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 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 0-16553
ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0214445
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)
Issuer's telephone number:
(713) 358-8401
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
Transitional Small Business Disclosure Format (Check one):
Yes No x
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
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(Unaudited)
CURRENT ASSETS:
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Cash $ 4,515
Accounts receivable - oil & gas sales 42,662
Other current assets 36,833
---------------
Total current assets 84,010
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 3,505,157
Less accumulated depreciation and depletion 3,311,932
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Property, net 193,225
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TOTAL $ 277,235
===============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 34,048
Payable to general partner 27,353
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Total current liabilities 61,401
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NONCURRENT PAYABLE TO GENERAL PARTNER 109,414
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PARTNERS' CAPITAL:
Limited partners 69,907
General partner 36,513
---------------
Total partners' capital 106,420
---------------
TOTAL $ 277,235
===============
Number of $500 Limited Partner units outstanding 10,797
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See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, 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. Effective April 1, 1996, the Company sold its interest in the Kidd well
in the Enexco acquisition for $17,920. The Company recognized a $17,920
gain from the sale. Effective June 1, 1996, the Company sold its
interest in the Harper well in the RIC acquisition for $15,572. The
Company recognized a gain of $13,718 from the sale.
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.
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. In the first quarter of 1996, the
Company recognized a non-cash impairment provision of $147,948 for certain
oil and gas properties due to market indications that the carrying amounts
were not fully recoverable.
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market for the sale of oil and gas. The lower oil production was primarily the
result of natural production declines, partially offset by production from the
Corkscrew acquisition which had been shut-in during the second quarter of 1995
for rod repairs. The lower gas production was primarily the result of the sale
of the Kidd well in the Enexco acquisition, effective April 1, 1996, coupled
with natural production declines.
Lease operating expenses increased to $100,193 in the first six months of 1996
from $94,708 in the first six months of 1995. The increase of $5,485 (6%) is
primarily due to road repair expenses incurred on the Corkscrew acquisition in
the first quarter of 1996.
Depreciation and depletion expense decreased to $29,359 in the first six months
of 1994 to $52,813 in the first six months of 1995. This represents a decrease
of $23,454 (44%). The changes in production, noted above, reduced depreciation
and depletion expense by $4,103. A 40% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $19,351. The rate decrease
was primarily due to the lower property basis resulting from the recognition of
an impairment of property for $147,948 in the first quarter of 1996.
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 $147,948 for certain
oil and gas properties due to market indications that the carrying amounts were
not fully recoverable.
Effective April 1, 1996, the Company sold its interest in the Kidd well in the
Enexco acquisition for $17,920. The Company recognized a $17,920 gain from the
sale. Effective June 1, 1996, the Company sold its interest in the Harper well
in the RIC acquisition for $15,572. The Company recognized a gain of $13,718
from the sale.
General and administrative expenses decreased to $23,166 in the first six months
1996 from $24,547 in the first six months of 1995. This decrease of $1,381 (6%)
is primarily due to less staff time being required to manage the Company's
operations in 1996.
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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 activities.
The Company discontinued the payment of distributions during 1995. Future
distributions are dependent upon, among other things, an increase in prices
received for oil and gas. The Company will continue to recover its reserves and
distribute to the limited partners the net proceeds realized form the sale of
oil and gas production. Distribution amounts are subject to change if net
revenues are greater or less than expected. Based on the December 31, 1995
reserve report prepared by Gruy, there appears to be sufficient future net
revenues to pay all obligations and expenses. The General Partner does not
intend to accelerate the repayment of the debt beyond the Company's cash flow
provided by operating activities. Future periodic distributions will be made
once sufficient net revenues are accumulated. Company will continue to recover
its reserves and distribute to the limited partners the net proceeds realized
form the sale of oil and gas production. Distribution amounts are subject to
change if net revenues are greater or less than expected. Future periodic
distributions will be made once sufficient net revenues are accumulated.
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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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 III - SERIES 5, 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
November 7, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
