United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-14250
ENEX OIL & GAS INCOME PROGRAM II - 7, L.P.
(Exact name of small business issuer as specified in its charter)
Texas 76-0163130
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
Suite 200, Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)
Registrant's telephone number:
(713) 358-8401
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
Transitional Small Business Disclosure Format (Check one):
Yes No x
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM II - 7, L.P.
BALANCE SHEET
- ----------------------------------------------------------------------------
JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 22,991
Accounts receivable - oil & gas sales 42,011
Other current assets 3,416
---------------------
Total current assets 68,418
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facili 2,949,427
Less accumulated depreciation and depletion 2,185,321
---------------------
Property, net 764,106
---------------------
TOTAL $ 832,524
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 9,506
Payable to general partner 3,352
---------------------
Total current liabilities 12,858
---------------------
PARTNERS' CAPITAL:
Limited partners 782,036
General partner 37,630
---------------------
Total partners' capital 819,666
---------------------
TOTAL $ 832,524
=====================
</TABLE>
See accompanying notes to financial statements.
- -------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM II - 7, L.P.
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------
(UNAUDITED) QUARTER ENDED SIX MONTHS ENDED
--------------------- ----------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
-------- -------- ---------- ---------
REVENUES:
<S> <C> <C> <C> <C>
Oil and gas sales $99,747 $87,836 $ 214,109 $ 180,011
-------- -------- ---------- ---------
EXPENSES:
Depreciation and depletion 30,708 46,636 67,982 98,272
Lease operating expenses 16,139 12,261 35,434 42,504
Production taxes 4,896 3,832 10,218 8,186
General and administrative 9,231 6,407 22,874 14,827
-------- -------- ---------- ---------
Total expenses 60,974 69,136 136,508 163,789
-------- -------- ---------- ---------
INCOME FROM OPERATIONS 38,773 18,700 77,601 16,222
-------- -------- ---------- ---------
OTHER EXPENSE:
Interest expense - - - (112)
-------- -------- ---------- ---------
NET INCOME $38,773 $18,700 $ 77,601 $ 16,110
======== ======== ========== =========
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
<CAPTION>
<PAGE>
ENEX OIL AND GAS INCOME PROGRAM II - 7, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
SIX MONTHS ENDED
-------------------------
JUNE 30, JUNE 30,
1996 1995
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 77,601 $ 16,110
----------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and depletion 67,982 98,272
(Increase) decrease in:
Accounts receivable - oil & gas sales (14,693) (3,663)
Other current assets 4,514 327
Increase (decrease) in:
Accounts payable (12,426) 6,764
Payable to general partner (49,745) (56,051)
----------- ---------
Total adjustments (4,368) 45,649
----------- ---------
Net cash provided by operating activities 73,233 61,759
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (13,540) (28,589)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (49,674) (28,940)
----------- ---------
NET INCREASE IN CASH 10,019 4,230
CASH AT BEGINNING OF YEAR 12,972 4,870
----------- ---------
CASH AT END OF PERIOD $ 22,991 $ 9,100
=========== =========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
ENEX OIL & GAS INCOME PROGRAM II - 7, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The interim financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of results for the
interim periods.
2. A cash distribution was made to the limited partners of the Company in
the amount of $23,193, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on April 30, 1996.
3.) On August 9, 1996, the Company's General Partner submitted preliminary
proxy material to the Securities Exchange Commission with respect to a
proposed consolidation of the Company with 33 other managed limited
partnerships. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
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<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Second Quarter 1996 Compared to Second Quarter 1995
[CAPTION]
Oil and gas sales for the second quarter increased to $99,747 in 1996 from
$87,836 in 1995. This represents an increase of $11,911 (14%). Oil sales
increased by $3,206 (4%). A 13% increase in the average oil sales price
increased sales by $9,653. This increase was partially offset by an 8% decrease
in oil production. Gas sales increased by $8,705 (105%). An 80% increase in the
average gas sales price increased sales by $7,561. A 14% increase in gas
production increased sales by an additional $1,144. The increases in the average
sales prices correspond with changes in the overall market for the sale of oil
and gas. The increase in gas production was primarily the result of
enhanced production improvements on the Concord acquisition.
Lease operating expenses increased to $16,139 in the second quarter of 1996 from
$12,261 in the second quarter of 1995. The increase of $3,878 (32%) is primarily
due to the changes in production, noted above, and enhanced recovery costs
incurred on the Concord acquisition in the second quarter of 1996.
Depreciation and depletion expense decreased to $30,708 in the second quarter of
1996 from $46,636 in the second quarter of 1995. This represents a decrease of
$15,928 (34%). A 32% decrease in the depletion rate reduced depreciation and
depletion expense by $14,186. The changes in production, noted above, reduced
depreciation and depletion expense by an additional $1,742. The decrease in the
depletion rate is primarily the result of an upward revision of the oil and gas
reserves during December 1995.
General and administrative expenses increased to $9,231 in the second quarter of
1995 from $6,407 in the second quarter of 1995. This increase of $2,824 (44%) is
primarily due to more staff time being required to manage the Company's
operations.
First Six Months in 1996 Compared to the First Six Months in 1995
Oil and gas sales for the first six months increased to $214,109 in 1996 from
$180,011 in 1995. This represents an increase of $34,098 (19%). Oil sales
increased by $19,335 (12%). An 18% increase in the average oil sales price
caused sales to increase by $27,335. This increase was partially offset by a 5%
decrease in oil production. Gas sales increased by $14,763 (75%). A 41% increase
in the average gas sales price increased sales by $10,090. A 24% increase in gas
production increased sales by an additional $4,673. The increases in the average
sales prices correspond with changes in the overall market for the sale of oil
and gas. The decrease in oil production was primarily due to natural production
declines. The increase in gas production was primarily the result of the
enhanced production improvements on the Concord acquisition.
Lease operating expenses for the first six months decreased to $35,434 in 1996
from $42,504 in 1995. The decrease of $7,070 (20%) is primarily due to costs
incurred on the Concord acquisition in the first quarter of 1995 to increase
production.
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<PAGE>
Depreciation and depletion expense decreased to $67,982 in the first six months
of 1996 from $98,272 in the first six months of 1995. This represents a decrease
of $30,290 (31%). A 31% decrease in the depletion rate reduced depreciation and
depletion by $30,497. This decrease was slightly offset by the changes in
production, noted above. The decrease in the depletion rate is primarily the
result of an upward revision of the oil and gas reserves during December 1995.
General and administrative expenses increased to $22,874 in the first six months
of 1996 from $14,827 in the first six months of 1995. This increase of $8,047
(54%) is primarily due to more staff time being required to manage the Company's
operations.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations 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 cash flow to the
Company's partners.
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.
Distribution amounts are subject to change if net revenues are greater or less
than expected. Nonetheless, the general partner believes the Company will
continue to have sufficient cash flow to fund operations and to maintain a
regular pattern of distributions.
On August 9, 1996, the Company's General Partner submitted preliminary proxy
material to the Securities Exchange Commission with respect to a proposed
consolidation of the Company with 33 other managed limited partnerships. The
terms and conditions of the proposed consolidation are set forth in such
preliminary proxy material.
As of June 30, 1996, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits to this report.
(b) The Company filed no reports on Form 8-K during the
quarter ended June 30, 1996.
II-1
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
ENEX OIL & GAS INCOME
PROGRAM II - 7, L.P.
(Registrant)
By:ENEX RESOURCES CORPORATION
General Partner
By: /s/ R. E. Densford
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
August 13, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000782335
<NAME> Enex Oil & Gas Income Program II - 7, L.P.
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-START> jan-01-1996
<PERIOD-END> jun-30-1996
<CASH> 22991
<SECURITIES> 0
<RECEIVABLES> 42011
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68418
<PP&E> 2949427
<DEPRECIATION> 2185321
<TOTAL-ASSETS> 832524
<CURRENT-LIABILITIES> 12858
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 819666
<TOTAL-LIABILITY-AND-EQUITY> 832524
<SALES> 214109
<TOTAL-REVENUES> 214109
<CGS> 45652
<TOTAL-COSTS> 113634
<OTHER-EXPENSES> 22874
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
