accountants and the Texas Society of Certified
Public Accountants.
James A. Klein. Mr. Klein, age 33, joined the General Partner as Controller
in February 1991. In June 1993, he was appointed President and Principal of Enex
Securities Corporation. From June 1988 to February 1991, he was employed by
Positron Corporation in Houston. From July 1987 to May 1988, he was employed by
Transworld Oil Company in Houston and from September 1985 until July 1987, he
was an accountant with Deloitte Haskins & Sells in Houston, Texas, auditing oil
and gas and oil service companies. Mr. Klein is a Certified Public Accountant
and holds a B.A. in Accounting (1985) from the University of Iowa. He is a
member of the American Institute of Certified Public Accountants and the Iowa
Society of Certified Public Accountants.
Item 10. Executive Compensation
The Company has no Directors or executive officers.
The Company does not pay a proportional or fixed share of the
compensation paid to the officers of the General Partner.
The Company reimburses the General Partner for direct costs and
administrative costs incurred on its behalf. Administrative costs allocated to
the Company 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 Company incurred $752,413 and $766,060 of such
administrative costs payable to the General Partner in 1996 and 1995,
respectively.
III-3
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
$500 Limited
Name of Partner Units Percent
Title of Class Beneficial Owner Owned Directly of Class
Limited Partner Enex Resources 105,645 54.5607%
Item 12. Certain Relationships and Related Transactions
See the Statements of Operations included in the Financial
Statements in Item 7 of this report for information concerning general and
administrative costs incurred by Enex and allocated to the Company, and Note 1
to such Financial Statements for information concerning payments to Enex
Securities Corporation, a wholly owned subsidiary of Enex and to Enex for
certain offering and organization expenses incurred by the Company.
See Item Number 2 - "Description of Property" in this report for
a description of the properties operated by Enex. Enex operates such properties
under the terms of a Joint Operating Agreement ("JOA"). Overhead charges allowed
to third parties under the JOA in accordance with the Council of Petroleum
Accountants Societies are not charged to the Company. Such costs are considered
to be within the general and administrative overhead charges allocated to the
Company.
Item 13. Exhibits and Reports on Form 8-K
Sequential
Page No.
----------------
(a) Exhibits
(3) a. Certificate of Limited Partnership of the
Company as currently in effect. Incorporated
by reference to Exhibit 3(3) to the
Company's Registration Statement under the
Securities Exchange Act of 1934 on Form 8-B
filed with the Securities and Exchange
Commission on February 15, 1986.
b. Articles of Limited Partnership of the
Company as currently in effect. Incorporated
by reference to Appendix B to the
Prospectus/Proxy Statement that appeared as
Exhibit 2 to the Company's Registration
Statement under the Securities Exchange Act
of 1934 on Form 8-B filed with the
Securities and Exchange Commission on
February 15, 1986.
(4) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
III-4
<PAGE>
(18) Not Applicable
(19) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Not Applicable
(25) Not Applicable
(28) Not Applicable
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter
of the period covered by this report.
III-5
<PAGE>
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ENEX PROGRAM I PARTNERS, L.P.
By: ENEX RESOURCES CORPORATION
the General Partner
March 18, 1997 By: /s/ G. B. Eckley
-------------------
G. B. Eckley, President
In accordance with the Exchange Act, this report has been
signed below on March 18, 1997, by the following persons in the capacities
indicated.
ENEX RESOURCES CORPORATION General Partner
By: /s/ G. B. Eckley
------------------------
G. B. Eckley, President
/s/ G. B. Eckley
President, Chief Executive
------------------ Officer and Director
G. B. Eckley
/s/ R. E. Densford Vice President, Secretary, Treasurer,
Chief Financial Officer and Director
-------------------
R. E. Densford
/s/ James A. Klein Controller and Chief Accounting Officer
-----------------
James A. Klein
S-1
<PAGE>
/s/ Robert D. Carl, III
--------------------------
Robert D. Carl, III Director
/s/ Martin J. Freedman
--------------------------
Martin J. Freedman Director
/s/ William C. Hooper, Jr.
--------------------------
William C. Hooper, Jr. Director
/s/ Tom Shorney
--------------------------
Tom Shorney Director
/s/ Stuart Strasner
--------------------------
Stuart Strasner Director
S-2
<PAGE>
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(Replace this text with the legend)
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<NAME> Enex Program I Partners, L.P.
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