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 March 31, 1997
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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, L.P.
BALANCE SHEET
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31,
ASSETS 1997
------------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash $ 17,668
Accounts receivable - oil & gas sales 41,168
Other current assets 2,731
------------------
Total current assets 61,567
------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 3,494,967
Less accumulated depreciation and depletion 3,288,049
------------------
Property, net 206,918
------------------
TOTAL $ 268,485
==================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 29,271
Payable to general partner 89,622
------------------
Total current liabilities 118,893
------------------
PARTNERS' CAPITAL:
Limited partners 106,715
General partner 42,877
------------------
Total partners' capital 149,592
------------------
TOTAL $ 268,485
==================
Number of $500 Limited Partner units outstanding 10,797
</TABLE>
See accompanying notes to financial statements.
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I-1
<PAGE>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, L.P.
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED) THREE MONTHS ENDED
----------------------------------------
MARCH 31, MARCH 31,
1997 1996
------------------- -------------------
REVENUES:
<S> <C> <C>
Oil and gas sales $ 102,695 $ 92,521
------------------- -------------------
EXPENSES:
Depreciation and depletion 9,858 13,893
Impairment of property - 147,948
Lease operating expenses 50,591 53,454
Production taxes 6,204 5,719
General and administrative 8,544 12,443
------------------- -------------------
Total expenses 75,197 233,457
------------------- -------------------
NET INCOME (LOSS) $ 27,498 $ (140,936)
=================== ===================
</TABLE>
See accompanying notes to financial statements.
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I-2
<PAGE>
ENEX OIL & GAS INCOME PROGRAM III - SERIES 5, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1997
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<TABLE>
<CAPTION>
PER $500
LIMITED
PARTNER
GENERAL LIMITED UNIT OUT-
TOTAL PARTNER PARTNERS STANDING
----------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 $ 193,372 $ 27,479 $ 165,893 $ 15
CASH DISTRIBUTIONS (16,264) (1,626) (14,638) (1)
NET INCOME (LOSS) (55,014) 13,288 (68,302) (6)
----------------- ------------------ ------------------ ------------------
BALANCE, DECEMBER 31, 1996 122,094 39,141 82,953 8
NET INCOME 27,498 3,736 23,762 2
----------------- ------------------ ------------------ ------------------
BALANCE, MARCH 31, 1997 $ 149,592 $ 42,877 $ 106,715 (1)$ 10
================= ================== ================== ==================
</TABLE>
(1) Includes 2,064 units purchased by the general partner as a limited partner.
See accompanying notes to financial statements.
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I-3
<PAGE>
ENEX OIL AND GAS INCOME PROGRAM III - SERIES 5, L.P.
STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
------------------------------------------
MARCH 31, MARCH 31,
1997 1996
------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 27,498 $ (140,936)
------------------- -------------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and depletion 9,858 13,893
Impairment of property - 147,948
(Increase) decrease in:
Accounts receivable - oil & gas sales (2,040) (12,158)
Other current assets 707 132
Increase (decrease) in:
Accounts payable (2,269) (18,675)
Payable to general partner (19,363) 6,310
------------------- -------------------
Total adjustments (13,107) 137,450
------------------- -------------------
Net cash provided (used) by operating activities 14,391 (3,486)
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property credits - development costs 1,141 228
------------------- -------------------
NET INCREASE (DECREASE) IN CASH 15,532 (3,258)
CASH AT BEGINNING OF YEAR 2,136 13,280
------------------- -------------------
CASH AT END OF PERIOD $ 17,668 $ 10,022
=================== ===================
</TABLE>
See accompanying notes to financial statements.
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I-4
<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. 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 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.
3. On April 7, 1997, the Company's General Partner mailed proxy material
to the limited partners 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 proxy
material.
I-5
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
First Quarter 1997 Compared to First Quarter 1996
Oil and gas sales for the first quarter increased from $92,521 in 1996 to
$102,695 in 1997. This represents an increase of $10,174 (11%). Oil sales
increased by $13,595 or 18%. A 40% increase in the average oil sales price
increased sales by $25,218. This increase was partially offset by a 16% decline
in oil production. Gas sales decreased by $3,421 or 19%. A 46% decrease in gas
production reduced sales by $8,491. This decrease was partially offset by a 51%
increase in the average gas sales price. The decrease in oil production was
primarily a result of natural production declines. The decrease in gas
production was due to sale of the Kidd well on the Enexco acquisition in April
1996, the sale of the Harper well in the RIC acquisition in June 1996, and the
sale of the Spider Lake well in the RIC acquisition in August 1996. The
increases in the average oil and gas prices were due to relatively higher
production from properties with a higher average sales price coupled with higher
prices in the overall market for the sale of oil and gas.
Lease operating expenses decreased from $53,454 in the first quarter of 1996 to
$50,591 in the first quarter of 1997. The decrease of $2,863 (5%) is primarily
due the changes in production, noted above.
Depreciation and depletion expense decreased from $13,893 in the first quarter
of 1996 to $9,858 in the first quarter of 1997. This represents a decrease of
$4,035 (29%). The changes in production, noted above, reduced depreciation and
depletion expense by $3,012. A 9% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $1,023. The rate decrease
was primarily due to an upward revision of the oil and gas reserves during
December 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 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 from $12,443 in the first quarter
of 1996 to $8,544 in the first quarter of 1997. This decrease of $3,899 or 31%
was primarily due to less staff time being required to manage the Company's
operations in 1997, coupled with a $1,859 decrease in the amount of direct
expenses incurred by the Company.
I-6
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
On April 7, 1997, the Company's General Partner mailed proxy material to the
limited partners 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 proxy material.
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 1996 to 1997 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 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, 1996
reserve report prepared by Gruy, there appears to be sufficient future net
revenues to pay all obligations and expenses. 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. The general partner does not intend to
accelerate the repayment of the debt beyond the cash flow provided by operating,
financing and investing activities. Based upon current projected cash flows from
its property, it does not appear that the Company will have sufficient cash to
pay distributions and pay its operating expenses, and meet its debt obligations.
The Company did make distributions in the amount of $11,892 on July 31, 1996.
Future periodic distributions will continue once sufficient net revenues are
accumulated.
As of March 31, 1997, 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 March 31, 1997.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENEX OIL & GAS INCOME
PROGRAM III - 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
May 11, 1997 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> 3-mos
<FISCAL-YEAR-END> dec-31-1997
<PERIOD-START> jan-01-1997
<PERIOD-END> mar-31-1997
<CASH> 17668
<SECURITIES> 0
<RECEIVABLES> 41168
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 61567
<PP&E> 3494967
<DEPRECIATION> 3288049
<TOTAL-ASSETS> 268485
<CURRENT-LIABILITIES> 118893
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 149592
<TOTAL-LIABILITY-AND-EQUITY> 268485
<SALES> 102695
<TOTAL-REVENUES> 102695
<CGS> 56795
<TOTAL-COSTS> 66653
<OTHER-EXPENSES> 8544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27498
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
