SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(AMENDMENT 4)
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT
FILED BY A PARTY OTHER THAN THE REGISTRANT X
CHECK THE APPROPRIATE BOX:
X PRELIMINARY PROXY STATEMENT
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY {AS PERMITTED BY RULE
14A-6(E)(2)}
DEFINITIVE PROXY STATEMENT
DEFINITIVE ADDITIONAL MATERIALS
SOLICITING MATERIAL PURSUANT TO RULE 14A-11(C) OR RULE 14A-12
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ENEX RESOURCES CORPORATION
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
$125 PER EXCHANGE ACT RULES 0-11(C)(1)(II), 14A-6(I)(1), OR 14A-6(J)(2).
$500 PER EACH PARTY TO THE CONTROVERSY PURSUANT TO EXCHANGE ACT
RULE 14A-6(I)(3).
FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(4) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
$500 "UNITS" OF LIMITED PARTNERSHIP INTERESTS
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(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
3,098
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(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11:. {SET FORTH THE AMOUNT ON
WHICH THE FILING FEE IS CALCULATED AND STATE HOW IT WAS
DETERMINED.}:
$155,870 {PARTNERSHIP INDEBTEDNESS EXCEEDS ESTIMATED
FAIR MARKET VALUE OF PARTNERSHIP ASETS TO BE SOLD IN LIQUIDATION
PURSUANT TO PLAN OF DISSOLUTION.}
- --------------------------------------------------------------------------------
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
$155,870
- --------------------------------------------------------------------------------
(5) TOTAL FEE PAID:
$31.17
- --------------------------------------------------------------------------------
X FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS
CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE
ACT RULE 0-11(A)(2) AND IDENTIFY THE FILING FOR WHICH OFFSETTING
FEE WAS PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRA-
TION STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS
FILING.
(1) AMOUNT PREVIOUSLY PAID: $31.17
- --------------------------------------------------------------------------------
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.
- --------------------------------------------------------------------------------
(3) FILING PARTY:
- --------------------------------------------------------------------------------
(4) DATE FILED:
- --------------------------------------------------------------------------------
<PAGE>
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ENEX
- ---------------------------
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 4, L.P.
Three Kingwood Place
Suite 200
800 Rockmead Drive
Kingwood, Texas 77339
NOTICE OF SPECIAL MEETINGS
To Be Held On October 28, 1997
To Our Limited Partners:
Special meetings of the limited partners (the "Limited Partners") of Enex
Oil & Gas Income Program IV Series 3, L.P., Enex 88-89 Income and Retirement
Fund - Series 1, L.P., Enex 88-89 Income and Retirement Fund Series 2, L.P.,
Enex 88-89 Income and Retirement Fund - Series 3, L.P., and Enex 88-89 Income
and Retirement Fund - Series 4, L.P., all New Jersey limited partnerships (the
"Partnerships" or individually a "Partnership"), have been called for October
28, 1997 at 2:00 P.M. at the offices of Enex Resources Corporation (the "General
Partner") at Three Kingwood Place, 800 Rockmead Drive, Kingwood, Texas 77339.
Only Limited Partners of record of one or more of the Partnerships at the close
of business on September 10, 1997 are entitled to notice of and to vote at the
special meetings or any adjournments thereof. The Limited Partners of each
Partnership will be asked to vote on a proposal to dissolve and liquidate their
Partnership in accordance with the applicable provisions of their Partnership
Agreement.
You will find a detailed explanation of the proposal, including its
purpose, anticipated benefits and conditions in the attached Proxy Statement.
Please read it carefully. We think you will conclude that the proposal to
dissolve and liquidate the Partnerships is in the best interests of the Limited
Partners of each Partnership. After considering each Partnership's financial
condition and prospects, the Board of Directors of the General Partner has
unanimously approved the proposed transactions as being in the best interests of
the Limited Partners. The affirmative vote of a majority-in-interest of the
Limited Partners is required to approve the proposal for each Partnership. The
General Partner will vote all of the limited partnership interests it owns in
favor of the proposal.
It is very important that you cast your votes on this matter promptly,
regardless of the size of your holdings. Hence, even if you plan to attend the
special meetings in person, we urge you to complete, sign and return the
enclosed proxy (or proxies) as soon as possible in the enclosed envelope in
order to assure the presence of a quorum at each of the meetings. Any proxy may
be revoked at any time before it is exercised by following the instructions set
forth on page one of the accompanying Proxy Statement.
BY ORDER OF THE GENERAL PARTNER,
ENEX RESOURCES CORPORATION
GERALD B. ECKLEY
President,
General Partner
September 11, 1997
<PAGE>
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
- ---------------------------
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ENEX
- ---------------------------
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 1, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 3, L.P.
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 4, L.P.
Three Kingwood Place
Suite 200
800 Rockmead Drive
Kingwood, Texas 77339
PROXY STATEMENT
Solicitation and Voting of Proxies
This Proxy Statement is furnished in connection with the solicitation
on behalf of Enex Resources Corporation ("Enex" or the "General Partner") of
proxies to be voted at special meetings (each a "Special Meeting") of the
limited partners (the "Limited Partners") of Enex Oil & Gas Income Program IV -
Series 3, L.P., Enex 88-89 Income and Retirement Fund - Series 1, L.P., Enex
88-89 Income and Retirement Fund - Series 2, L.P., Enex 88-89 Income and
Retirement Fund - Series 3, L.P., and Enex 88-89 Income and Retirement Fund -
Series 4, L.P., all New Jersey limited partnerships (the "Partnerships" or,
individually, a "Partnership"), to be held on October 28, 1997
The Board of Directors of the General Partner has fixed the close of
business on September 10, 1997 as the record date for the determination of
Limited Partners of record entitled to notice of and to vote at the Special
Meetings. The Limited Partners of each Partnership will be asked to vote on a
proposal to dissolve the Partnership and liquidate it in accordance with the
applicable provisions of its Amended Agreement of Limited Partnership
("Partnership Agreement"). Due to the substantial amount of debt owed by each
Partnership, it is likely that the Limited Partners will receive no or very
little cash or other tangible consideration from these transactions.
The presence, in person or by proxy, of the holders of a
majority-in-interest of the issued and outstanding limited partnership interests
("Interests") of a Partnership entitled to vote will constitute a quorum for the
transaction of business by that Partnership. A proxy in the accompanying form
which is properly signed, dated and returned to the General Partner and not
revoked will be voted in accordance with the instructions contained therein. If
Interests are held in joint name, a proxy signed by one of the joint owners or
by a majority of the joint owners will be voted in accordance with the
instructions contained therein. If no instructions are indicated, proxies will
be voted for the proposal recommended by the Board of Directors of the General
Partner. Proxies will be received and tabulated by the General Partner for each
Partnership. Votes cast in person will be tabulated by an election inspector
appointed by the General Partner.
Limited Partners who execute proxies may revoke them at any time prior
to their being exercised by delivering written notice to the Secretary of the
General Partner at the above address or by subsequently executing and delivering
another proxy at any time prior to the voting. Mere attendance at a Special
Meeting will not revoke the proxy, but a Limited Partner present at a Special
Meeting may revoke his proxy and vote in person.
The approximate date on which this Proxy Statement and the accompanying
proxy or proxies will first be mailed to Limited Partners is September 12, 1997.
The date of this Proxy Statement is September 11, 1997
1
<PAGE>
EXPENSES OF THE PROPOSED TRANSACTIONS
The cost of the proposed transactions (including the cost of soliciting
proxies), which will primarily include expenses in connection with the
preparation and mailing of this Proxy Statement and all papers which now
accompany or may hereafter supplement it, will be borne by the Partnerships pro
rata in accordance with the estimated fair market value of their respective net
assets (see Table 1 in "The Proposal To Dissolve and Liquidate the Partnerships"
below). This basis for allocation was chosen over others (such as the number of
Limited Partners of each Partnership or the amount of each Partnership's
original capital or allocating one-fifth of the costs to each Partnership)
because the largest share of the costs of the proposed transactions consist of
solicitation expenses and counsel fees in connection with the preparation of
this Proxy Statement. In the General Partner's opinion, these costs are most
equitably allocated in accordance with the value of the Partnerships' assets.
See "Table H" below for an estimate of these costs.
The solicitation will be made by mail. The General Partner will supply
brokers or persons holding Interests of record in their names or in the names of
their nominees for other persons, as beneficial owners, with such additional
copies of proxies, and proxy materials as may reasonably be requested in order
for such record holder to send one copy to each beneficial owner, and will, upon
request of such record holders, reimburse them for their reasonable expenses in
mailing such material.
Certain directors, officers and employees of the General Partner, not
especially employed for this purpose, may solicit Proxies, without additional
remuneration therefor, by mail, telephone, telegraph or personal interview.
TABLE OF CONTENTS
Solicitation and Voting of Proxies....................... 1
EXPENSES OF THE PROPOSED TRANSACTIONS.................... 2
SUMMARY ................................................ 3
SPECIAL FACTORS.......................................... 4
Proposal to Dissolve and Liquidate the Partnerships .. 4
Reasons for Proposed Transactions .................... 6
Partnership Operations and Financial Condition........ 6
Alternatives to the Proposed Transactions............. 7
Fairness of the Proposed Transactions................. 8
Potential Benefits to the General Partner ............ 11
Federal Income Tax Consequences....................... 12
Description of Property and Oil and Gas Reserves...... 13
Valuation of Oil and Gas Properties................... 13
Conflicts of Interest................................. 14
THE PROPOSAL TO DISSOLVE AND LIQUIDATE................... 15
General ........................................... 15
Record Date, Voting and Security Ownership of Certain
Beneficial Owners and Management...................... 18
Certain Transactions.................................. 19
No Dissenters' Rights................................. 22
Description of Business............................... 22
Principal Executive Offices and Telephone Number....... 22
Information Concerning the Partnerships ............... 23
Information Concerning the General Partner............. 23
OTHER MATTERS............................................. 25
DOCUMENTS INCORPORATED BY REFERENCE...................... 25
2
<PAGE>
SUMMARY
The following discussion is intended to highlight certain information
contained elsewhere herein and, accordingly, should be read in conjunction with
such information. It is not a complete statement of all material features of the
matters being submitted to Limited Partners for their approval and is qualified
in its entirety by this Proxy Statement and each Partnership's Annual Report on
Form 10-KSB/A and Quarterly Report on Form 10-QSB/A which accompany this Proxy
Statement. LIMITED PARTNERS ARE URGED TO READ THIS PROXY STATEMENT AND THE
ANNUAL REPORTS IN THEIR ENTIRETY.
Person Soliciting Proxies....... Enex Resources Corporation (the "General
Partner")
Date of Special Meetings........ October 28, 1997
Time and Place.................. 2:00 P.M. local time, at the General
Partner's principal executive offices
located at Three Kingwood Place,
Suite 200, 800 Rockmead Drive,
Kingwood, Texas 77339
Record Date..................... September 10, 1997
Class of Securities Entitled
to Vote....................... Limited Partnership Interests in each
Partnership
<TABLE>
<CAPTION>
Enex
OGIP IV Enex 88-89 Income and Retirement Fund
Units of Limited Partnership Interest Series 3 Series 1 Series 2 Series 3 Series 4
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Outstanding on the Record Date and Entitled to Vote*... 6,080 3,605 3,098 3,414 3,645
Number of Limited Partners............................... 1,461 233 258 215 359
Units of Limited Partnership Interest Beneficially
Owned by the General Partner........................... 1,166 467 224 242 240
Percentage Interest Beneficially Owned by the
General Partner........................................ 19.1856% 12.9543% 7.2287% 7.0927% 6.5868%
Percentage of Remaining Limited Partnership Interests
Needed to Approve the Proposal......................... 30.8145% 37.0458% 42.7714% 42.9074% 43.4133%
Fair Market Value of Net Assets**........................ $2,549 $31,473 $(125,587) $(25,712) $22,011
</TABLE>
- ------------------
* The aggregate amount of the Limited Partners' initial subscriptions divided by
$500. ** The fair market value of each Partnership was determined by H.J. Gruy
and Associates, Inc. as of December 31, 1996, as described below in "Description
of Property and Oil and Gas Reserves".
No executive officer or director of the General Partner owns an interest in any
of the Partnerships. The General Partner knows of no other person who has
beneficial ownership of more than 5% of the Interests in any of the
Partnerships.
3
<PAGE>
SPECIAL FACTORS
Proposal to Dissolve and Liquidate the Partnerships:
As explained in "Reasons for Proposed Transactions" below, the General
Partner has determined that Partnership operations are likely to be either
unprofitable or only marginally profitable for the foreseeable future. In light
of these circumstances, the Limited Partners of each Partnership will be asked
to consider and vote upon the proposal to dissolve and liquidate each
Partnership in accordance with the provisions of its Partnership Agreement.
Adoption of the proposal to dissolve and liquidate each Partnership requires the
affirmative vote of a majority in interest of the Limited Partners of each such
Partnership. Because the General Partner holds Interests in each Partnership,
the proposals to dissolve and liquidate can be approved without the affirmative
vote of a majority of the Interests held by all other Limited Partners. If the
proposals are adopted, the assets will be sold and the proceeds of sale
allocated to the Partners' capital accounts. In connection with the proposed
liquidations, the General Partner or an affiliate will act as a "buyer of last
resort" for the Partnership properties; i.e., if no third-party bid is received
at or above the fair market value of a property as determined by H.J. Gruy and
Associates, Inc. ("Gruy"), an independent petroleum consulting firm retained by
the Partnerships to appraise the Partnerships' properties, the General Partner
or an affiliate will purchase such property at such fair market value. Except in
such cases, neither the General Partner nor any affiliate will purchase any
Partnership properties. Due to the substantial amount of debt owed the General
Partner by each Partnership, it is likely that the consideration paid by the
General Partner for any Partnership properties so purchased by the General
Partner will be substantially in the form of the full or partial discharge of
this debt.
As shown below, the estimated fair market value of each Partnership's
oil and gas reserves and other assets for Enex 88-89 Income and Retirement Fund
- - Series 2, L.P., and Series 3, L.P. is less than the outstanding debt owed by
each of these Partnerships to the General Partner. All the funds raised in their
liquidation will likely be used to pay liabilities to third parties and to
satisfy this debt. This may result in the General Partner acquiring all of the
assets of each of these Partnerships without the payment of consideration other
than the discharge of indebtedness owed to the General Partner. It is unlikely
that the Limited Partners of these Partnerships will receive cash or other
tangible consideration from these transactions. For Enex 88-89 Income and
Retirement Fund - Series 1, L.P. and Series 4, L.P., the fair market value of
each Partnership's oil and gas reserves at December 31, 1996, as determined by
Gruy, is slightly greater than the outstanding liabilities owed by each
Partnership. If their indebtedness does not increase prior to sale, a small
liquidating cash distribution of $8.73 and $6.04 per $500 Unit of limited
partnership interest, respectively, is expected to be distributed to the Limited
Partners. For Enex Oil & Gas Income Program IV - Series 3, L.P. it is
anticipated that the liabilities owed to third parties (including those incurred
for proxy solicitation expenses) and to the General Partner will be greater than
the fair market value of this Partnership's assets, and accordingly no
distribution will be available to its Limited Partners.
4
<PAGE>
<TABLE>
<CAPTION>
TABLE 1
Enex
OGIP IV Enex 88-89 Income and Retirement Fund
-------------- ---------------------------------------------------
Series 3, Series 1, Series 2, Series 3, Series 4
L.P. L.P. L.P. L.P. L.P.
------------- ----------- ------------ --------- ----------
Fair Market Value of
Oil & Gas Reserves (1)
Property Name:
<S> <C> <C> <C> <C> <C>
Bagley $29,000 $15,000 $8,000 $8,500 $9,000
Bryum B - 5,100 4,950 4,950 -
Corinne - 78,750 - - -
Brighton 23,520 - - - -
Lake Decade - - - - -
Elmac - - 10,899 38,709 17,706
Speary - - - - 55,000
------------- ----------- ------------ --------- ----------
Total 52,520 98,850 23,849 52,159 81,706
Cash on hand (2) 6,635 3,324 2,291 6,174 6,877
Accounts receivable (2) 29,606 18,215 6,283 13,121 17,223
Other current assets (2) 981 - - - -
------------- ----------- ------------ --------- ----------
Fair Market Value
of Assets 89,742 120,389 32,423 71,454 105,806
Less:
Liability to General 55,180 86,431 155,870 95,435 81,461
Partner
Liabilities to others (2) 32,013 2,485 2,140 1,731 2,329
------------- ----------- ------------ --------- ----------
Partnership Net Capital
(Deficit) $2,549 $31,473 ($125,587) ($25,712) $22,016
============= =========== ============ ========= ==========
1996 Cash Flow Provided by
Operating Activities $10,842 $2,851 $1,413 $5,398 $6,750
========= =========== ============= ========== ===========
Potential Liquidating Cash
Distributions Per $500 Unit (3) $0.42 $8.73 - - $6.04
========= =========== ============= ========== ===========
</TABLE>
(1) The fair market value of each Partnership's oil and gas reserves was
determined by H.J. Gruy and Associates, Inc. as of December 31, 1996,
as described below in ""SPECIAL FACTORS--Description of Property and
Oil and Gas Reserves" and "--Valuation of Oil and Gas Properties".
(2) Assets and liabilities per each Partnership's respective Form 10-KSB/A as of
December 31, 1996.
(3) For limited partners in Enex 88-89 Income Retirement Fund - Series 1,
L.P. and Series 4, L.P. this amount (less proxy solicitation expenses)
is the potential liquidating cash distribution they will receive if the
oil and gas properties are sold at their estimated fair market values.
If the oil and gas properties in Enex 88-89 Income Retirement Fund -
Series 2, L.P. and Series 3, L.P. are sold at their estimated fair
market values, the General Partner will write off $25,587 and $25,712,
respectively, of amounts owed to it and no distributions will be
available. For limited partners of Enex Oil & Gas Income
5
<PAGE>
Program IV - Series 3, L.P., even though the fair market value of their
assets slightly exceeds their liabilities, it is anticipated that proxy
solicitation expenses incurred will result in no cash available for
distributions.
Reasons For Proposed Transactions
Due to the depletion of each Partnerships' producing oil and gas
reserves and to the write-down of undeveloped reserves (which were $538,207,
$333,204. $286,302, $258,758, and $24,044 for Enex Oil & Gas Income Program IV -
Series 3, L.P., Enex Income and Retirement Fund - Series 1, L.P., Series 2,
L.P., Series 3, L.P., and Series 4, L.P., respectively), the magnitude of the
amounts owed by each Partnership to the General Partner (see Table 1 above ),
the Partnerships' inability to generate sufficient cash flow to consistently
maintain regular cash distributions to their Limited Partners (no distributions
have been paid to any of the Partnerships for the previous 2 1/2 years), and the
ongoing costs of operating each Partnership, which for 1997 are estimated to be
$27,674, $21,156, $16,760, $14,895 and $12,000 for Enex Oil & Gas Income Program
IV- Series 3, L.P., Enex 88-89 Income and Retirement Fund - Series 1, L.P.,
Series 2, L.P., Series 3, L.P. and Series 4, L.P., respectively, (see "General
and Administrative Costs" attached as Table E), the General Partner has
determined that Partnership operations are likely to be either unprofitable or
only marginally profitable for the foreseeable future. The write-down of
undeveloped reserves was primarily in the undeveloped oil and gas reserves at
Lake Decade field, Terrebonne Parish, Louisiana. This reduction was due both to
the lack of successful drilling on the Partnerships' acreage, as well as on
offset acreage, and to the depletion characteristics of existing known producing
reservoirs in the Lake Decade field. In the first quarter of 1996 the one well
which was holding the lease in the Lake Decade field and which had undeveloped
reserves assigned was recompleted by the operator to a zone in which the
Partnerships did not own an interest. As a result, the lease expired and the
undeveloped reserves associated with the lease were written off. This caused
both the downward reserve revisions in 1996 and the reserve valuation writedowns
taken by each Partnership in the first fiscal quarter of 1996.
As shown in Table 1 above, for Enex 88-89 Income and Retirement Fund -
Series 1, L.P., Series 2, L.P., and Series 3, L.P. the fair market value of each
Partnership's oil and gas reserves at December 31, 1996, as determined by Gruy,
is less than the outstanding debt owed by each Partnership to the General
Partner. As a result, the General Partner believes that the net proceeds from
the sale of properties, whether purchased by a third party or by the General
Partner, will be used to retire outstanding debt, principally owed to the
General Partner, and that future cash distributions to the Limited Partners of
these Partnerships are unlikely.
Partnership Operations and Financial Condition
6
<PAGE>
It does not appear that even significant increases in oil and gas
prices will enable the Partnerships to generate sufficient cash flow to pay
their operating and administrative expenses and repay their debt obligations.
All of the Partnerships have deficits in their Limited Partners' capital
accounts and Enex 88-89 Income and Retirement Fund - Series 2, L.P. and Series
3, L.P. are insolvent under generally accepted accounting principles. Only if
oil and gas prices were to sustain much higher levels for a significant period
of time would any of the Partnerships be able to cover their ongoing
administrative and operating expenses and pay down their outstanding
indebtedness to the General Partner. The General Partner believes that an
increase in oil and gas prices of this magnitude and duration is extremely
unlikely anytime in the foreseeable future.
Alternatives to the Proposed Transactions
If the Partnerships are not liquidated and dissolved pursuant to the
proposed plans of dissolution and liquidation described herein, the General
Partner will likely withdraw as general partner of the Partnerships effective on
120 days written notice to the Limited Partners. If the General Partner does
withdraw, the Partnership Agreement of each Partnership permits the Limited
Partners of each Partnership to reconstitute and continue the business of such
Partnership, but this right requires the unanimous written consent of the
Limited Partners within ninety (90) days after the notice of withdrawal becomes
effective. In light of the poor financial condition and prospects of each
Partnership, the General Partner believes that it would be highly unlikely that
a substitute general partner could be found who would be willing to fund the
ongoing administrative and operating expenses of the Partnerships. If the
Partnerships are not reconstituted, they will dissolve effective on the one
hundred twentieth day after the notice of withdrawal has been sent, but the
Partnerships will not be terminated until the assets of the Partnerships have
been disposed of.
The General Partner considered, as alternatives to liquidation,
consolidating the Partnerships with other partnerships managed by the General
Partner and continuing to manage the Partnerships on an ongoing basis. However,
for the reasons mentioned above and the benefits the Limited Partners will
derive from approval of the proposed dissolutions, as described under "Fairness
of the Proposed Transaction" and "Potential Benefits to the Partners--To the
Limited Partners" below, the General Partner has determined that it is in the
best interests of the Limited Partners to dissolve and liquidate the
Partnerships.
Consolidating the Partnerships. The possibility of consolidating the
Partnerships with the General Partner or with other partnerships managed by the
General Partner was considered. Because any consolidation of partnerships
managed by the General Partner or with the General Partner would be based on the
net fair market value of a partnership's assets less liabilities, the negative
net value of Enex 88-89 Income and Retirement Fund - Series 2, L.P. and Series
3, L.P. and the very small positive net value for Enex Oil & Gas Income Program
IV - Series 3, L.P. and Enex 88-89 Income and Retirement Fund - Series 1, L.P.
and Series 4, L.P. (see Table 1 above) and the inability of any of the
Partnerships to generate sufficient cash flow to liquidate their liabilities and
pay cash distributions would have permitted the Partnerships to receive very
little or no consideration in any consolidation with profitable partnerships or
with the General Partner. Their participation would also be unfair to the
investors in the other entities. Consolidating just two or more of the
Partnerships was also considered. Although the aggregate general and
administrative expenses of the Partnerships would be reduced by such a
transaction, the reductions would not be sufficient to offset the losses
generated by the Partnerships (which the General Partner would be forced to
continue to carry) or to reduce their indebtedness to the General Partner, which
would remain outstanding following such a consolidation. (See Tables A and E
below.) Thus, the consolidated entity would continue to operate at a loss
without providing any benefit to the Limited Partners from the transaction. The
General Partner would not support such a transaction.
Continuing the Management of the Partnerships. The General Partner has
concluded that the Partnerships' inability to generate sufficient cash flow to
repay their indebtedness and pay cash distributions in the foreseeable future
makes their continued operation unviable. This conclusion is based on the fact
that the Limited Partners of each of the Partnerships have not received
7
<PAGE>
cash distributions for 2 1/2 years. In addition, based on 1996 cash flow
provided by operating activities, it would take the following number of years
for each Partnership to repay the amounts owed to the General Partner.
Number of Years to Repay
Indebtedness to the General Partner
Enex Oil & Gas Income Program IV - Series 3, L.P. 5.1
Enex 88-89 Income and Retirement Fund - Series 1, L.P. 30.3
Enex 88-89 Income and Retirement Fund - Series 2, L.P. 110.3
Enex 88-89 Income and Retirement Fund - Series 3, L.P. 17.7
Enex 88-89 Income and Retirement Fund - Series 4, L.P. 12.1
During these periods, no cash distributions would be paid to Limited
Partners. Except for Enex Oil & Gas Income Program IV - Series 3, L.P., the
estimated reserve life of the oil and gas properties owned by these Partnerships
is less than the number of years shown above to repay the amounts owed the
General Partner. For Enex Oil & Gas Income Program IV - Series 3, L.P. the
estimated reserve life is six (6) years However, as oil and gas properties are
depleting assets, the cash flow in future years would more than likely decline
from 1996 levels which would result in this Partnership having insufficient cash
to repay its indebtedness and ongoing operating costs. As discussed above, if
the Partnerships are not liquidated and dissolved pursuant to the proposed plans
of dissolution and liquidation described herein, the General Partner will likely
withdraw, and such a withdrawal would also most likely lead to the dissolution
and liquidation of the Partnerships.
Fairness of the Proposed Transactions
Due to the loss of a significant portion of the oil and gas reserves of
each Partnership in the Lake Decade field (see "Reasons for Proposed
Transactions" above), the resulting poor financial condition of the Partnerships
(including the fact that the book value of the remaining assets attributable to
the limited partners of each Partnership is less than their respective
liabilities), the General Partner began to consider the Partnerships' future
prospects. Each Limited Partner's capital account has a negative balance equal
to the number of Units owned multiplied by the following amounts:
Negative Capital
Account Balance
Per $500 Unit
Enex Oil & Gas Income Program IV - Series 3, L.P. $ 2.21
Enex 88-89 Income and Retirement Fund - Series 1, L.P. $ 6.97
Enex 88-89 Income and Retirement Fund - Series 2, L.P. $ 43.56
Enex 88-89 Income and Retirement Fund - Series 3, L.P. $ 13.44
Enex 88-89 Income and Retirement Fund - Series 4, L.P. $ 0.46
Each Partnership's cash flow provided by operating activities,
indebtedness, the number of years which would be required to repay the
indebtedness and negative limited partner capital balances as well as the
limited prospects for improvement in market prices of oil and gas were reviewed.
At its December 3, 1996 meeting, the General Partner's Board of Directors was
advised of the Partnerships' reserve loss and poor financial condition and that
market prices for oil and gas were not likely to increase sufficiently to allow
the Partnerships to repay their indebtedness, and that the Partnerships should
be dissolved and liquidated. The Board was further advised that dissolution and
liquidation would probably not provide the Limited Partners of Enex Oil & Gas
Income Program IV - Series 3, L.P. and Enex 88-89 Income and Retirement Fund -
Series 2, L.P. and Series 3, L.P. with any cash distributions and only a nominal
cash distribution to the Limited Partners of Enex 88-89 Income and Retirement
Fund - Series 1, L.P. and Series 4, L.P. (see Table 1 above). Such transactions
would provide the potential for favorable tax consequences to the Limited
Partners if they do not own their Interests in an IRA, Keogh or other tax-exempt
account, althoughit was noted that a majority of the Interests in the four Enex
88-89 Income and Retirement Fund Partnerships are held in such tax-exempt
accounts (see Table 2 below).
As previously noted, the General Partner considered, as alternatives to
liquidation, consolidating the Partnerships with other partnerships managed by
the General Partner and continuing to manage the Partnerships on an ongoing
basis. However, in January, 1996, the Board of Directors of the General Partner,
a majority of whose members are not employees of the General Partner or any
affiliates of the General Partner, unanimously approved the proposed
dissolutions and liquidations as being fair
8
<PAGE>
and in the best interests of the Limited Partners based on the following
substantive factors, in order of their significance: (i) each Partnership's poor
financial condition and prospects, (ii) the potential for certain Limited
Partners to realize favorable tax consequences (see "Federal Income Tax
Consequences" below), (iii) for Enex 88-89 Income and Retirement Fund - Series
1, L.P. and Series 4, L.P. the potential for the Limited Partners to receive a
liquidating cash distribution, and (iv) the General Partner's willingness to act
as a "buyer of last resort" at the estimated fair market values of the
Partnerships' properties as estimated by Gruy (even if all of a Partnership's
indebtedness to the General Partner has been satisfied out of proceeds of
earlier property sales) which ensures a "floor" or minimum consideration for
Partnership properties and thereby ensures an equivalent "ceiling" or maximum
amount of forgiveness of indebtedness income each Limited Partner that is not a
tax-exempt entity will realize from the proposed transactions, upon which it
will be subject to federal income tax (see Table 2 below). The General Partner
believes there are no detriments of the transactions to the Limited Partners,
other than the potential loss of income that might be earned in the future if
oil and gas prices rise significantly. All members of the General Partner's
Board of Directors were present at all meetings at which the proposed
transactions were considered.
As previously discussed, it is more than likely that the Limited Partners
of Enex Oil & Gas Income Program IV - Series 3, L.P. and Enex 88-89 Income and
Retirement Fund - Series 2, L.P. and Series 3, L.P. will not be receiving cash
or any other tangible consideration and that the Limited Partners of Enex 88-89
Income and Retirement Fund - Series 1, L.P. and Series 4, L.P. will receive only
a nominal cash distribution in connection with the proposed dissolutions and
liquidations of the Partnerships. The primary benefit of the proposed
transactions to the Limited Partners is, in fact, the federal income tax
consequences of the proposed transactions to those Limited Partners that are not
tax-exempt. If the consideration received in liquidation is equal to the
estimated fair market value of the Partnerships' assets, as shown on Table 1
above, and assuming that a Limited Partner's basis in his partnership interest
is equal to his partnership capital account determined for federal income tax
purposes, the General Partner believes that the Limited Partners who are
original investors in their Partnerships will be allocated approximately the
following amounts of favorable tax benefits (i.e., long term capital losses,
suspended passive losses, and 1997 net operating losses) and the following
amounts of forgiveness of indebtedness income per $500 Unit:
<TABLE>
TABLE 2
Enex
OGIP IV Enex 88-89 Income and Retirement Fund
Series 3 Series 1 Series 2 Series 3 Series 4
L.P. L.P. L.P. L.P. L.P.
<S> <C> <C> <C> <C> <C>
Capital Loss (long term) $(88.93) $(111.69) $(206.24) $(176.53) $(171.11)
Net Operating Loss (10.59) (17.72) (39.12) (35.40) (14.74)
Forgiveness of Indebtedness Income - - 40.54 7.53 -
-------- -------- -------- ------- -----
Net Amount (99.52) (129.41) (205.12) (204.40) (185.85)
======= ======== ======== ======== ========
Suspended Passive Loss (285.87) - - - -
======== ========== ========== ========== =======
Percentage of the Outstanding
Limited Partnership
Interests held by tax-exempt entities 16.3% 58.0% 58.7% 50.0% 65.2%
Potential Liquidating Cash
Distributions Per $500 Unit $0.42 $8.73 - - $6.04
</TABLE>
Those Limited Partners that are tax-exempt entities will not be subject to
taxation on their shares of Partnership forgiveness of indebtedness income and
will not receive any benefit from their shares of the Partnerships' capital or
net operating losses. Suspended passive losses are utilizable to the extent they
have not been utilized in prior years. See "Federal Income Tax Consequences"
below.
As shown in Table 2 above, the proposed dissolutions and liquidations
of the Partnerships will result in substantial net losses per $500 Unit.
Although many of the Units are held by tax-exempt Limited Partners, these net
losses will be realizable
9
<PAGE>
by the holders of the significant percentage of the Units of each Partnership
that is held by non-exempt Limited Partners. Also, as stated above, if the
Partnerships were to be continued, Limited Partners would be unlikely to receive
any cash distributions with respect to their Units and would, in any event,
remain unable to utilize their capital losses and suspended passive losses until
dissolution. Accordingly, unless prevailing oil and gas prices were to change
significantly, the Limited Partners' benefits, including their tax benefits, at
such time as the Partnerships would automatically dissolve pursuant to their
Partnership Agreements, would not be significantly different from those
available at this time. The General Partner believes, therefore, that the
earlier realization of the potential tax benefits identified above will provide
the Limited Partners of each Partnership, as a whole, with the principal benefit
that they are likely to realize from their Units. In addition, Limited Partners
of Enex 88-89 Income and Retirement Fund - Series 1, L.P. and - Series 4, L.P.
are likely to receive nominal liquidating cash distributions with respect to
their Units.
In determining the substantive fairness of the proposed transactions,
the General Partner did consider whether the consideration or benefit to the
Limited Partners from the proposed transactions constitutes fair value in
relation to net book value, going concern value, liquidation value, and the
estimated fair market values prepared by Gruy. Current and historical market
prices were not considered because there has never been a market for the limited
partnership interests of any of the Partnerships. Because it is more than likely
that the Limited Partners of Enex Oil & Gas Income Program IV - Series 3, L.P.
and Enex 88-89 Income and Retirement Fund - Series 2, L.P. and Series 3, L.P.
will not be realizing any value and the Limited Partners of Enex 88-89 Income
and Retirement Fund - Series 1, L.P. and Series 4, L.P. will only be receiving
nominal value from the Partnerships' properties due to the amount of each
Partnership's indebtedness, such values were not given any weight in determining
the substantive fairness of the proposed transactions to the Limited Partners
beyond the General Partner's reliance on Gruy's fair market value estimates to
determine that the Partnerships' liabilities exceeded or will exceed their
assets. In addition, the General Partner believes that alternative methods of
valuing all the Partnerships' properties, such as using prices recently paid by
the General Partner for units of Interests ($0 per Unit for each of the
Partnerships), net book value, going concern value or Gruy's fair market value
would not result in a higher valuation of Partnership properties than the values
the General Partner expects to realize through the sale of the Partnerships' oil
and gas properties.
Although the General Partner does not believe that alternative methods
of valuing the Partnership properties, such as using prices recently paid the
General Partner for Interests in the Partnerships, net book value, going concern
value or liquidation value (there are no current or historical market prices),
would result in a higher valuation of Partnership properties than that yielded
by Gruy's valuations, even were such to be the case, the General Partner would
not consider it relevant to a determination of the substantive fairness of the
transaction to the Limited Partners. As discussed above, due to the poor
financial condition of the Partnerships, in the event the proposed transactions
were not approved the General Partner would withdraw as general partner likely
leading to the dissolution and liquidation of the Partnerships in any case. In
the General Partners' experience, oil and gas properties are generally purchased
and sold at prices approximating the purchasers' and sellers' estimates of the
discounted present value of the subject oil and gas reserves. Thus, the Gruy
estimated fair market valuations, as compared to the other above-referenced
valuation methods, represents the best estimation of the realizable value of the
Partnership properties.
Adoption of the proposal to dissolve and liquidate each Partnership
requires the affirmative vote of a majority in interest of the Limited Partners
of each such Partnership. Because the General Partner holds Interests in each
Partnership, the proposals to dissolve and liquidate can be approved without the
affirmative vote of a majority of the Interests held by all other Limited
Partners (See "Percentage of Remaining Limited Partnership Interests Needed to
Approve the Proposal" in the "SUMMARY" above and "THE PROPOSAL TO DISSOLVE AND
LIQUIDATE--Record Date, Voting and Security Ownership of Certain Beneficial
Owners and Management" below). No director or group of directors has retained an
unaffiliated representative to act solely on behalf of the Limited Partners for
the purposes of negotiating the terms of the proposed plan to dissolve and
liquidate the Partnerships or to prepare a report concerning the fairness of
such proposals. No firm offer has been made by any person during the preceding
18 months regarding the merger or consolidation of any of the Partnerships, the
sale or transfer of all or any substantial part of the assets of any Partnership
or securities of any Partnership which would enable the holder thereof to
exercise control of such Partnership. In light of Gruy's determination that the
fair market value of the net assets of each Partnership was $31,473 or less (and
negative in two cases) the General Partner determined that the Partnerships did
not have sufficient assets to justify the engagement of an unaffiliated
representative to act on behalf of the Limited Partners. Accordingly, although
the absence of the protections described in the preceding two sentences was
considered
10
<PAGE>
by the General Partner in determining the procedural fairness of the proposed
transactions to the Limited Partners, it was determined to be unavoidable.
The General Partner will not bid on any Partnership properties but will
prepare a bid package to be furnished to potential purchasers. The bid packages
will include sufficient information for prospective bidders to reasonably
determine values for the properties. Sale at public auction will also be
considered, especially in the case of smaller working and royalty interests
and/or lower valued properties. In all cases, each Partnership property will be
sold for the highest possible price. In cases where the highest third party bid
for a property is less than its fair market value as determined by Gruy, the
General Partner or an affiliate will purchase the property at such fair market
value. Thus, the General Partner or an affiliate will act as a "buyer of last
resort". For additional information concerning property sales, see "THE PROPOSAL
TO DISSOLVE AND LIQUIDATE--General".
The General Partner believes that the proposed transactions are
procedurally, as well as substantively, fair to the Limited Partners. In this
regard, the General Partner has complied with all applicable legal requirements
with respect to the procedural aspects of the proposed transactions. Each of the
Partnerships' properties will be made available for sale in a manner which the
General Partner believes to be fair. The proposed transactions were approved in
advance by the Board of Directors of the General Partner and will be submitted
to the Limited Partners for their approval in accordance with the applicable
provisions of their Partnership Agreements. In addition, the fair market value
of each of the Partnerships' properties was determined by Gruy, an independent
consulting firm.
Potential Benefits to the General Partner
Enex owns the largest limited partnership interest in each Partnership
(see "Record Date, Voting and Security Ownership of Certain Beneficial Owners
and Management" below). If the proposed dissolutions are approved Enex will
participate as a Limited Partner to the extent of its limited partnership
interest in the consequences of the liquidation in the same manner as all other
Limited Partners that are not tax-exempt entities.
As General Partner, Enex will benefit from the proposed transactions by
collecting all or a portion of the amounts owed to it by each Partnership upon
the sale of each such Partnership's properties, either in the form of cash
proceeds of such sales, or as buyer of last resort, the receipt of Partnership
properties in exchange for the discharge of Partnership indebtedness to the
General Partner. Also, upon the liquidation of the Partnerships, the General
Partner will cease to incur the ongoing expenses of administering and operating
the Partnerships, which in the case of Enex 88-89 Income and Retirement Fund -
Series 2, and 3, L.P., the Partnership has no ability to repay. Actual
administrative expenses paid by the General Partner for each Partnership in 1995
and 1996, as well as estimates of such expenses for 1997 and 1998, are set forth
in Table E. Expenses associated with the Partnerships' reporting obligations
under the Securities and Exchange Act of 1934, as amended, and the preparation
of annual tax reports and annual audits, comprise a significant portion of such
administrative expenses. The liquidation and dissolution of the Partnerships
will prevent the amounts owed to the General Partner from increasing and reduce
the General Partner's risk that the receivables from each Partnership are/or may
in the future become uncollectible.
11
<PAGE>
The General Partner intends to continue to hold any of the Partnership
properties it might acquire as a buyer of last resort. The General Partner has
no plans to dispose of any of such properties. In the event that the General
Partner acquires any Partnership properties in connection the proposed plans of
dissolution and liquidation of the Partnerships, the General Partner believes
that such properties will be profitable due to the elimination of the current
ongoing expenses associated with administering and operating the Partnerships
and the elimination of the Partnerships' indebtedness.
Federal Income Tax Consequences
In general, the General Partner believes that, with respect to
individuals who are citizens or residents of the United States, for federal
income tax purposes the proposed liquidation of each Partnership's assets will
result in a capital loss to the Limited Partners of each Partnership. In
addition to the capital loss, each Partnership will have a net operating loss
from the Partnership's current year of operation which will be deductible.
However, if a Limited Partner owns his interest in an IRA, Keogh or other
tax-exempt account, he will not be able to utilize the capital loss or the net
operating loss.
The forgiveness of any indebtedness by the General Partner will constitute
ordinary income to the Limited Partners of such Partnership; however, even with
this income, the General Partner anticipates that each Partnership will have a
net operating loss for 1997. See Table 2 above.
If the proposal is adopted, a Limited Partner of Enex Oil & Gas Income
Program IV - Series 3, L.P. will also have available for use in the current year
a suspended passive loss of $285.87 per $500 Unit of limited partnership
interest generated prior to 1997 if he or she is an original investor and has
never utilized any of the Partnership's passive losses in prior years. A Limited
Partner's passive loss may be used in the current year to offset income from
other sources.
12
<PAGE>
Enex 88-89 Income and Retirement Fund - Series 1, L.P., Series 2, L.P.,
Series 3, L.P., and Series 4, L.P. own solely royalty interests in oil and gas
properties, and all losses generated prior to 1997 for these partnerships were
utilizable by the limited partners in the year the loss was generated.
Accordingly, these Partnerships have no suspended losses.
The actual tax consequences to any Limited Partner will depend on the
Limited Partner's own tax circumstances. No legal opinion concerning the tax
consequences of the proposed transactions has been obtained by the General
Partner. The foregoing discussion of the potential federal income tax
consequences of the proposed liquidation of the Partnerships has been prepared
by Robert E. Densford, Vice President-Finance, Secretary and Treasurer of the
General Partner and James A. Klein, Controller of the General Partner, both of
whom are certified public accountants. NEVERTHELESS, EACH LIMITED PARTNER SHOULD
CONSULT HIS OR HER OWN TAX ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF THE
PROPOSED TRANSACTIONS.
Description of Property and Oil and Gas Reserves
A summary of each Partnership's property acquisitions and quantitative
information regarding the Partnership's oil and gas reserves is included in Item
2 of each Partnership's 1996 Form 10-KSB/A accompanying this Proxy Statement and
in Table D. Certain oil and gas property reserve information is also included in
Tables B, B-1, C, F and G attached hereto. Included in this information are fair
market valuations of the properties of each Partnership prepared by Gruy. Gruy
has been preparing reserve estimates for each of the Partnership's oil and gas
reserves since the inception of each Partnership's operations. Gruy was selected
by the General Partner for this task based upon its reputation, experience and
expertise in this area. Gruy is an international petroleum consulting firm with
offices in Houston and Dallas, Texas. Their staff includes petroleum engineers
and geology consultants. Services they provide include reserve estimates, fair
value appraisals, geologic studies, expert witness testimony and arbitration. In
1996 and 1995, Enex Oil & Gas Income Program IV - Series 3, L.P. and Enex 88-89
Income and Retirement Fund - Series 1, L.P., Series 2, L.P., Series 3, L.P. and
Series 4, L.P. paid Gruy a total of $275, $1,127, $564, $563 and $1,014,
respectively, in fees for annual reserve report valuations. In 1997, these
Partnerships paid Gruy a total of $470 for the fair market valuations described
in this Proxy Statement. In addition, Gruy has received compensation from the
General Partner and other limited partnerships of which Enex is the general
partner during the past two years in the aggregate amount of $114,634.
Valuation of Oil and Gas Properties
Gruy has estimated for each oil and gas property in which the Partnerships
own interests, as of December 31, 1996, the recoverable units of oil and gas and
the undiscounted and discounted future net cash flows by year commencing January
1, 1997 and continuing through the estimated productive lives of the properties.
The Limited Partners should be aware that the reserves estimated by Gruy are
estimates only and should not be construed as being exact amounts. Gruy
estimated each Partnership's oil and gas reserves and applied certain
assumptions described below regarding price and cost escalations. Future cash
flow by year was calculated for each property. The future annual cash flows were
then discounted at 10% for time using mid-year discounting. The 10% discount
factor, as used by Gruy, is considered to be the industry standard for valuing
oil and gas properties. Additionally, it is the standard promulgated by the
Securities and Exchange Commission for the valuation of oil and gas properties.
Following the time value discounting described above, a risk factor was then
applied by Gruy to the total discounted cash flow of each property. The risk
factor was applied for each reserve type and ownership type. The risk factor is
applied by Gruy to the extent it determines appropriate based on its
considerations of the particular location, type of interest, category of
reserves and operational characteristics of such reserves. The risk factors
applied to proved producing reserves ranged from a low of 66.0% to a high of
72.4% where Partnership properties consisted of working interests and net
profits interests and from 74.6% to 75.9% where properties consisted of
overriding royalty interests. See attached Table B-1 for a list of properties,
the various risk factors applied to each property, and the Partnerships which
own the property. Gruy allocated the estimates among the Partnerships on a
pro-rata basis in accordance with their respective ownership interest in each of
the properties evaluated. See Tables C and D. The resulting value for each
Partnership is included in Table 1 and in Table B and is labeled Fair Market
Value of Oil and Gas Reserves. Gruy estimated the fair market value of the oil
and gas properties of each of Enex Oil & Gas Income Program IV, Series 3, L.P.,
Enex 88-89 Income and Retirement Fund, Series 1, L.P., Enex 88-89 Income and
Retirement Fund, Series 2, L.P., Enex 88-89 Income and Retirement Fund, Series
3, L.P., and Enex 88-89 Income and Retirement Fund, Series 4, L.P., as $52,520,
$98,850, $23,849, $52,159 and $81,706, respectively.
13
<PAGE>
Future net revenues were estimated by Gruy using a 12 month average oil
price of $20.75 per barrel and gas prices ranging from $1.15 per thousand cubic
feet ("Mcf") to $2.65 per Mcf, such gas prices representing average prices
received over the last 12 months for each field or property. The posted price of
oil on January 1, 1997 was approximately $25 per barrel. The January 1, 1997 gas
price varied on each property and ranged from $1.00 to $5.15 per Mcf. On March
1, 1997 oil prices averaged $19.50 per barrel and gas prices ranged from $.90 to
$3.23 per Mcf. Future operating costs and capital expenditures were estimated by
the General Partner and utilized by Gruy in the future cash flow estimates.
Prices and costs were escalated as follows: Oil prices were escalated 2.65% in
1998, 3.52% in 1999, 3.49% in 2000, 3.55% in 2001, and 3.5% each year thereafter
to a maximum of $34.00 per barrel. Natural gas prices were escalated 1.33% in
1998, 3.51% in 1999, 3.39% in 2000, 3.60% in 2001, and 3.5% thereafter to a
maximum of $3.70 per thousand cubic feet. Operating expenses and future capital
investments were escalated at the rate of 3.5% per year until the year in which
the primary product reached its maximum price.
According to Gruy, there are basically two approaches for the estimation
of the fair market value of oil and gas properties; the income approach and the
market data approach. The income approach requires the estimation of reserves,
identification of their categories (proved, probable and possible), a detailed
cash flow projection and the proper application of risk factors. The market data
approach utilizes comparable sales of properties in the area. Fair market values
were estimated using the income approach as opposed to the market data approach
because it is difficult to identify sales of oil and gas properties that are
comparable in net reserves, product prices, location, operating expenses and
operator expertise. For proved producing properties, the estimated discounted
future net revenue was reduced to a fair market value by multiplying by a
suitable fraction that accounts for the risk associated with such an investment.
The fair market value method is considered to more accurately value all types of
properties as compared to the net present value method. The net present value
method, where the cash flow stream is discounted at some rate higher than the
weighted cost of capital, tends to undervalue long-life properties and overvalue
short-life properties.
No instructions were given and no limitations were imposed by the General
Partner on the scope of or methodology to be used in preparing the fair market
valuations by Gruy. All information provided by Enex and used by Gruy in
preparing such valuations were verified and corroborated through sources
unaffiliated with Enex. The fair market valuation report prepared by Gruy is
available for inspection and copying at the office of the General Partner during
regular business hours by any interested Limited Partner or his representative
who has been so designated in writing. A copy of such report will be mailed to
any interested Limited Partner or his representative upon written request.
Conflicts of Interest
The General Partner's interests with respect to the proposed dissolution
and liquidation of each Partnership may conflict with those of the Limited
Partners of each such Partnership since (i) pursuant to the applicable
provisions of each Partnership's Partnership Agreement, indebtedness owed by
each Partnership to the General Partner will likely be repaid out of the
liquidation proceeds (see Table 1 for the total debt owed by each Partnership to
the General Partner); (ii) with respect to its limited partnership interests in
each Partnership, the General Partner will receive its proportionate share of
the tax benefits of any Partnership losses while those limited partners that are
tax-exempt entities will not receive any tax benefit from such losses; and (iii)
as described above, in connection with the proposed dissolution and liquidation
of the Partnerships, the General Partner may purchase Partnership properties, in
its role as "buyer of last resort," at their fair market values as determined by
Gruy, if no equal or higher bid is received (see Tables 1 and B-1 for the dollar
amount of the fair market value of each Partnership property).
The General Partner would be entitled to the following tax deductions if
each Partnership's properties were sold for the Gruy fair market values set
forth in Table B-1.
Tax Deduction
Enex Oil and Gas Income Program IV - Series 3, L.P. $ 122,001
Enex 88-89 Income and Retirement Fund - Series 1, L.P. 54,515
Enex 88-89 Income and Retirement Fund - Series 2, L.P. 167,344
Enex 88-89 Income and Retirement Fund - Series 3, L.P. 75,478
Enex 88-89 Income and Retirement Fund - Series 4, L.P. 41,758
14
<PAGE>
THE PROPOSAL TO DISSOLVE AND LIQUIDATE
General
At the Special Meetings, the Limited Partners of each Partnership will be
asked to consider and vote upon a proposal to dissolve and liquidate each
Partnership in accordance with the provisions of its Partnership Agreement, as
described herein. Upon the winding up and termination of the business and
affairs of the Partnership, its assets shall be sold, the proceeds allocated to
the Partners in accordance with provisions of the Partnership Agreement and the
Partners' capital accounts adjusted accordingly. The expenses related to
dissolving and liquidating each Partnership will be deducted from the proceeds
of the sale of Partnership oil and gas properties. These costs are estimated to
be approximately $9,098, $3,420, $3,537, $3,343, and $4,002 for Enex Oil & Gas
Income Program IV - Series 3, L.P., Enex 88-89 Income and Retirement Fund -
Series 1, L.P., Enex 88-89 Income and Retirement Fund - Series 2, L.P., Enex
88-89 Income and Retirement Fund - Series 3, L.P., and Enex 88-89 Income and
Retirement Fund - Series 4, L.P., respectively, with the principal expenses
being legal fees incurred in connection with the preparation of the Proxy
Statement and related materials, solicitation expenses, printing costs and
Gruy's appraisal fees. If it becomes necessary to engage the services of a
broker or other agent to facilitate the sale of the Partnerships' properties,
customary commissions and selling fees will have to be incurred, however.
According to the Partnership Agreements, such proceeds of all sales are to be
distributed as follows:
(i) all of the Partnership's debts and liabilities to persons other than
the General Partner and the Limited Partners (collectively, the "Partners"),
which are anticipated to be immaterial in amount, shall be paid and discharged
in their order of priority, as provided by law;
(ii) all of the Partnership's debts and liabilities to the Partners shall
be paid and discharged (currently each of Enex 88- 89 Income and Retirement Fund
- - Series 2, L.P. and Series 3, L.P. owes the General Partner an amount in excess
of the estimated fair market value of its assets); and
(iii) to the Partners in proportion to and in payment of the positive
balances in their respective capital accounts, with the effect of bringing such
capital accounts to zero.
However, each Limited Partner's capital account has a negative balance
equal to the number of Units owned multiplied by the following amounts:
Negative Capital
Account Balance
Per $500 Unit
Enex Oil & Gas Income Program IV - Series 3, L.P. $ 2.21
Enex 88-89 Income and Retirement Fund - Series 1, L.P. $ 6.97
Enex 88-89 Income and Retirement Fund - Series 2, L.P. $ 43.56
Enex 88-89 Income and Retirement Fund - Series 3, L.P. $ 13.44
Enex 88-89 Income and Retirement Fund - Series 4, L.P. $ 0.46
Accordingly, any remaining cash will be distributed to the Partners pro
rata in proportion to their respective sharing ratios, i.e., the ratio between
each Partner's net subscription in the Partnership and the aggregate net
subscriptions of all Partners of the Partnership.
The amount of the potential proceeds from the sale of each Partnership's
oil and gas properties and other assets cannot be readily estimated. However,
see Tables B, B-1, C, F and G for quantitative information regarding proved oil
and gas reserves, estimated future net cash flows, and discounted future net
cash flows of each Partnership's oil and gas reserves as of December 31, 1996
prepared by Gruy. Similar quantitative and cash flow information is shown for
each Partnership as of December 31, 1995 and 1994.
Gruy has also prepared a fair market valuation as of December 31, 1996 for
every oil and gas property owned by each Partnership (see Table 1 above and
Tables B and B-1). Because of the difficulty of estimating oil and gas reserves,
the proceeds of a sale may not reflect the full value of the properties to which
they relate. Such estimates are merely appraisals of
15
<PAGE>
value and may not correspond to realized value, which may be higher or lower.
Every reasonable effort will be made by the General Partner to sell the
Partnerships' properties for the highest possible price. Qualified potential
buyers will be sought out, informed of the availability of the properties for
purchase, and distributed a sales brochure. These qualified potential buyers
will include, but not be limited to, operators of the properties, other
non-operating owners of the properties, and companies and/or persons known to
own or be interested in owning the types of properties available.
Neither the General Partner nor any other affiliate of any Partnership or
of the General Partner will bid on any Partnership properties but will prepare a
bid package to be furnished to potential purchasers. The bid packages will
include sufficient information for prospective bidders to reasonably determine
values for the properties. A copy of the bid package will be mailed to any
Limited Partner who notifies the General Partner that he or she is interested in
bidding on any Partnership properties. Additional data will be available in the
data room set up at the General Partner's office, where potential bidders will
be able to review in detail the General Partner's records and files pertaining
to the properties. In addition, pursuant to the provisions of the New Jersey
Uniform Limited Partnership Law (1976) (the "New Jersey Act"), each Partnership
is required to make available certain information to Limited Partners at such
Partnership's principal office, including information regarding the state of the
business and financial condition of such Partnership and such other information
regarding its affairs as is just and reasonable for the Limited Partners to
examine and copy. Sale at public auction will also be considered, especially in
the case of smaller working and royalty interests and/or lower valued
properties. At all times, and in particular in effectuating the proposed
liquidations if approved, the General Partner has acted and will continue to act
in accordance with its fiduciary duties as a general partner of a limited
partnership governed by the New Jersey Act and applicable common law principles.
In all cases, each Partnership property will be sold for the highest
possible price. In cases where the highest third party bid for a property is
less than its fair market value as determined by Gruy, the General Partner or an
affiliate will purchase the property at such fair market value. Thus, the
General Partner or an affiliate will act as a "buyer of last resort".
Accordingly, as shown in Table 1 above, the minimum amount to be received by
each Partnership for its oil and gas properties is $52,520 for Enex Oil & Gas
Income Program IV- Series 3, L.P.; $98,950 for Enex 88-89 Income and Retirement
Fund - Series 1, L.P.; $23,849 for Enex 88-89 Income and Retirement Fund -
Series 2, L.P.; $52,159 for Enex 88-89 Income and Retirement Fund - Series 3,
L.P.; and $81,706 for Enex 88-89 Income and Retirement Fund - Series 4, L.P.
Until such time as a Partnership's total indebtedness has been discharged in
full, the consideration paid by the General Partner for any properties of such
Partnership purchased by the General Partner shall be in the form of
satisfaction of such indebtedness. At such time as a Partnership's indebtedness
has been discharged in full, the General Partner's purchase of such properties
from such Partnership as buyer of last resort will be for cash. However, due to
the substantial amount of debt owed the General Partner by each Partnership, it
is likely that the consideration paid by the General Partner for any Partnership
properties so purchased by the General Partner will be solely in the form of the
full or partial discharge of this debt. For Enex Oil & Gas Income Program IV
Series 3, L.P. and Enex 88-89 Income and Retirement Fund - Series 2, L.P., and
Series 3, L.P. all the funds raised in the liquidation will likely be used to
pay liabilities to third parties and to satisfy this debt. Therefore, it is
unlikely that the Limited Partners of these three Partnerships will receive cash
or any other tangible consideration from these transactions. For Limited
Partners of Enex 88-89 Income and Retirement Fund - Series 1, L.P. and Enex
88-89 Income and Retirement Fund - Series 4, L.P., if the Partnership's
indebtedness does not increase prior to the sale, a small liquidating cash
distribution of $7.32 and $3.71 per $500 Unit, respectively, will be received by
the Limited Partners. If the amount owed the General Partner by each Partnership
is not fully satisfied from proceeds received from property sales to third
parties and/or to the General Partner, such indebtedness of each Partnership
will be forgiven by the General Partner. See "SPECIAL FACTORS--Federal Income
Tax Consequences" above for a description of the tax consequences related to the
forgiveness of this debt.
Although permitted to do so by the Partnership Agreements, the General
Partner will not distribute any Partnership assets in kind.
The Partnership Agreements permit the General Partner to purchase
Partnership properties following dissolution by matching the highest bona-fide
third-party offer received. In order to avoid the appearance of potential
conflicts of interest, however, the General Partner has elected to forego this
right in connection with the proposed dissolutions to be voted upon at the
Special Meetings.
For additional information concerning the Partnerships' properties and oil
and gas prices, see "SPECIAL FACTORS--Description of Property and Oil and Gas
Reserves" and "--Valuation of Oil and Gas Properties" above.
16
<PAGE>
17
<PAGE>
To the General Partner's knowledge, consummation of the proposal is not
subject to compliance with any federal or state regulatory requirements other
than those applicable to the solicitation of proxies pursuant to this Proxy
Statement. Following approval of the proposed dissolution and liquidation of the
Partnerships, the registration of the Limited Partnership Interests of the
Partnerships under Section 12(g) of the Exchange Act and the Partnerships'
obligations to file reports pursuant to Section 15(d) of the Exchange Act will
terminate.
Record Date, Voting and Security Ownership of Certain Beneficial Owners and
Management
As of the Record Date, the Partnerships had the following numbers of
"Units" of limited partnership interest (i.e., the aggregate amount of the
Limited Partners' initial subscriptions divided by $500) outstanding and
entitled to vote (in each case the number of Units represents 100% of the
outstanding limited partnership interests of the Partnership):
Number of
Units
Enex Oil & Gas Income Program IV - Series 3, L.P. 6,079
Enex 88-89 Income and Retirement Fund - Series 1, L.P. 3,605
Enex 88-89 Income and Retirement Fund - Series 2, L.P. 3,097
Enex 88-89 Income and Retirement Fund - Series 3, L.P. 3,413
Enex 88-89 Income and Retirement Fund - Series 4, L.P. 3,644
From January 1, 1995 to the date hereof, the General Partner has purchased
an aggregate of 263.50, 153.76, 66.36, 21.97 and 46.21 Units of Limited
Partnership Interest of Enex Oil & Gas Income Program IV - Series 3, L.P, Enex
88-89 Income and Retirement Fund - Series 1, L.P., Enex 88-89 Income and
Retirement Fund - Series 2, L.P., Enex 88- 89 Income and Retirement Fund -
Series 3, L.P., and Enex 88/89 Income and Retirement Fund - Series 4, L.P.,
respectively, (including 5.79 30.00, 2.00,6.00 and 2.21, respectively, of such
Units during the past sixty (60) days), at an average purchase price per Unit of
$6.55, $14.87, $0.00, $0.00 and $1.96, respectively, in accordance with its
annual offer to repurchase such interests as required by the Partnership
Agreements.
Approval of the proposal for each Partnership requires the affirmative
vote of the holders of a majority-in-interest of that Partnership. The term "the
holders of a majority-in-interest" refers to Limited Partners (including the
General Partner) holding more than fifty percent of the limited partnership
interests of all the Limited Partners of that Partnership. With respect to the
proposal, abstentions will be included in determining the presence of a quorum,
and will be treated as votes cast against the proposal. "Broker non-votes" will
be deemed absent for purposes of determining the presence of a quorum and will
be treated as votes cast against the proposal. Any unmarked proxies, including
those submitted by brokers and nominees, will be voted in favor of the
applicable proposal. The terms of each Partnership's Agreement require the
General Partner to vote its general partnership interests in concurrence with
the vote of the Limited Partners with respect to the proposed dissolution and
liquidation.
The following table sets forth for each Partnership, as of the Record
Date, the number and percentage of Units beneficially owned by the General
Partner. No executive officer or director of the General Partner owns an
interest in any of the Partnerships. The General Partner knows of no other
person who has beneficial ownership of more than 5% of the outstanding limited
partnership interests in any of the Partnerships.
<TABLE>
<CAPTION>
Enex
OGIP IV Enex 88-89 Income and Retirement Fund
Series 3 Series 1 Series 2 Series 3 Series 4
<S> <C> <C> <C> <C> <C>
Units Beneficially Owned by the General Partner 1,166 467 224 242 240
Percentage Beneficially Owned by the General Partner 19.1856 12.9543 7.2287 7.0927 6.5868
</TABLE>
18
<PAGE>
The General Partner intends to vote all of the Units it owns in favor
of the proposal. Therefore, for each Partnership, if the following percentages
of the outstanding Units are voted by other Limited Partners in favor of the
proposal, it will be approved:
<TABLE>
<CAPTION>
Percentage of Units
Needed to Approve
Proposal
<S> <C> <C>
Enex Oil & Gas Income Program IV - Series 3, L.P. 30.8145%
Enex 88-89 Income and Retirement Fund - Series 1, L.P. 37.0458%
Enex 88-89 Income and Retirement Fund - Series 2, L.P. 42.7714%
Enex 88-89 Income and Retirement Fund - Series 3, L.P. 42.9074%
Enex 88-89 Income and Retirement Fund - Series 4, L.P. 43.4133%
</TABLE>
Certain Transactions
The following amounts relate to transactions between the General
Partner and the Partnerships which have occurred since January 1, 1995:
<TABLE>
<CAPTION>
Allocated General & Administrative Expenses
6 months ended
1995 1996 June 30, 1997
---- ---- -------------
<S> <C> <C> <C> <C>
Enex Oil & Gas Income Program IV - Series 3, L.P. $17,729 $17,221 $7,967
Enex 88-89 Income and Retirement Fund - Series 1, L.P. 15,999 16,197 7,404
Enex 88-89 Income and Retirement Fund - Series 2, L.P. 12,287 12,635 5,694
Enex 88-89 Income and Retirement Fund - Series 3, L.P. 10,993 11,370 5,089
Enex 88-89 Income and Retirement Fund - Series 4, L.P. 10,455 10,909 4,868
</TABLE>
The Partnerships reimburse the General Partner for administrative costs
incurred on their behalf. Administrative costs allocated to the Partnerships are
computed on a cost basis in accordance with standard industry practices by
allocating the time spent by the General Partner's personnel among all projects
and by allocating rent and other overhead on the basis of the relative direct
time charges. The General Partner believes that these amounts are less than
administrative charges customarily charged other partnerships because until June
30, 1997 the General Partner managed 34 other partnerships and was, therefore,
able to allocate such similar charges over a larger base of partnerships.
The General Partner has purchased the following units of Limited
Partnership Interest in accordance with its annual offer to repurchase such
interests, as required by the Partnership Agreements. No executive officer or
director of the General Partner and no person controlling the General Partner
has purchased any such units during the period indicated.
19
<PAGE>
Enex Oil & Gas Income Program IV, Series 3, L.P.
<TABLE>
<CAPTION>
Units of Aggregate
Limited Partnership Amount Purchase
Quarter Ending Interests Paid Price/Unit (1)
-------------- ----------------------- -------- --------------
<S> <C> <C> <C>
June 30, 1994 350.88 $ 11,688.24 $ 33.31
September 30, 1994 1.26 $ 35.48 $ 28.15
December 31, 1994 94.19 $ 2,712.62 $ 28.79
March 31, 1995 0 $ 0.00 $ 0.00
June 30, 1995 2.53 $ 46.45 $ 18.35
September 30, 1995 14.79 $ 410.83 $ 27.77
December 31, 1995 79.59 $ 1,358.86 $ 17.07
March 31, 1996 1.91 $ 35.10 $ 18.37
June 30, 1996 102.60 $ 0.00 $ 0.00
September 30, 1996 51.48 $ 0.00 $ 0.00
December 31, 1996 0 $ 0.00 $ 0.00
March 31, 1997 4.78 $ 0.00 $ 0.00
June 30, 1997 5.79 $ 0.00 $ 0.00
</TABLE>
Enex 88-89 Income and Retirement Fund - Series 1, L.P.
<TABLE>
<CAPTION>
Units of Aggregate
Limited Partnership Amount Purchase
Quarter Ending Interests Paid Price/Unit (1)
-------------- ----------------------- -------- --------------
<S> <C> <C> <C>
June 30, 1994 86.22 $ 7,003.68 $ 81.23
September 30, 1994 10.00 $ 778.93 $ 77.89
December 31, 1994 144.59 $ 10,243.65 $ 70.84
March 31, 1995 0 $ 0.00 $ 0.00
June 30, 1995 0 $ 0.00 $ 0.00
September 30, 1995 90.00 $ 2,024.15 $ 22.49
December 31, 1995 12.00 $ 256.68 $ 21.39
March 31, 1996 .25 $ 5.84 $ .23
June 30, 1996 1.62 $ 0.00 $ 0.00
September 30, 1996 1.32 $ 0.00 $ 0.00
December 31, 1996 18.55 $ 0.00 $ 0.00
March 31, 1997 0 $ 0.00 $ 0.00
June 30, 1997 30.00 $ 0.00 $ 0.00
</TABLE>
20
<PAGE>
Enex 88-89 Income and Retirement Fund - Series 2, L.P.
<TABLE>
<CAPTION>
Units of Aggregate
Limited Partnership Amount Purchase
Quarter Ending Interests Paid Price/Unit (1)
-------------- ----------------------- -------- --------------
<S> <C> <C> <C>
June 30, 1994 .92 $ 7.48 $ 8.13
September 30, 1994 0 $ 0.00 $ 0.00
December 31, 1994 21.23 $ 72.87 $ 3.43
March 31, 1995 0 $ 0.00 $ 0.00
June 30, 1995 10.00 $ 0.00 $ 0.00
September 30, 1995 25.00 $ 0.00 $ 0.00
December 31, 1995 0 $ 0.00 $ 0.00
March 31, 1996 7.46 $ 0.00 $ 0.00
June 30, 1996 .73 $ 0.00 $ 0.00
September 30, 1996 1.04 $ 0.00 $ 0.00
December 31, 1996 .11 $ 0.00 $ 0.00
March 31, 1997 20.00 $ 0.00 $ 0.00
June 30, 1997 2.00 $ 0.00 $ 0.00
</TABLE>
Enex 88-89 Income and Retirement Fund - Series 3, L.P.
<TABLE>
<CAPTION>
Units of Aggregate
Limited Partnership Amount Purchase
Quarter Ending Interests Paid Price/Unit (1)
-------------- ----------------------- -------- --------------
<S> <C> <C> <C>
June 30, 1994 72.00 $ 1,037.38 $ 14.40
September 30, 1994 35.03 $ 409.82 $ 11.69
December 31, 1994 9.90 $ 100.69 $ 10.17
March 31, 1995 0 $ 0.00 $ 0.00
June 30, 1995 0 $ 0.00 $ 0.00
September 30, 1995 0 $ 0.00 $ 0.00
December 31, 1995 0 $ 0.00 $ 0.00
March 31, 1996 0 $ 0.00 $ 0.00
June 30, 1996 5.10 $ 0.00 $ 0.00
September 30, 1996 1.11 $ 0.00 $ 0.00
December 31, 1996 0 $ 0.00 $ 0.00
March 31, 1997 9.75 $ 0.00 $ 0.00
June 30, 1997 6.01 $ 0.00 $ 0.00
</TABLE>
21
<PAGE>
Enex 88-89 Income and Retirement Fund - Series 4, L.P.
<TABLE>
<CAPTION>
Limited Partnership Amount Purchase
Quarter Ending Interests Paid Price/Unit (1)
-------------- ----------------------- -------- --------------
<S> <C> <C> <C>
June 30, 1994 47.13 $ 797.82 $ 16.92
September 30, 1994 0 $ 0.00 $ 0.00
December 31, 1994 13.72 $ 175.91 $ 12.82
March 31, 1995 0 $ 0.00 $ 0.00
June 30, 1995 2.50 $ 0.00 $ 0.00
September 30, 1995 .19 $ 0.00 $ 0.00
December 31, 1995 0 $ 0.00 $ 0.00
March 31, 1996 .55 $ 1.48 $ 2.69
June 30, 1996 8.91 $ 0.00 $ 0.00
September 30, 1996 27.38 $ 0.00 $ 0.00
December 31, 1996 4.44 $ 0.00 $ 0.00
March 31, 1997 0 $ 0.00 $ 0.00
June 30, 1997 2.21 $ 0.00 $ 0.00
</TABLE>
(1) All purchases during a given quarter were at the same price per unit.
During the past 60 days the General Partner purchased no Limited
Partnership Interests in accordance with its annual purchase offer, as required
by the Partnership Agreements. No other person purchased any Partnership
securities during the past 60 days.
Additional information regarding transactions between the Partnerships
and the General Partner is hereby incorporated by reference to Item 7 -
Financial Statements and Supplemental Data to each Partnership's Annual Report
on Form 10-KSB/A for the year ended December 31, 1996 and Item 1 - Financial
Statements (unaudited) to each Partnership's Quarterly Report on Form 10-QSB/A
for the fiscal quarters ended March 31, and June 30, 1997.
No Dissenters' Rights
Limited Partners will not have, nor be entitled to, any dissenters' or
appraisal rights with respect to the proposals under the Partnership Agreements
or under applicable law. Generally, in the absence of a breach of the General
Partner's fiduciary duty (i.e., to act fairly and in the best interests of the
Partnerships and their Limited Partners), Limited Partners who object to the
proposed dissolution and liquidation will have no remedy available to them under
state law or under the Partnership Agreements if the percentage of Units needed
to approve the proposal vote for it (see "Record Date, Voting and Security
Ownership of Certain Beneficial Owners and Management" above).
Description of Business
The Partnerships were formed under the New Jersey Uniform Limited
Partnership Law (1976). The Partnerships are engaged in the oil and gas business
through the ownership of various interests in producing oil and gas properties.
For further information, see Item 1 of each Partnership's 1996 Form 10-KSB/A
accompanying this Proxy Statement.
Principal Executive Offices and Telephone Number
The principal executive offices and telephone number of each Partnership
are as follows: c/o Enex Resources Corporation, Three Kingwood Place, Suite 200,
800 Rockmead Drive, Kingwood, Texas 77339, attention Corporate Secretary,
telephone: (281) 358-8401.
22
<PAGE>
Information Concerning the Partnerships
Pursuant to the provisions of the Act, each Partnership is required to
keep the following records at its principal office or make them available at
that office at the Limited Partner's expense at any reasonable time within five
(5) days after receipt of a written request from a Limited Partner stating the
purpose for which an examination thereof is requested:
(1) a current list that states:
(A) the name and mailing address of each Partner, separately
identifying in alphabetical order the General Partner and the
Limited Partners; (B) the last known street address of the business
or residence of the General Partner; (C) the percentage or other
interest in the Partnership owned by each Partner;
(2) copies of the Partnership's federal, state, and local information
or income tax returns for each of its six most recent tax years; (3) a
copy of the Partnership Agreement and certificate of limited
partnership, all amendments or restatements, and executed copies of any
powers of attorney under which the Partnership Agreement, certificate
of limited partnership, and all amendments or restatements to the
agreement and certificate have been executed; (4) unless contained in
the Partnership Agreement a written statement of;
(A) the amount of the cash contribution and a description and
statement of the agreed value of any other contribution made by
each Partner, and the amount of the cash contribution and a
description and statement of the agreed value of any other
contribution that the Partner has agreed to make in the future as
an additional contribution; (B) the times at which additional
contributions are to be made or events requiring additional
contributions to be made; (C) events requiring the Partnership to
be dissolved and its affairs wound up; and (D) the date on which
each Partner became a partner; and
(5) books and records of account of the Partnership.
Also required to be made available is other information regarding the
business, affairs, and financial condition of each Partnership as is just and
reasonable for the Limited Partners to examine and copy.
Pursuant to the provisions of the Partnership Agreements, the General
Partner will permit access to all records of each Partnership, after adequate
notice, during normal business hours, to any Limited Partner and/or his
accredited representatives. Notwithstanding the foregoing, the General Partner
may keep logs, well reports and other drilling data confidential for a
reasonable period of time. The General Partner maintains a list of names and
addresses of all Limited Partners at the principal office of the Partnerships.
Such list may be reviewed by any Limited Partner or his representative during
normal business hours. On request, a copy of such list will be furnished to any
Limited Partner or his representative upon payment of reproduction and mailing
costs.
Information Concerning the General Partner
Enex was incorporated on August 17, 1979 in Colorado. On June 30, 1992,
Enex reincorporated in Delaware. Enex is engaged in the business of acquiring
interests in producing oil and gas properties and managing oil and gas income
limited partnerships. Enex's operations are concentrated in this single industry
segment.
Enex's principal executive offices are maintained at 800 Rockmead
Drive, Three Kingwood Place, Kingwood, Texas 77339. The telephone number at
these offices is (281) 358-8401. Enex has no regional offices.
The names, present principal occupation or employment, and material
occupations and employments during the last 5 years of each of Enex's directors,
executive officers and controlling shareholders are as follows:
Gerald B. Eckley. Mr. Eckley is a director, President and Chief Executive
Officer of the General Partner and has served as such since its formation in
1979. Mr. Eckley is the beneficial owner of 289,900 shares of the General
Partner's common stock (representing 20.47% of such common stock) calculated in
accordance with Securities and Exchange Commission Rule 13d-3.
23
<PAGE>
William C. Hooper, Jr. Mr. Hooper is a director of the General Partner.
From 1970 until the present, he has been self-employed as a consulting petroleum
engineer in Houston, Texas providing services to industry and government and
engaged in business as an independent oil and gas operator and investor.
Stuart Strasner. Mr. Strasner is a director of the General Partner. He is a
professor of business law at Oklahoma City University in Oklahoma City, Oklahoma
and was Dean of the law school at Oklahoma City University from July 1984 until
June 1991. He is a member of the Fellows of the American Bar Association and a
member of the Oklahoma Bar Association. Mr. Strasner is also a director of
Health Images, Inc., a public company which provides fixed site magnetic
resonance imaging ("MRI") services.
Martin J. Freedman. Mr. Freedman is a director of the General Partner.
Since 1985, he has been President of Freedman Oil & Gas Company in Denver
Colorado, engaged primarily in the management of its exploration and producing
properties, and since 1988, the managing partner of MJF Energy which has an
interest in several gas pipelines and gas wells.
James Thomas Shorney. Mr. Shorney is a director of the General Partner. He
has been a petroleum consultant and Secretary/Treasurer of the Shorney Company
in Oklahoma City, Oklahoma, a privately held oil and gas exploration company,
from 1970 to date.
Robert D. Carl, III. Mr. Carl is a director of the General Partner. He is a
private investor. From 1985 to March 1997, Mr. Carl was the Chairman of the
Board of Health Images, Inc., a company founded by Mr. Carl and subsequently
listed on the New York Stock Exchange.
On January 4, 1996, the Securities and Exchange Commission ("SEC")
filed a complaint in the United States District Court for the District of
Columbia against Mr. Carl alleging that Mr. Carl violated Section 16(a) of the
Securities Exchange Act of 1934 ("Exchange Act"), and Rules 16a-2 and 16a-3 (and
former Rule 16a-1) thereunder, by failing to timely file reports concerning
thirty-eight securities transactions in his mother's brokerage accounts
involving shares of Health Images, Inc. stock. The SEC took the position that
because Mr. Carl (1) provided substantial financial support to his mother, (2)
commingled his mother's assets with his own, (3) provided a substantial portion
of the funds used to purchase the shares in question, and (4) received from his
mother a substantial portion of the sales proceeds, he, therefore, had a
pecuniary interest in, and was a beneficial owner of, the shares in question.
In response to the SEC's action, Mr. Carl disgorged to Health Images,
Inc. approximately $92,400 in short-swing profits from the trading in his
mother's account, plus interest thereon of approximately $52,600. The SEC
further requested the court to impose a $10,000 civil penalty against Mr. Carl
pursuant to Section 21(d)(3) of the Exchange Act. Without admitting or denying
the allegations in the complaint, Mr. Carl consented to the entry of a final
judgment imposing the $10,000 penalty. On January 12, 1996, a federal judge
entered the final judgment in this matter, and Mr. Carl has since filed amended
reports on Forms 4 and 5 reflecting these transactions in his mother's accounts.
In relation to the same matter, the SEC has issued an administrative
order pursuant to Section 21C of the Exchange Act against Mr. Carl, finding that
he violated Section 16(a) and the rules thereunder and requiring him to cease
and desist from committing or causing any violation or future violation of those
provisions. Without admitting or denying allegations in the SEC's Order, Mr.
Carl consented to the entry of the Order.
Robert E. Densford. Mr. Densford is a Director of the General Partner and
its Vice President-Finance, Secretary and Treasurer, a position he has held
since 1989. He was the General Partner's Controller from 1985 to 1989.
James A. Klein. Mr. Klein has been the General Partner's Controller since
February 1991. Since June 1993, he has been President and Principal of the
General Partner's subsidiary, Enex Securities Corporation. From June 1988 to
February 1991, he was employed by Positron Corporation in Houston.
Each of the General Partner's directors is a United States citizen and
maintains a business address in care of the General Partner.
24
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the only business which the
General Partner intends to present at the Special Meetings are the matters set
forth in the accompanying Notice of Special Meetings. The General Partner has no
knowledge of any other business to be presented at the Special Meetings. If
other business consisting of matters of which the General Partner has no current
knowledge or matters incident to the conduct of a Special Meeting is brought
before a Special Meeting, the persons named in the enclosed form of proxy will
vote according to their discretion.
Representatives of Deloitte & Touche LLP are expected to be present at
the Special Meetings. They will have the opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
DOCUMENTS INCORPORATED BY REFERENCE
This Proxy Statement incorporates by reference the following documents
which have been filed by each Partnership with the Commission:
(1) Each Partnership's Annual Report on Form 10-KSB/A for the year
ended December 31, 1996, copies of which accompany this Proxy
Statement; and
(2) Each Partnership's Quarterly Report on Form 10-QSB/A for the
fiscal quarters ended March 31, and June 30, 1997, copies of
which accompany this Proxy Statement.
The Proxy Statement specifically incorporates herein by reference the
information set forth in the following sections contained in each Partnership's
Annual Report on Form 10-KSB/A: Item 1-Business; Item 2-Properties; Item 3-Legal
Proceedings; Item 5-Market for Common Equity and Related Security Holder
Matters; Item 6-Management's Discussion and Analysis of Results of Operations
and Financial Condition; and Item 7-Financial Statements and Supplementary Data.
The following sections of the Quarterly Reports on Form 10-QSB/A are
specifically incorporated herein by reference: Item 1 - Financial Statements
(unaudited).
By Order of the Board of Directors
of the General Partner
ROBERT E. DENSFORD
Vice President-Finance,
Secretary and Treasurer
25
<PAGE>
<TABLE>
<CAPTION>
TABLE A
Selected Financial Data Enex Oil & Gas Income
Program IV - Series 3, L.P.
-----------------------------------------------------
Year ended
December 31,
-----------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Total revenues $158,257 $117,994 $292,260 $259,991
Net (loss) ($514,423) ($15,990) ($159,910) ($279,442)
Net (loss) per $500 unit ($85) ($3) ($29) ($47)
Cash flow from operations $10,842 $5,214 $178,248 $61,230
Cash flow from operations per $500 unit $2 $1 $29 $10
Limited Partners' capital (deficit) ($13,447) $505,968 $546,510 $782,974
Limited Partners' capital (deficit) per $500 unit ($2) $83 $90 $129
Cash distributions to Limited Partners - $22,282 $62,872 $56,873
Cash distributions to Limited Partners per $500 unit - $4 $10 $9
Debt payable to general partner $55,180 $85,800 $106,486 $162,282
Total debt $87,193 $114,169 $155,623 $223,256
</TABLE>
<TABLE>
<CAPTION>
TABLE A
Selected Financial Data
Enex 88-89 Income & Retirement
Fund-Series 1, L.P.
-----------------------------------------------------
Year ended
December 31,
-----------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Total revenues $45,540 $36,385 $96,831 $109,677
Net (loss) ($325,307) ($39,273) ($24,899) ($98,953)
Net (loss) per $500 unit ($90) ($11) ($7) ($30)
Cash flow from operations $2,851 $3,902 $72,136 $76,998
Cash flow from operations per $500 unit $1 $1 $20 $21
Limited Partners' capital (deficit) ($25,117) $302,419 $349,914 $444,760
Limited Partners' capital (deficit) per $500 unit ($7) $84 $97 $123
Cash distributions to Limited Partners - $6,840 $69,947 $79,076
Cash distributions to Limited Partners per $500 unit - $2 $19 $22
Debt payable to general partner $86,431 $101,631 $121,735 $117,337
Total debt $88,916 $104,133 $124,785 $118,501
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE A
Selected Financial Data Enex 88-89 Income & Retirement
Fund - Series 2, L.P.
-----------------------------------------------------
Year ended
December 31,
-----------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Total revenues $24,079 $22,555 $34,264 $29,847
Net income (loss) ($284,164) ($8,412) ($121,166) ($140,242)
Net income (loss) per $500 unit ($92) ($3) ($39) ($46)
Cash flow from operations $1,413 ($436) $29,727 $20,622
Cash flow from operations per $500 unit $0 $0 $10 $7
Limited Partners' capital (deficit) ($134,892) $150,106 $163,349 $307,970
Limited Partners' capital (deficit) per $500 unit ($44) $48 $53 $99
Cash distributions to Limited Partners - $3,958 $21,935 $22,376
Cash distributions to Limited Partners per $500 unit - $1 $7 $7
Debt payable to general partner $155,870 $162,401 $174,344 $162,061
Total debt $158,010 $164,000 $177,167 $162,976
</TABLE>
<TABLE>
<CAPTION>
TABLE A
Selected Financial Data Enex 88-89 Income & Retirement
Fund - Funde- Series.3, L.P.
-----------------------------------------------------
Year ended
December 31,
-----------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Total revenues $40,352 $35,495 $45,980 $48,119
Net income (loss) ($245,531) $96 ($90,585) ($146,837)
Net income (loss) per $500 unit ($72) $0 ($27) ($44)
Cash flow from operations $5,398 ($1,734) $34,332 ($29,204)
Cash flow from operations per $500 unit $2 ($1) $10 ($9)
Limited Partners' capital (deficit) ($45,881) $202,291 $209,046 $328,747
Limited Partners' capital (deficit) per $500 unit ($13) $59 $61 $96
Cash distributions to Limited Partners - $4,525 $26,273 $29,204
Cash distributions to Limited Partners per $500 unit - $1 $8 $9
Debt payable to general partner $95,435 $111,254 $140,539 $135,559
Total debt $97,166 $112,849 $143,401 $136,533
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE A
Selected Financial Data Enex 88-89 Income & Retirement
Fund - Series 4, L.P.
-----------------------------------------------------
Year ended
December 31,
-----------------------------------------------------
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Total revenues $51,886 $42,536 $63,887 $28,405
Net (loss) ($218,333) ($1,658) ($89,707) ($103,530)
Net (loss) per $500 unit ($60) ($0) ($25) ($29)
Cash flow from operations $6,750 ($541) $34,483 $24,406
Cash flow from operations per $500 unit $2 $0 $9 $7
Limited Partners' capital (deficit) ($1,668) $220,447 $230,320 $351,069
Limited Partners' capital (deficit) per $500 unit ($0) $60 $63 $96
Cash distributions to Limited Partners - $4,633 $94,452 $27,552
Cash distributions to Limited Partners per $500 unit - $1 $26 $7
Debt payable to general partner $81,461 $108,048 $143,307 $150,295
Total debt $83,790 $110,404 $146,634 $151,944
</TABLE>
<PAGE>
TABLE B
<TABLE>
<CAPTION>
Oil and gas reserves Enex Oil & Gas Income
Program IV - Series 3, L.P.
----------------------------------------------------------
At December 31,
-------------------------------------------------------
1996 1995 1994 1993
Proved Reserves:
<S> <C> <C> <C> <C>
Oil (bbls) 6,303 13,241 17,512 24,439
Oil (bbls) per $500 unit 1 2 3 4
Gas (mcf) 16,266 279,759 336,916 359,087
Gas (mcf) per $500 unit 2 41 50 53
Estimated future net cash flows $138,684 $735,530 $663,244 $945,469
Estimated future net cash flows per $500 unit $23 $121 $109 $156
Discounted (at 10%) future net cash flows $120,508 $582,866 $549,817 $756,548
Discounted (at 10%) future net cash
flows per $500 unit $20 $96 $90 $124
Fair market value of oil and gas reserves $52,520
Fair market value of oil
and gas reserves per $500 unit $9
</TABLE>
TABLE B
<TABLE>
<CAPTION>
Oil and gas reserves Enex 88-89 Income & Retirement
Fund - Series 1, L.P.
------------------------------------------------------
At December 31,
------------------------------------------------------
1996 1995 1994 1993
Proved Reserves:
<S> <C> <C> <C> <C>
Oil (bbls) 2,255 7,286 8,001 9,311
Oil (bbls) per $500 unit 1 2 2 2
Gas (mcf) 75,388 295,695 335,946 360,412
Gas (mcf) per $500 unit 19 74 84 90
Estimated future net cash flows $292,569 $654,570 $598,589 $995,458
Estimated future net cash flows per $500 unit $81 $182 $166 $276
Discounted (at 10%) future net cash flows $217,921 $361,969 $364,469 $596,231
Discounted (at 10%) future net cash
flows per $500 unit $60 $100 $101 $165
Fair market value of oil and gas reserves $98,850
Fair market value of oil
and gas reserves per $500 unit $27
</TABLE>
TABLE B
<TABLE>
<CAPTION>
Oil and gas reserves Enex 88-89 Income & Retirement
Fund - Series 2, L.P.
----------------------------------------------------------
At December 31,
-------------------------------------------------------
1996 1995 1994 1993
Proved Reserves:
<S> <C> <C> <C> <C>
Oil (bbls) 2,340 5,380 6,194 7,889
Oil (bbls) per $500 unit 1 2 2 2
Gas (mcf) 10,335 152,019 179,883 193,647
Gas (mcf) per $500 unit 3 44 52 56
Estimated future net cash flows $67,026 $375,329 $326,472 $462,847
Estimated future net cash flows per $500 unit $22 $121 $105 $149
Discounted (at 10%) future net cash flows $53,793 $294,809 $270,561 $370,427
Discounted (at 10%) future net cash
flows per $500 unit $17 $95 $87 $120
Fair market value of oil and gas reserves $23,849
Fair market value of oil
and gas reserves per $500 unit $8
</TABLE>
TABLE B
<TABLE>
<CAPTION>
Oil and gas reserves Enex 88-89 Income & Retirement
Fund - Series 3, L.P.
------------------------------------------------------
At December 31,
------------------------------------------------------
1996 1995 1994 1993
Proved Reserves:
<S> <C> <C> <C> <C>
Oil (bbls) 4,876 7,620 8,254 9,998
Oil (bbls) per $500 unit 1 2 2 3
Gas (mcf) 19,486 148,547 173,824 187,344
Gas (mcf) per $500 unit 5 39 46 49
Estimated future net cash flows $144,895 $391,293 $332,598 $451,613
Estimated future net cash flows per $500 unit $42 $115 $97 $132
Discounted (at 10%) future net cash flows $110,882 $306,500 $275,782 $362,893
Discounted (at 10%) future net cash
flows per $500 unit $32 $90 $81 $106
Fair market value of oil and gas reserves $52,159
Fair market value of oil
and gas reserves per $500 unit $15
</TABLE>
TABLE B
<TABLE>
<CAPTION>
Enex 88-89 Income & Retirement
Oil and gas reserves Fund - Series 4, L.P.
-------------------------------------------------------
At December 31,
-------------------------------------------------------
1996 1995 1994 1993
Proved Reserves:
<S> <C> <C> <C> <C>
Oil (bbls) 5,524 7,979 9,417 12,875
Oil (bbls) per $500 unit 1 2 2 3
Gas (mcf) 93,757 179,012 200,633 205,307
Gas (mcf) per $500 unit 23 44 50 50
Estimated future net cash flows $294,355 $392,657 $354,103 $487,614
Estimated future net cash flows per $500 unit $81 $108 $97 $134
Discounted (at 10%) future net cash flows $211,952 $310,904 $294,689 $394,412
Discounted (at 10%) future net cash
flows per $500 unit $58 $85 $81 $108
Fair market value of oil and gas reserves $81,706
Fair market value of oil
and gas reserves per $500 unit $22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TABLE B-1
Enex Oil & Gas Income Program IV - Series 3, L.P.
Reserve Type of Discounted (@ 10%) Risk Fair Market
Property Name Category(1) Interest(2) Net Cash Flows Factors(3) Value
<S> <C> <C> <C>
Bagley PDP WI $ 40,051 .72408 $ 29,000
Brighton PDP WI $ 33,336 .70554 $ 23,520
Lake Decade PDP WI $ 4,797 - $ 0
Total $ 52,520
Enex 88-89 Income and Retirement Fund - Series 1, L.P.
Reserve Type of Discounted (@ 10%) Risk Fair Market
Property Name Category(1) Interest(2) Net Cash Flows Factors(3) Value
Corinne PDP ORRI $ 103,695 .75944 $ 78,750
Byrum B PDP ORRI $ 6,837 .74594 $ 5,100
Bagley PDP NPI $ 20,716 .72407 $ 15,000
Lake Decade PDP NPI $ 1,199 - $ 0
Total $ 98,850
Enex 88-89 Income and Retirement Fund - Series 2, L.P.
Reserve Type of Discounted (@ 10%) Risk Fair Market
Property Name Category(1) Interest(2) Net Cash Flows Factors(3) Value
Byrum B PDP ORRI $ 6,636 .74593 $ 4,950
Bagley PDP NPI $ 11,049 .72405 $ 8,000
Elmac PDP NPI $ 16,515 .65995 $ 10,899
Lake Decade PDP NPI $ 2,549 - $ 0
Total $ 23,849
Enex 88-89 Income and Retirement Fund - Series 3, L.P.
Reserve Type of Discounted (@ 10%) Risk Fair Market
Property Name Category(1) Interest(2) Net Cash Flows Factors(3) Value
Byrum B PDP ORRI $ 6,636 .74593 $ 4,950
Bagley PDP NPI $ 11,739 .72408 $ 8,500
Elmac PDP NPI $ 58,655 .65994 $ 38,709
Lake Decade PDP NPI $ 2,399 - $ 0
Total $ 52,159
Enex 88-89 Income and Retirement Fund - Series 4, L.P.
Reserve Type of Discounted (@ 10%) Risk Fair Market
Property Name Category(1) Interest(2) Net Cash Flows Factors(3) Value
Lake Decade PDP NPI $ 2,174 - $ 0
Bagley PDP NPI $ 12,430 .72405 $ 9,000
Elmac PDP NPI $ 26,830 .65993 $ 17,706
Speary PDP NPI $ 75,938 .72428 $ 55,000
Total $ 81,706
</TABLE>
(1) PDP = proved developed producing reserves
(2) WI = working interest
ORRI = overriding royalty interest
NPI = net profit royalty interest
(3) Risk factors were determined by H.J. Gruy and Associates and consider
risk, location, type of interest, category of reserves and
operational characteristics of each property.
<PAGE>
TABLE C
PROPERTY DETAIL
<TABLE>
<CAPTION>
Working Interest %*
-------------------------------------------
Acquisition State Field Operator Name Well Name Type 403 521 522 523 524
<S> <C> <C> <C> <C> <C>
Corinne MS Corinne Samson Resources Co. Dabbs 4-2 GAS
Corinne MS Corinne Samson Resources Co. Dabbs RT 01 GAS
Corinne MS Corinne Samson Resources Co. Dabbs RT 02 GAS
Corinne MS Corinne Samson Resources Co. Dabbs RT 2-2 GAS
Corinne MS Corinne Samson Resources Co. Dabbs Richardson 6-2 GAS
Corinne MS Corinne Samson Resources Co. Duke 13-3 OIL
Corinne MS Corinne Samson Resources Co. Gore Heirs Unit 1-12 GAS
Corinne MS Corinne Samson Resources Co. Richardson 4-2 GAS
Corinne MS Corinne Samson Resources Co. Richardson T A 02 GAS
Corinne MS Corinne Samson Resources Co. Richardson T A 04 GAS
Corinne MS Corinne Samson Resources Co. Richardson T A 5-1 & 5-2 GAS
Corinne MS Corinne Samson Resources Co. Richardson T A 06 GAS
Corinne MS Corinne Samson Resources Co. Scott Turner Unit GAS
Speary TX Speary Enex Resources Corp Bessie Hackney Gas Unit GAS
Speary TX Speary Enex Resources Corp John A Hackney GAS
Speary TX Speary Enex Resources Corp Landgrebe Leroy OIL
Speary TX Speary Enex Resources Corp Lyons Unit 1 OIL
Speary TX Speary Enex Resources Corp Wessendorff Joe C 01 OIL
Bryum B MI Onondaga Global Nat'l Resources Byrum 1-28 OIL
Brighton MI Brighton Global Nat'l Resources Caid 1-11 OIL 6.30000
Brighton MI Brighton Global Nat'l Resources Swan 1-11 OIL 7.45500
Lake Decade LA Lake Decade Southwestern Energy Fina Fee 06 GAS 1.94100
Elmac Hills MI Charlton Don Yohe Enterprises Elmac Hills 1-19 OIL 0.84406 2.99780 1.37122
Elmac Hills MI Charlton Don Yohe Enterprises Elmac Hills 1-18 OIL
Elmac Hills MI Charlton Don Yohe Enterprises Elmac Hills 2-18 OIL
Bagley MI Bagley Terra Energy Limited Bagley Unit OIL 4.31608 2.23245 1.19064 1.26506 1.33947
</TABLE>
============================
* "403" refers to Enex Oil & Gas Income Program IV - Series 3, L. P.
"521" refers to Enex 88-89 Income and Retirement Fund - Series 1, L. P.
"522" refers to Enex 88-89 Income and Retirement Fund - Series 2, L.P.
"523" refers to Enex 88-89 Income and Retirement Fund - Series 3, L. P.
"524" refers to Enex 88-89 Income and Retirement Fund - Series 4, L.P.
<PAGE>
<TABLE>
<CAPTION>
TABLE C
PROPERTY DETAIL
Revenue Interest %*
---------------------------------------------
Acquisition State Field Operator Name Well Name Type 403 521 522 523 524
<S> <C> <C> <C> <C>
Corinne MS Corinne Samson Resources Co. Dabbs 4-2 GAS 0.05127
Corinne MS Corinne Samson Resources Co. Dabbs RT 01 GAS 0.05127
Corinne MS Corinne Samson Resources Co. Dabbs RT 02 GAS 0.82032
Corinne MS Corinne Samson Resources Co. Dabbs RT 2-2 GAS 0.82032
Corinne MS Corinne Samson Resources Co. Dabbs Richardson 6-2 GAS 1.73668
Corinne MS Corinne Samson Resources Co. Duke 13-3 OIL 0.8203125
Corinne MS Corinne Samson Resources Co. Gore Heirs Unit 1-12 GAS 0.410158
Corinne MS Corinne Samson Resources Co. Richardson 4-2 GAS 2.606772
Corinne MS Corinne Samson Resources Co. Richardson T A 02 GAS 0.893228
Corinne MS Corinne Samson Resources Co. Richardson T A 04 GAS 2.606775
Corinne MS Corinne Samson Resources Co. Richardson T A 5-1 & 5-2 GAS 3.57292
Corinne MS Corinne Samson Resources Co. Richardson T A 06 GAS 1.73689
Corinne MS Corinne Samson Resources Co. Scott Turner Unit GAS 0.82031
Speary TX Speary Enex Resources Corp Bessie Hackney Gas Unit GAS 7.73598
Speary TX Speary Enex Resources Corp John A Hackney GAS 7.85660
Speary TX Speary Enex Resources Corp Landgrebe Leroy OIL 8.03400
Speary TX Speary Enex Resources Corp Lyons Unit 1 OIL 7.72500
Speary TX Speary Enex Resources Corp Wessendorff Joe C 01 OIL 7.70000
Bryum B MI Onondaga Global Nat'l Resources Byrum 1-28 OIL 1.02000 0.99000 0.99000
Brighton MI Brighton Global Nat'l Resources Caid 1-11 OIL 5.5125
Brighton MI Brighton Global Nat'l Resources Swan 1-11 OIL 6.49032
Lake Decade LA Lake Decade Southwestern Energy Fina Fee 06 GAS 1.38146 0.345366 0.73390 0.69073 0.62597
Elmac Hills MI Charlton Don Yohe Enterprises Elmac Hills 1-19 OIL 0.66435 2.35953 1.07928
Elmac Hills MI Charlton Don Yohe Enterprises Elmac Hills 1-18 OIL
Elmac Hills MI Charlton Don Yohe Enterprises Elmac Hills 2-18 OIL
Bagley MI Bagley Terra Energy Limited Bagley Unit OIL 3.611799 1.86816 0.99636 1.05863 1.120905
</TABLE>
============================
* "403" refers to Enex Oil & Gas Income Program IV - Series 3, L. P.
"521" refers to Enex 88-89 Income and Retirement Fund - Series 1, L. P.
"522" refers to Enex 88-89 Income and Retirement Fund - Series 2, L.P.
"523" refers to Enex 88-89 Income and Retirement Fund - Series 3, L. P.
"524" refers to Enex 88-89 Income and Retirement Fund - Series 4, L.P.
<PAGE>
TABLE D
GROSS AND NET PRODUCTIVE OIL AND GAS WELLS
AS OF December 31, 1996
<TABLE>
<CAPTION>
RODUCTIVE OIL WELLS(1) PRODUCTIVE GAS WELLS(1)
--------------------------------- ------------------------------
NET WORKING NET NET WORKING NET
PARTNERSHIP GROSS INTEREST ROYALTY GROSS INTEREST ROYALTY
WELLS(2) WELLS WELLS WELLS(2) WELLS WELLS
<S> <C> <C> <C> <C> <C>
Enex Oil & Gas Income Program IV-Series 3, L.P. 9 0.442 - 2 0.047 -
Enex 88-89 Inc. & Ret. Fund - Series 1, L.P. 9 - 0.175 17 - 0.256
Enex 88-89 Inc. & Ret. Fund - Series 2, L.P. 11 - 0.119 5 - 0.047
Enex 88-89 Inc. & Ret. Fund - Series 3, L.P. 11 - 0.189 5 - 0.036
Enex 88-89 Inc. & Ret. Fund - Series 4, L.P. 14 - 0.536 7 - 0.153
</TABLE>
(1) Productive wells are producing wells and wells capable of production,
including shut-in wells. A gross well is a well in which an interest is held.
The number of gross wells is the total number of wells in which an interest is
owned. A net working interest (W.I.) well is deemed to exist when the sum of the
fractional ownership interests in gross W.I. wells equals one. The number of net
W.I. wells is the sum of the fractional interests owned in gross W.I. wells,
expressed as whole numbers and fractions thereof. A net royalty well is deemed
to exist when the sum of gross royalty wells equals one. The number of net
royalty wells is the sum of the fractional owned in gross royalty wells,
expressed as whole numbers and fractions thereof.
(2) Totals for gross wells have been reduced to adjust for ownership by more
than one Partnership.
GROSS AND NET PRODUCTIVE ACREAGE
AND UNDEVELOPED ACREAGE(1)
<TABLE>
<CAPTION>
DEVELOPED (2) DEVELOPED (2)
WORKING INTEREST ROYALTY
ACREAGE(3) ACREAGE (3)
--------------------------- -----------------------
GROSS NET GROSS NET
PARTNERSHIP ACRES(4) ACRES ACRES(4) ACRES
<S> <C> <C> <C>
Enex Oil & Gas Income Program IV-3, L.P. 1,824 68.57 - -
Enex 88-89 Inc. & Ret. Fund - Series 1, L.P. - - 4,465 69.76
Enex 88-89 Inc. & Ret. Fund - Series 2, L.P. - - 2,785 30.26
Enex 88-89 Inc. & Ret. Fund - Series 3, L.P. - - 2,785 33.07
Enex 88-89 Inc. & Ret. Fund - Series 4, L.P. - - 3,457 112.98
</TABLE>
(1) The Partnerships have no undeveloped acreage.
(2) Developed acres are acres spaced or assigned to productive wells.
(3) A gross acre is an acre in which an interest is owned. The number of gross
acres is the total number of acres in which such interest is owned a net working
interest acre is deemed to exist when the sum of fractional ownership of working
interests owned in gross acres equals one. The number of net working interest
acres is the sum of fractional working interests owned in gross acres expressed
in whole numbers and fractions thereof. A net royalty acre is deemed to exist
when the sum of fractional ownership of royalty interests owned in gross acres
equals one. The number of net royalty acres is the sum of fractional royalty
interests owned in gross acres expressed as whole numbers and fractions thereof.
(4) Totals for gross acres have been reduced to adjust for ownership by more
than one Partnership.
<PAGE>
TABLE E
General and Administrative Charges
<TABLE>
<CAPTION>
Partnership 1995 1996 1997 Estimated 1998 Estimated
---------------------- ------------------------ ------------------------- ----------------------
Number Direct Costs Total Direct Costs Total Direct Costs Total Direct Costs Total
(1) (2) (2) (2) (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
403 $2,018 $19,747 $7,937 $25,158 $8,731 $27,674 $9,604 $30,441
521 $1,991 $17,990 $3,036 $19,233 $3,340 $21,156 $3,674 $23,272
522 $862 $13,149 $2,601 $15,236 $2,861 $16,760 $3,147 $18,436
523 $776 $11,769 $2,171 $13,541 $2,388 $14,895 $2,627 $16,385
524 $1,897 $12,352 $2,881 $10,909 $3,169 $12,000 $3,486 $13,200
</TABLE>
(1) See Table C for partnership names.
(2) Direct costs consist of tax preparation, audit and Securities Exchange
Commission filing fees.
<PAGE>
TABLE F
SUPPLEMENTARY OIL AND GAS INFORMATION
(UNAUDITED)
Standardized Measure of Discounted Future Net Cash Flows and Changes Therein
Relating to Proved Oil and Gas Reserves at December 31, 1996 and 1995.
The future cash flows shown below were calculated using year-end oil and gas
prices in accordance with Statement of Financial Accounting Standards No. 69.
The following presents the Partnerships' standardized measure of discounted
future net cash flows as of December 31, 1996 and 1995.
<TABLE>
<CAPTION>
Enex Oil & Gas Income Enex 88-89 Income & Retirement
Program IV - Series 3, L.P. Fund - Series 1, L.P.
--------------------------------- -------------------------------------
1996 1995 1996 1995
------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Future cash inflows $226,464 $929,191 $344,873 $758,351
Future production and development costs (87,780) (193,661) (52,304) (103,781)
------------- ---------------- ---------------- ------------------
Future net cash flows 138,684 735,530 292,569 654,570
10% annual discount (18,176) (152,664) (74,648) (292,601)
------------- ---------------- ---------------- ------------------
Standardized measure of future discounted
net cash flows of proved oil and gas reserves $120,508 $582,866 $217,921 $361,969
============= ================ ================ ==================
</TABLE>
The following presents the principal sources of changes in the standardized
measure of discounted future net cash flows during 1996 and 1995.
<TABLE>
<CAPTION>
Enex Oil & Gas Income Enex 88-89 Income & Retirement
Program IV - Series 3, L.P. Fund - Series 1, L.P.
--------------------------------- -------------------------------------
1996 1995 1996 1995
------------- ---------------- ---------------- ------------------
Sales and transfers of oil and gas produced,
<S> <C> <C> <C> <C>
net of production costs ($75,709) ($42,448) ($41,527) ($31,804)
Net changes in prices and production costs 164,614 37,251 210,845 81,436
Revisions of previous quantity estimates (577,806) (68,258) (388,016) (27,780)
Accretion of discount 15,266 11,343 29,260 23,412
Changes in production rates (timing) and other 11,277 95,161 45,390 (47,764)
------------- ---------------- ---------------- ------------------
Changes in standardized measure of
discounted future net cash flows ($462,358) $33,049 ($144,048) ($2,500)
============= ================ ================ ==================
</TABLE>
- --------------------------------------------------------------------------
<PAGE>
TABLE F (contined)
SUPPLEMENTARY OIL AND GAS INFORMATION
(UNAUDITED)
The following presents the Partnerships' standardized measure of discounted
future net cash flows as of December 31, 1996 and1995.
<TABLE>
<CAPTION>
Enex 88-89 Income & Retirement Enex 88-89 Income & Retirement
Fund - Series 2, L.P. Fund - Series 3, L.P.
---------------------------------- -------------------------------------
1996 1995 1996 1995
-------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Future cash inflows $96,975 $464,914 $199,262 $499,732
Future production and development costs (29,949) (89,585) (54,367) (108,439)
-------------- ---------------- ---------------- ------------------
Future net cash flows 67,026 375,329 144,895 391,293
10% annual discount (13,233) (80,520) (34,013) (84,793)
-------------- ---------------- ---------------- ------------------
Standardized measure of future discounted
net cash flows of proved oil and gas reserves $53,793 $294,809 $110,882 $306,500
============== ================ ================ ==================
</TABLE>
The following presents the principal sources of changes in the standardized
measure of discounted future net cash flows during 1996 and 1995.
<TABLE>
<CAPTION>
Enex 88-89 Income & Retirement Enex 88-89 Income & Retirement
Fund - Series 2, L.P. Fund - Series 3, L.P.
--------------------------------- -------------------------------------
1996 1995 1996 1995
------------- ---------------- ---------------- ------------------
Sales and transfers of oil and gas produced,
<S> <C> <C> <C> <C>
net of production costs ($23,586) ($21,885) ($39,985) ($35,022)
Net changes in prices and production costs 62,733 91,134 100,939 94,453
Revisions of previous quantity estimates (286,383) (32,361) (262,754) (16,653)
Accretion of discount 29,481 27,056 30,650 27,578
Changes in production rates (timing) and other (23,261) (39,696) (24,468) (39,638)
------------- ---------------- ---------------- ------------------
Changes in standardized measure of
discounted future net cash flows ($241,016) $24,248 ($195,618) $30,718
============= ================ ================ ==================
</TABLE>
- ------------------------------------------------------------------------------
<PAGE>
TABLE F (contined)
SUPPLEMENTARY OIL AND GAS INFORMATION
(UNAUDITED)
The following presents the Partnerships' standardized measure of discounted
future net cash flows as of December 31, 1996 and1995.
<TABLE>
<CAPTION>
Enex 88-89 Income & Retirement
Fund - Series 4, L.P.
-------------------------------
1996 1995
--------------- ------------
<S> <C> <C>
Future cash inflows $502,757 $566,251
Future production and development costs (208,402) (173,594)
--------------- ------------
Future net cash flows 294,355 392,657
10% annual discount (82,403) (81,753)
--------------- ------------
Standardized measure of future discounted
net cash flows of proved oil and gas reserves $211,952 $310,904
=============== ============
</TABLE>
The following presents the principal sources of changes in the standardized
measure of discounted future net cash flows during 1996 and 1995.
<TABLE>
<CAPTION>
Enex 88-89 Income & Retirement
Fund - Series 4, L.P.
----------------------------
1996 1995
------------- ------------
Sales and transfers of oil and gas produced,
<S> <C> <C>
net of production costs ($51,616) ($42,110)
Net changes in prices and production costs 81,440 63,127
Revisions of previous quantity estimates (118,372) 4,099
Accretion of discount 31,090 29,469
Changes in production rates (timing) and other (41,494) (38,370)
------------- ------------
Changes in standardized measure of
discounted future net cash flows ($98,952) $16,215
============= ============
</TABLE>
- ---------------------------------------------------------------------------
<PAGE>
TABLE G
SUPPLEMENTARY OIL AND GAS INFORMATION
Proved Oil and Gas Reserve Quantities (Unaudited)
The following tables present an estimate of the Partnerships' proved oil and gas
reserve quantities and changes therein for the two years ended December 31, 1996
for Enex Oil & Gas Income Program IV - Series 3, L.P. and for Enex 88-89 Income
and Retirement Fund - Series 1 through 4, L.P.s. Oil reserves are stated in
barrels (Bbls) and natural gas in thousand cubic feet (MCF). Proved reserves are
defined as estimated quantities, which based upon geological and engineering
data, appear with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. All of the
Partnerships' reserves are located in the United States.
<TABLE>
<CAPTION>
Enex Oil & Gas Income Enex 88-89 Income & Retirement
Program IV - Series 3, L.P. Fund - Series 1, L.P.
-------------------------------- ------------------------------------
PROVED DEVELOPED AND
UNDEVELOPED RESERVES: Oil (Bbls) Gas (Mcfs) Oil (Bbls) Gas (Mcfs)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 17,512 336,916 8,001 335,946
Revisions of previous estimates (790) (46,667) 402 (26,342)
Production (3,481) (10,490) (1,117) (13,909)
-------------- --------------- --------------- ---------------
Balance at December 31, 1995 13,241 279,759 7,286 295,695
Revisions of previous estimates (4,181) (252,519) (4,018) (205,819)
Production (2,757) (10,974) (1,013) (14,488)
-------------- --------------- --------------- ---------------
Balance at December 31, 1996 6,303 16,266 2,255 75,388
============== =============== =============== ===============
PROVED DEVELOPED RESERVES:
Balance at December 31, 1995 7,677 10,892 5,895 228,478
Balance at December 31, 1996 6,303 16,266 2,255 75,388
</TABLE>
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE G (contined)
SUPPLEMENTARY OIL AND GAS INFORMATION
Proved Oil and Gas Reserve Quantities (Unaudited)
Enex 88-89 Income & Retirement Enex 88-89 Income & Retirement
Fund - Series 2, L.P. Fund - Series 3, L.P.
----------------------------------- -----------------------------------
PROVED DEVELOPED AND
UNDEVELOPED RESERVES: Oil (Bbls) Gas (Mcfs) Oil (Bbls) Gas (Mcfs)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 6,194 179,883 8,254 173,824
Revisions of previous estimates 245 (20,898) 1,085 (16,557)
Production (1,059) (6,966) (1,719) (8,720)
---------------- ---------------- --------------- ----------------
Balance at December 31, 1995 5,380 152,019 7,620 148,547
Revisions of previous estimates (2,033) (135,405) (858) (120,098)
Production (1,007) (6,279) (1,886) (8,963)
---------------- ---------------- --------------- ----------------
Balance at December 31, 1996 2,340 10,335 4,876 19,486
================ ================ =============== ================
PROVED DEVELOPED RESERVES:
Balance at December 31, 1995 2,424 9,183 4,838 14,113
Balance at December 31, 1996 2,340 10,335 4,876 19,486
</TABLE>
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE G (contined)
SUPPLEMENTARY OIL AND GAS INFORMATION
Proved Oil and Gas Reserve Quantities (Unaudited)
Enex 88-89 Income & Retirement
Fund - Series 4, L.P.
----------------------------------
PROVED DEVELOPED AND
UNDEVELOPED RESERVES: Oil (Bbls) Gas (Mcfs)
<S> <C> <C>
Balance at January 1, 1995 9,417 200,633
Revisions of previous estimates 906 (2,490)
Production (2,344) (19,131)
---------------- -----------------
Balance at December 31, 1995 7,979 179,012
Revisions of previous estimates (372) (66,238)
Production (2,083) (19,017)
---------------- -----------------
Balance at December 31, 1996 5,524 93,757
================ =================
PROVED DEVELOPED RESERVES:
Balance at December 31, 1995 5,457 57,181
Balance at December 31, 1996 5,524 93,757
</TABLE>
- -----------------------------------------------------------------------------
<PAGE>
TABLE H
<TABLE>
<CAPTION>
403 521 522 523 524
<S> <C> <C> <C> <C> <C>
Legal Fees $ 3.111 $ 1,169 $ 1,209 $ 1,143 1,368
Filing Fees $ 389 $ 146 $ 151 $ 143 171
Appraisal Fees $ 933 $ 351 $ 363 $ 343 410
Solicitation Expenses $ 3,693 $ 1,389 $ 1,436 $ 1,357 1,625
Printing Costs $ 972 $ 365 $ 378 $ 357 428
Total $ 9,098 $ 3,420 $ 3,537 $ 3,343 4,002
</TABLE>
The costs of the proposed dissolution and liquidation of the Partnerships,
which will primarily include expenses in connection with the preparation and
mailing of the Proxy Statement and all papers which accompany or supplement it,
will be borne by the Partnerships pro rata in accordance with the estimated fair
market value of their respective assets (see Table 1 in the Proxy Statement).
This basis for allocation was chosen over others (such as the number of
Unitholders of each Partnership or the amount of each Partnership's original
capital or allocating one-fifth of the costs to each Partnership) because the
largest share of the costs of this solicitation consist of the fees incurred to
obtain an independent valuation of the Partnerships' properties and counsel fees
in connection with the preparation of this Proxy Statement. In the General
Partner's opinion, these costs are most equitably allocated in accordance with
the value of the Partnerships' assets.
<PAGE>
- -------------------------------
ENEX
- -------------------------------
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 2, L.P.
Three Kingwood Place
Suite 200
800 Rockmead Drive
Kingwood, Texas 77339
PROXY FOR SPECIAL MEETING OF LIMITED PARTNERS
TO BE HELD
October 28, 1997
The undersigned hereby appoints GERALD B. ECKLEY, WILLIAM C. HOOPER, JR.
and ROBERT E. DENSFORD, and each or any of them, attorneys and proxies, with
full power of substitution, and authorizes them to vote all interests of Enex
88-89 Income and Retirement Fund - Series 2, L.P., held of record by the
undersigned on September 10, 1997, at the Special Meeting of Limited Partners to
be held on October 28, 1997, and any adjournments thereof, hereby revoking all
previous proxies, with all powers the undersigned would possess if present, on
all matters mentioned in the Notice of Special Meeting dated September 10, 1997,
as follows:
INSTRUCTIONS: MARK ONLY ONE BOX FOR EACH NUMBERED MATTER
(1) To dissolve and liquidate Enex 88-89 Income and Retirement Fund - Series
2, L.P., a New Jersey limited partnership.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) In their discretion, to vote upon such other business as may
properly come before the Meeting or any adjournments thereof.
38
<PAGE>
Please mark, date, sign and return this Proxy promptly, using the
enclosed envelope.
Dated , 1997
-------------------------------------
Month Day
Signature
Signature
Please sign exactly as name
appears hereon, indicating official
position or representative capacity,
if any.
I plan to attend the meeting.
Yes [ ] No [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE GENERAL PARTNER
OF THE PARTNERSHIP
39
