United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 0-15432
ENEX OIL & GAS INCOME PROGRAM II - 10, L.P.
(Exact name of small business issuer as specified in its charter)
Texas 76-0163121
(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
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Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM II - 10, L.P.
BALANCE SHEET
- ---------------------------------------------------------------------------
September 30,
ASSETS 1996
---------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash $ 12,733
Accounts receivable - oil & gas sales 26,129
Other current assets 1,281
------------
Total current assets 40,143
------------
OIL & GAS PROPERTIES:
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,907,277
Less accumulated depreciation and depletion 1,447,946
------------
Property, net 459,331
------------
TOTAL $ 499,474
============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 3,625
Payable to general partner 99,527
------------
Total current liabilities 103,152
------------
PARTNERS' CAPITAL:
Limited partners 368,522
General partner 27,800
------------
Total partners' capital 396,322
------------
TOTAL $ 499,474
============
Number of $500 Limited Partner units outstanding 3,916
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM II - 10, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) QUARTER ENDED NINE MONTHS ENDED
------------------------------------ ----------------------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
--------------- ----------------- ----------------- -------------------
REVENUES:
<S> <C> <C> <C> <C>
Oil and gas sales $ 61,339 $ 51,801 $ 184,511 $ 155,356
--------------- ----------------- ----------------- -------------------
EXPENSES:
Depreciation and depletion 18,693 30,908 60,922 90,414
Lease operating expenses 8,277 10,823 28,662 35,274
Production taxes 2,960 2,285 8,839 6,994
General and administrative 5,299 5,309 22,411 16,360
--------------- ----------------- ----------------- -------------------
Total expenses 35,229 49,325 120,834 149,042
--------------- ----------------- ----------------- -------------------
INCOME FROM OPERATIONS 26,110 2,476 63,677 6,314
--------------- ----------------- ----------------- -------------------
OTHER EXPENSE:
Interest expense - - - (72)
--------------- ----------------- ----------------- -------------------
NET INCOME $ 26,110 $ 2,476 $ 63,677 $ 6,242
=============== ================= ================= ===================
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM II - 10, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
- ------------------------------------------------------------------------------
PER $500
LIMITED
PARTNER
GENERAL LIMITED UNIT OUT-
TOTAL PARTNER PARTNERS STANDING
-------------- ------------- -------------- --------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 434,036 $ 27,800 $ 406,236 $ 104
CASH DISTRIBUTIONS (47,084) - (47,084) (12)
NET INCOME (LOSS) (5,342) - (5,342) (2)
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1994 381,610 27,800 353,810 90
CASH DISTRIBUTIONS (28,249) - (28,249) (7)
NET INCOME 25,478 - 25,478 7
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1995 $ 378,839 $ 27,800 $ 351,039 (1) $ 90
CASH DISTRIBUTIONS (46,194) - (46,194) (12)
NET INCOME 63,677 - 63,677 16
-------------- ------------- -------------- --------
BALANCE, SEPTEMBER 30, 1996 $ 396,322 $ 27,800 $ 368,522 (1) $ 94
============== ============= ============== ========
</TABLE>
(1) Includes 966 units purchased by the general partner as a limited partner.
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL AND GAS INCOME PROGRAM II - 10, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
NINE MONTHS ENDED
---------------------
September 30, September 30,
1996 1995
---------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 63,677 $ 6,242
---------- ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and depletion 60,922 90,414
(Increase) decrease in:
Accounts receivable - oil & gas sales (10,414) (1,363)
Other current assets 3,282 3,535
(Decrease) in:
Accounts payable (11,208) (5,192)
Payable to general partner (52,322) (37,594)
---------- ------------
Total adjustments (9,740) 49,800
---------- ------------
Net cash provided by operating activities 53,937 56,042
---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (11,171) (22,786)
---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (46,194) (22,566)
---------- ------------
NET INCREASE (DECREASE) IN CASH (3,428) 10,690
CASH AT BEGINNING OF YEAR 16,161 4,652
---------- ------------
CASH AT END OF PERIOD $ 12,733 $ 15,342
========== ============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
ENEX OIL & GAS INCOME PROGRAM II - 10, 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 $14,249, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on July 31, 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. On November 13, 1996, the Company submitted amended
preliminary proxy material to the SEC with respect to this
consolidation. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
4. 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.
I-5
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Third Quarter 1996 Compared to Third Quarter 1995
Oil and gas sales for the third quarter increased to $61,339 in 1996 from
$51,801 in 1995. This represents an increase of $9,538 (18%). Oil sales
increased by $8,941 (20%). A 33% increase in the average oil sales price
increased sales by $12,940. This increase was partially offset by a 10% decrease
in oil production. Gas sales increased by $597 (9%). A 56% increase in the
average gas sales price increased sales by $2,576, partially offset by a 30%
decrease in gas production. 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 and gas production was primarily due to natural production declines.
Lease operating expenses for the third quarter decreased to $8,277 in 1996 from
$10,823 in 1995. The decrease of $2,546 (24%) is primarily due to costs incurred
on the Concord acquisition in the third quarter of 1995 to enhance production.
Depreciation and depletion expense decreased to $18,693 in the third quarter of
1996 from $30,908 in the third quarter of 1995. This represents a decrease of
$12,215 (40%). A 30% decrease in the depletion rate reduced depreciation and
depletion expense by $8,018. The changes in production, noted above, reduced
depreciation and depletion expense by an additional $4,197. 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 decreased to $5,299 in the third quarter of
1996 from $5,309 in the third quarter of 1995. This decrease of $10 is primarily
due to less staff time being required to manage the Company's operations.
First Nine months in 1996 Compared to First Nine Months in 1995
Oil and gas sales for the first nine months increased to $184,511 in 1996 from
$155,356 in 1995. This represents an increase of $29,155 (19%). Oil sales
increased by $20,063 (15%). A 23% increase in the average oil sales price caused
sales to increase by $28,356. This increase was partially offset by a 6%
decrease in oil production. Gas sales increased by $9,092 (51%). A 43% increase
in the average gas sales price increased sales by $8,165. A 5% increase in gas
production increased sales by an additional $927. 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 nine months decreased to $28,662 in 1996
from $35,274 in 1995. The decrease of $6,612 (19%) 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 $60,922 in the first nine months
of 1996 from $90,414 in the first nine months of 1995. This represents a
decrease of $29,492 (33%). A 29% decrease in the depletion rate reduced
depreciation and depletion by $25,492. The changes in production noted above
reduced expense by an additional $4,000. 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 for the first nine months increased to
$22,411 in 1996 from $16,360 in 1995. This increase of $6,051 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's "available cash flow" is essentially equal to
the net amount of cash provided by operating, financing and investing
activities.
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. On
November 13, 1996, the Company submitted amended preliminary proxy material to
the SEC with respect to this consolidation. The terms and conditions of the
proposed consolidation are set forth in such preliminary proxy material.
As of September 30, 1996, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
I-7
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits to this report.
(b) The Company filed no reports on Form 8-K during the
quarter ended September 30, 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 hereunto duly
authorized.
ENEX OIL & GAS INCOME
PROGRAM II - 10, 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
December 23, 1996 By: /s/ James A. Klein
-----------------------
James A. Klein
Controller and Chief
Accounting Officer
<PAGE>
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<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000799171
<NAME> Enex Oil & Gas Income Program II - 10, L.P.
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-START> jan-01-1996
<PERIOD-END> sep-30-1996
<CASH> 12733
<SECURITIES> 0
<RECEIVABLES> 26129
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 40143
<PP&E> 1907277
<DEPRECIATION> 1447946
<TOTAL-ASSETS> 499474
<CURRENT-LIABILITIES> 103152
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 396322
<TOTAL-LIABILITY-AND-EQUITY> 499474
<SALES> 184511
<TOTAL-REVENUES> 184511
<CGS> 98423
<TOTAL-COSTS> 120834
<OTHER-EXPENSES> 22411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63677
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
