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 0-16553
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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, L.P.
BALANCE SHEET
- ------------------------------------------------------------------------------
JUNE 30,
ASSETS 1996
---------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash $ 4,515
Accounts receivable - oil & gas sales 42,662
Other current assets 36,833
---------------
Total current assets 84,010
---------------
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
---------------
Property, net 193,225
---------------
TOTAL $ 277,235
===============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 34,048
Payable to general partner 27,353
---------------
Total current liabilities 61,401
---------------
NONCURRENT PAYABLE TO GENERAL PARTNER 109,414
---------------
PARTNERS' CAPITAL:
Limited partners 69,907
General partner 36,513
---------------
Total partners' capital 106,420
---------------
TOTAL $ 277,235
===============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, 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 $ 101,173 $ 84,736 $ 193,694 $ 189,409
------------- ----------------- ----------------- -----------------
EXPENSES:
Depreciation and depletion 15,466 21,330 29,359 52,813
Impairment of property - - 147,948 -
Lease operating expenses 46,739 49,612 100,193 94,708
Production taxes 5,899 4,870 11,618 10,602
General and administrative 10,723 10,545 23,166 24,547
------------- ----------------- ----------------- -----------------
Total expenses 78,827 86,357 312,284 182,670
------------- ----------------- ----------------- -----------------
INCOME (LOSS) FROM OPERATIONS 22,346 (1,621) (118,590) 6,739
------------- ----------------- ----------------- -----------------
OTHER INCOME:
Gain on sale of property 31,638 - 31,638 -
------------- ----------------- ----------------- -----------------
NET INCOME (LOSS) $ 53,984 $ (1,621) $ (86,952) $ 6,739
============= ================= ================= =================
</TABLE>
See accompanying notes to financial statements.
- -----------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL AND GAS INCOME PROGRAM III - SERIES 5, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
--------------------------
JUNE 30, JUNE 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- -----------
<S> <C> <C>
Net income (loss) $ (86,952) $ 6,739
---------- ----------
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and depletion 29,359 52,813
Impairment of property 147,948 -
Gain on sale of property (31,638) -
(Increase) in:
Accounts receivable - oil & gas sales (16,030) (2,707)
Other current assets (33,418) (1,164)
Increase (decrease) in:
Accounts payable 904 (4,148)
Payable to affiliated limited partnership - 1,167
Payable to general partner (30,366) (14,924)
-------- --------
Total adjustments 66,759 31,037
Net cash provided (used) by operating activities (20,193) 37,776
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 33,492 -
Property additions - development costs (22,064) (2,699)
------- -------
Net cash provided (used) by investing activities 11,428 (2,699)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (45,509)
------- -------
NET (DECREASE) IN CASH (8,765) (10,432)
CASH AT BEGINNING OF YEAR 13,280 10,432
-------- --------
CASH AT END OF PERIOD $ 4,515 $ -
======== ========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
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.
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<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Second Quarter 1995 Compared to Second Quarter 1996
Oil and gas sales for the second quarter increased to $101,173 in 1996 from
$84,736 in 1995. This represents an increase of $16,437 (19%). Oil sales
increased by $15,601 (22%). A 14% increase in oil production increased sales by
$9,921. A 7% increase in the average oil sales price increased sales by an
additional $5,680. Gas sales increased by $836 (6%). A 44% increase in the
average gas sales price increased sales by $4,409. This increase was partially
offset by a 26% decrease in gas production. The changes in average sales prices
correspond with changes in the overall market for the sale of oil and gas. The
higher oil production was primarily the result of higher 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 decreased to $46,739 in 1996 from $49,612 in 1995. The
decrease of $2,873 (6%) is primarily due to workover costs incurred on the
Hightower and Corkscrew acquisitions in 1995.
Depreciation and depletion expense decreased to $15,466 in the second quarter of
1996 from $21,330 in the second quarter of 1995. This represents a decrease of
$5,864 (27%). A 30% decrease in the depletion rate reduced depreciation and
depletion expense by $6,731. This decrease was partially offset by the changes
in production, noted above. 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.
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 increased to $10,723 in the second quarter
of 1996 from $10,545 in the second quarter of 1995. This increase of $178 (2%)
is primarily due to more staff time being required to manage the Company's
operations in 1996.
First Six Months in 1995 Compared to First Six Months in 1996
Oil and gas sales for the first six months increased to $193,694 in 1996 from
$189,409 in 1995. This represents an increase of $4,285 (2%). Oil sales
decreased by $132. A 7% decrease in oil production reduced sales by $10,619.
This decrease was partially offset by a 7% increase in the average oil sales
price. Gas sales increased by $4,417 (16%). A 32% increase in the average gas
sales price increased sales by $7,986. This increase was partially offset by a
13% decrease in gas production. The changes in average sales prices correspond
with changes in the overall
I-5
<PAGE>
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. 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.
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 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
I-6
<PAGE>
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.
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 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 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
August 11, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000825247
<NAME> Enex Oil & Gas Income Program III-Series 5,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> 4515
<SECURITIES> 0
<RECEIVABLES> 42662
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 84010
<PP&E> 3505157
<DEPRECIATION> 3311932
<TOTAL-ASSETS> 277235
<CURRENT-LIABILITIES> 61401
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 106420
<TOTAL-LIABILITY-AND-EQUITY> 277235
<SALES> 193694
<TOTAL-REVENUES> 193694
<CGS> 111811
<TOTAL-COSTS> 289118
<OTHER-EXPENSES> 23166
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86952)
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</TABLE>
