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 September 30, 1995
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 0-17558
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0251416
(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
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
BALANCE SHEET
- -------------------------------------------------------------------
September 30,
ASSETS 1995
-------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash .......................................... $ 952
Accounts receivable - oil & gas sales ......... 6,356
----------
Total current assets ............................ 7,308
----------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests ............................ 1,374,397
Less accumulated depletion ................... 1,064,764
----------
Property, net ................................... 309,633
----------
TOTAL ........................................... $ 316,941
==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to general partner ................... $ 18,274
----------
NONCURRENT PAYABLE TO GENERAL PARTNER ........... 146,211
----------
PARTNERS' CAPITAL:
Limited partners ............................. 150,964
General partner .............................. 1,492
----------
Total partners' capital ......................... 152,456
----------
TOTAL ........................................... $ 316,941
==========
<FN>
See accompanying notes to financial statements.
- -------------------------------------------------------------------
</FN>
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
STATEMENTS OF OPERATIONS
- ---------------------------------------------------------------------------------------------------
(UNAUDITED) QUARTER ENDED NINE MONTHS ENDED
----------------------------- ------------------------------
September 30, September 30, September 30, September 30,
1995 1994 1995 1994
------------- ------------- ------------- -------------
REVENUES:
<S> <C> <C> <C> <C>
Oil and gas sales ............ $ 7,701 $ 5,713 $ 18,455 $ 26,573
---------- ---------- ---------- ----------
EXPENSES:
Depletion and amortization ... 4,851 8,619 16,839 49,195
Production and other taxes ... 160 141 513 552
General and administrative ... 2,744 2,789 8,596 12,086
---------- ---------- ---------- ----------
Total expenses ................. 7,755 11,549 25,948 61,833
---------- ---------- ---------- ----------
NET (LOSS) ..................... $ (54) $ (5,836) $ (7,493) $ (35,260)
========== ========== ========== ==========
<FN>
See accompanying notes to financial statements.
- ----------------------------------------------------------------------------------------------------
</FN>
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------
(UNAUDITED)
NINE MONTHS ENDED
--------------------------------
September 30, September 30,
1995 1994
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) ..................................... $ (7,493) $ (35,260)
----------- ----------
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depletion and amortization ................... 16,839 49,195
(Increase) decrease in:
Accounts receivable - oil & gas sales ........ 2,975 (1,151)
Increase (decrease) in:
Accounts payable ............................ (2,823) (915)
Payable to general partner .................. (9,859) 8,990
----------- ----------
Total adjustments .............................. 7,132 56,119
----------- ----------
Net cash provided (used) by operating activities (361) 20,859
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions ......................... (4,397) (17,099)
----------- ----------
NET INCREASE (DECREASE) IN CASH ................ (4,758) 3,760
CASH AT BEGINNING OF YEAR ...................... 5,710 359
----------- ----------
CASH AT END OF PERIOD .......................... $ 952 $ 4,119
=========== ==========
<FN>
See accompanying notes to financial statements.
- ---------------------------------------------------------------------------------------
</FN>
</TABLE>
I-3
<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, 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.
I-4
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Third Quarter 1995 Compared to Third Quarter 1994
Oil and gas sales for the third quarter increased from $5,713 in 1994 to
$7,701 in 1995. This represents an increase of $1,988 (35%). Oil sales increased
by $768 or 22%. A 42% increase in the average net oil sales price increased
sales by $1,249. This increase was partially offset by a 14% decrease in oil
production. Gas sales increased by $1,220 or 54%. A 110% increase in the average
net gas sales price increased sales by $1,819. This increase was partially
offset by a 27% decrease in gas production. The decreases in oil and gas
production were primarily due to natural production declines which were
especially pronounced on the Lake Decade acquisition. The increases in average
net prices were primarily due to workover charges incurred in 1994 on the Lake
Decade acquisition, in which the Company has a net profits royalty interest,
coupled with changes in the overall market for the sale of oil and gas.
Depletion expense decreased from $8,619 in the third quarter of 1994 to $4,851
in the third quarter of 1994. This represents a decrease of $3,768 (44%). The
changes in production, noted above, reduced depletion expense by $1,741. A 29%
decrease in the depletion rate decreased depletion expense by an additional
$2,027. The rate decrease is primarily the result of the recognition of an
impairment of property for $80,662 coupled with an upward revision of the
Company's gas reserves at December 31, 1994.
General and administrative expenses decreased from $2,789 in 1994 to $2,744 in
1995. This represents a decrease of $45 or 2%. This decrease was primarily a
result of less staff time being required to manage the Company's operations.
First Nine Months in 1995 Compared to First Nine Months in 1994
Oil and gas sales for the first nine months decreased from $26,573 in 1994 to
$18,455 in 1995. This represents a decrease of $8,118 (31%). Oil sales decreased
by $464 or 4%. A 35% decrease in oil production reduced sales by $4,114. This
decrease was partially offset by a 47% increase in average net oil sales price.
Gas sales decreased by $7,654 or 52%. A 65% decrease in gas production reduced
sales by $9,596. This decrease was partially offset by a 38% increase in the
average net gas sales price. The decreases in oil and gas production were
primarily due to a surge in production in 1994, resulting from the successful
completion of a workover on the Lake Decade acquisition in the fourth quarter of
1993. The increases in average net prices were primarily due to workover charges
incurred in 1994 on the Lake Decade acquisition, in which the Company has a net
profits royalty interest, coupled with changes in the overall market for the
sale of oil and gas.
I-5
<PAGE>
Depletion expense decreased from $49,195 in the first nine months of 1994 to
$16,839 in the first nine months of 1995. This represents a decrease of $32,356
(66%). The changes in production, noted above, reduced depletion expense by
$27,340. A 23% decrease in the depletion rate decreased depletion expense by an
additional $5,016. This rate decrease is primarily the result of the recognition
of an impairment of property for $80,662 coupled with an upward revision of the
Company's gas reserves at December 31, 1994.
General and administrative expenses decreased from $12,086 in 1994 to $8,596 in
1995. This decrease of $3,490 (29%) is primarily due to less 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 1994 to 1995 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 in April 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. Future periodic distributions will
be made once sufficient net revenues are accumulated.
I-6
<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, 1995.
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 88-89 INCOME AND RETIREMENT
FUND - SERIES 2, 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 11, 1995 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Enex 88-89 Income and Retirement Fund - Series 2, L.P.
</LEGEND>
<CIK> 0000842829
<NAME> Enex 88-89 Income & Retirement Fund-Series 2, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 952
<SECURITIES> 0
<RECEIVABLES> 6356
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7308
<PP&E> 1374397
<DEPRECIATION> 1064764
<TOTAL-ASSETS> 316941
<CURRENT-LIABILITIES> 18274
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 152456
<TOTAL-LIABILITY-AND-EQUITY> 316941
<SALES> 18455
<TOTAL-REVENUES> 0
<CGS> 16902
<TOTAL-COSTS> 16902
<OTHER-EXPENSES> 8596
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
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<NET-INCOME> (7493)
<EPS-PRIMARY> 0
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</TABLE>
