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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from...............to...............
Commission file number 0-17561
ENEX OIL & GAS INCOME
PROGRAM IV - Series 1, L.P.
(Name of small business issuer in its charter)
New Jersey 76-0251419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 Rockmead Drive
Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (713) 358-8401
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Interest
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes x No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[x]
State issuer's revenues for its most recent fiscal year. $177,344
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock as of a specified date within
the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange
Act):
Not Applicable
Documents Incorporated By Reference:
None
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<PAGE>
PART I
Item 1. Description of Business
General
Enex Oil & Gas Income Program IV-Series 1, L.P. (the "Company")
was formed under the New Jersey Uniform Limited Partnership Act (1976) on March
15, 1988 and commenced operations on September 8, 1988, with aggregate
subscriptions of $3,236,182, $3,203,820 of which was received from 1,992 limited
partners, including investors whose distributions from earlier partnerships
sponsored by the Company's general partner, Enex Resources Corporation ("Enex"),
were automatically invested in the Company.
The Company is engaged in the oil and gas business through the ownership of
various interests in producing oil and gas properties, as detailed in Item 2,
below. If warranted, the Company may further develop its oil and gas properties.
However, the Company does not intend to engage in significant drilling
activities. Such activities may be conducted, however, as an incidental part of
the management of producing properties or with a view toward enhancing the value
of producing properties. In no event will the Company engage in exploratory
drilling, or use any of the limited partners' net revenues to fund
exploratory drilling activities. Any developmental drilling will be financed
primarily through third party borrowing or with funds provided from operations.
The expenses of drilling, completing and equipping and operating development
wells are allocated 90% to the limited partners and 10% to the general partner.
See Note 1 to the Financial Statements for information relating to the
allocation of costs and revenues between the limited partners and the general
partner. The Company's operations are concentrated in a single industry segment.
The Company owns royalty interests in certain oil and gas properties. A
"royalty interest" is an interest retained by the lessor in the lease and
payable out of 100% of proceeds before deducting any other interests.The Company
also owns working interests in certain oil and gas properties. A "working
interest" is a portion of the operating interest which is subject to most of the
costs associated with a well.
The principal executive office of the Company is maintained at Suite 200,
Three Kingwood Place, Kingwood, Texas 77339. The telephone number at this office
is (713) 358-8401. The Company has no regional offices.
The Company has no employees. On March 1, 1996, Enex and its subsidiaries
employed 24 persons.
Marketing
The marketing of oil and gas produced by the Company is
affected by a number of factors which are beyond the Company's control, the
exact nature of which cannot be accurately predicted. These factors include the
quantity and price of crude oil imports, fluctuating supply and demand, pipeline
and other transportation facilities, the marketing of competitive fuels, state
and federal regulation of oil and gas production and distribution and other
matters affecting the availability of a ready market. All of these factors are
extremely volatile.
Valero Industrial Gas L.P., Global Natural Resources
Corporation, GPM Gas Corporation, Fina
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Oil Corporation, and Pride Pipeline Company accounted for 26%, 14%, 13%,
12% and 11%, respectively, of the Company's total sales in 1995. Valero
Industrial Gas L.P., Michael Petroleum Corp., Global Natural Resources
Corporation, Pride Pipeline Company and GPM Gas Corporation accounted for 24%,
21%, 12%, 12% and 11%, respectively, of the Company's total sales in 1994. No
other purchaser individually accounted for more than 10% of such sales. Although
the Company marketed a significant portion of its sales to the above noted
companies, such a concentration does not pose a significant risk due to the
commodity nature of the Company's products.
The operators of the Company's properties are noted in Item 2 below.
Although a significant portion of the Company's properties were operated by a
limited number of operators, this concentration does not pose a significant risk
since the Company's rights are secured by joint operating agreements.
Environmental and Conservation Regulation
State regulatory authorities in the states in which the Company
owns producing properties are empowered to make and enforce regulations to
prevent waste of oil and gas and to protect correlative rights and opportunities
to produce oil and gas for owners of a common reservoir. Each of such regulatory
authorities also regulates the amount of oil and gas produced by assigning
allowable rates of production, which may be increased or decreased in accordance
with supply and demand. Requirements regarding the prevention and clean-up of
pollution and similar environmental matters are also generally applicable. The
costs, if any, the Company may incur in this regard cannot be predicted.
The existence of such regulations has had no material adverse affects on
the Company's operations to date, and the cost of compliance has not yet been
material. There are no material administrative or judicial proceedings arising
under such laws or regulations pending against the Company. The Company is
unable to assess or predict the impact that compliance with environmental and
pollution control laws and regulations may have on its future operations,
capital expenditures, earnings or competitive position.
Tax Laws
The operations of the Company are affected by the federal
income tax laws contained in the Internal Revenue Code of 1986, as amended (the
"Code"). Under the Code, generally, the Company will report income from the sale
of oil and gas, against which it may deduct its ordinary business expenses,
depletion, depreciation and intangible drilling and development costs.
It is anticipated that most of the Company's income, if any,
will be from a "passive activity" for purposes of the Code. A passive activity
includes an activity in which the taxpayer does not materially participate,
including the ownership of a limited partnership interest, such as an interest
in the Company. "Passive income," however, does not include portfolio income
(i.e. dividends, interest, royalties, etc.). Although taxpayers generally may
not deduct losses or use tax credits derived from passive activities in an
amount greater than their income derived from such activities, if and to the
extent that the Company generates passive income, it will be available to offset
the limited partners' passive losses from other sources.
Partnerships with interests that are "publicly traded" are
taxed as corporations unless at least 90% of their income is "qualifying
income." Because the Company's income will be qualifying income for this
purpose, the Company will not be taxed as a corporation under this rule. Passive
income or
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Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations
This discussion should be read in conjunction with the
financial statements of the Company and the notes thereto included in this Form
10-KSB.
Oil and gas sales decreased to $177,344 in 1995 from $259,267
in 1994. This represents a decrease of $81,923 or 32%. Oil sales decreased by
$12,289 or 13%. A 19% decline in oil production caused sales to decrease by
$18,373. This decrease was partially offset by an 8% increase in the average oil
sales price. Gas sales decreased by $69,634 or 42%. A 34% decrease in gas
production reduced sales by $56,369. A 12% decrease in the average gas sales
price reduced sales by an additional $13,265. The decrease in oil production was
primarily due to natural production declines which were especially pronounced on
the Brighton acquisition. The decrease in gas production was primarily a result
of natural production declines, which were especially pronounced on the Barnes
Estate acquisition, coupled with the shut-in of production from the the Credo
acquisition to repair a casing leak, which was successfully completed in the
first quarter of 1995. The changes in average prices correspond with changes in
the overall market for the sale of oil and gas.
Lease operating expenses decreased to $88,409 in 1995, from
$102,129 in 1994. The decrease of $13,720 or 13% was primarily a result of the
decreases in oil and gas production, noted above.
Depreciation and depletion expense decreased to $121,546 in
1995 from $195,767 in 1994. This represents a decrease of $74,221 or 38%. The
changes in production, noted above, caused depreciation and depletion to
decrease by $58,624 while an 11% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $15,597. The depletion rate
decrease was primarily due to an upward revision of the gas reserves during
1995, partially offset by a downward revision of the oil reserves during 1995.
Due to lower prices and reserve revisions, in December 1994, the Company
recorded an impairment of property for $178,771, which represented the excess of
the net capitalized costs over the undiscounted future net revenues of the
reserves.
General and administrative expenses increased to $44,299 in 1995 from
$39,194 in 1994. The increase of $5,105 or 13% was primarily due to a $9,677
increase in direct expenses resulting from legal fees associated with a property
interest dispute on the Barnes Estate acquisition, partially offset by lower
costs allocated by the general partner in 1995. This case is set for trial in
the second quarter of 1996. The Company does not expect the settlement of the
dispute to have a material impact on the financial statements. Capital Resources
and Liquidity
Capital Resources and Liquidity
The Company's cash flow from operations is a direct result of the amount of
net proceeds from the sale of oil and gas production after payment of its debt
obligations. Accordingly, the changes in cash flow from 1994 to 1995 are
primarily due to the changes in oil and gas sales described above. It is the
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ENEX OIL & GAS INCOME PROGRAM IV - SERIES 1, L.P.
BALANCE SHEET, DECEMBER 31, 1995
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ASSETS
<TABLE>
<CAPTION>
1995
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CURRENT ASSETS:
<S> <C>
Cash $ 754
Accounts receivable - oil & gas sales 20,845
Other current assets 1,111
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Total current assets 22,710
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 3,290,121
Less accumulated depreciation and depletion 2,972,537
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Property, net 317,584
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TOTAL $ 340,294
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 8,847
Payable to general partner 39,598
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Total current liabilities 48,445
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NONCURRENT PAYABLE TO
GENERAL PARTNER 79,197
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PARTNERS' CAPITAL:
Limited partners 170,687
General partner 41,965
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Total partners' capital 212,652
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TOTAL $ 340,294
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Number of $500 Limited Partner units outstanding 6,472
</TABLE>
See accompanying notes to financial statements.
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II-5
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Martin J. Freedman. Mr. Freedman, age 71, was one of the General Partner's
founders and a member of its Board of Directors as well as a board member of
Enex Securities Corporation until June of 1986. He was reappointed to the Board
on April 19, 1990 to fill a vacancy. He is a member of the Compensation and
Options Committee. He is currently President of Freedman Oil & Gas Company,
engaged primarily in the management of its exploration and producing properties,
and the managing partner Martin J. Freedman & Company which has an interest in
approximately one hundred producing oil and/or gas wells. Mr. Freedman is a
lifetime member of the Denver Petroleum Club as well as being a lifetime member
of the Denver Association of Petroleum Landmen. He was an officer and Director
and/or founder of several former private and public companies. Mr. Freedman
entered the oil and gas business in 1954 when he joined Mr. Marvin Davis of the
Davis Oil Company. In 1956, he became President of Central Oil Corporation, a
company engaged in oil and gas exploration. From 1958 on, Mr. Freedman operated
as Martin J. Freedman Oil Properties and was President of Oil Properties, Inc.,
a private corporation. Mr. Freedman attended Long Island University and New York
University. He received a bachelor's degree in Psychology and also attended New
York University's graduate school.
James Thomas Shorney. Mr. Shorney, age 70, has been a Director of the
General Partner since April of 1990 and is a member of the Compensation and
Options Committee. He has been a petroleum consultant and Secretary/Treasurer of
the Shorney Company, a privately held oil and gas exploration company, from 1970
to date. From 1970 to 1976, he also served as a petroleum consultant in Land and
Lease Research Analysis Studies for the GHK Company. He was an oil and gas lease
broker from 1962 to 1970 and employed by Shell Oil Company in the Land
Department from 1954 to 1962. Before joining Shell Oil Company, he served as
Public Information Officer in the U.S. Army Air Force from 1950 to 1953
including attending Georgetown University Graduate School in 1952. Mr. Shorney
graduated from the University of Oklahoma with a B.A. degree in Journalism in
1950. From 1943 to 1945, he served in the U.S. Army Air Force as an air crew
member on a B-24 Bomber. Mr. Shorney is a member of the Oklahoma City
Association of Petroleum Landmen on which he has served as Director and
Secretary/Treasurer. He is an active member of the American Association of
Petroleum Landmen. In 1975, Mr. Shorney was first listed in the London Financial
Times' Who's Who in World Oil and Gas.
Robert D. Carl, III. Mr. Carl, age 42, was appointed a Director of the
General Partner on July 30, 1991 and is a member of the Audit Committee. He is
President, Chief Executive Officer and Chairman of the Board of Health Images,
Inc., a public company whose securities are traded on NYSE, which provides fixed
site magnetic resonance imaging ("MRI") services. From 1978 to 1981, Mr. Carl
also served as President of Carl Investment Associates, Inc. a registered
investment advisor. In 1981, Mr. Carl joined Cardio-Tech, Inc., as general
counsel and as an officer and Director. Upon the sale and reorganization of
Cardio-Tech, Inc. into Cardiopul Technologies in 1982, he served as its
Executive Vice President and as a Director. In March, 1985 he was elected
President, Chief Executive Officer and Chairman of Cardiopul Technologies which
spun off its non-imaging medical services business and changed its name to
Health Images, Inc. Mr. Carl received a B.A. in History from Franklin and
Marshall College, Lancaster, Pennsylvania in 1975 and a J.D. from Emory
University School of Law, Atlanta, Georgia in 1978. Mr. Carl is a trustee of
Franklin & Marshall College and is a member of the State Bar of Georgia.
On January 4, 1996, the 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 Rule 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
III-2
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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
judgement imposing the $10,000 penalty. On January 12, 1996, a federal judge
entered the final judgement 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, age 38, was appointed a Director of the
General Partner on September 11, 1991. He joined the General Partner as
Controller on May 1, 1985 and became Vice President-Finance, Secretary and
Treasurer on March 1, 1989. From January 1983 to April 1985, he was Senior
Accountant for Deloitte Haskins & Sells in Houston, Texas, auditing both closely
held and publicly owned oil and gas companies. From September 1981 to December
1982, he was a staff accountant for Coopers & Lybrand in Houston. Mr. Densford
is a C.P.A. and holds a B.B.A. degree in Accounting and an M.S. degree in Oil
and Gas Accounting from Texas Tech University and is a member of the American
Institute of Certified Public Accountants and the Texas Society of Certified
Public Accountants.
James A. Klein. Mr. Klein, age 32, joined the General Partner as Controller
in February 1991. In June 1993, he was appointed President and Principal of Enex
Securities Corporation. From June 1988 to February 1991, he was employed by
Positron Corporation in Houston. From July 1987 to May 1988, he was employed by
Transworld Oil Company in Houston and from September 1985 until July 1987, he
was an accountant with Deloitte Haskins & Sells in Houston, Texas, auditing oil
and gas and oil service companies. Mr. Klein is a Certified Public Accountant
and holds a B.A. in Accounting (1985) from the University of Iowa. He is a
member of the American Institute of Certified Public Accountants and the Iowa
Society of Certified Public Accountants.
Item 10. Executive Compensation
The Company has no Directors or executive officers.
The Company does not pay a proportional or fixed share of the compensation
paid to the officers of the General Partner.
The Company reimburses the General Partner for direct costs and
administrative costs incurred on its behalf. Administrative costs allocated to
the Company 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 Company incurred $27,335 and $34,009 of such
administrative costs payable to the General Partner in 1995 and 1994,
respectively.
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Item 11. Security Ownership of Certain Beneficial Owners and Management
$500 Limited
Name of Partner Units Percent
Title of Class Beneficial Owner Owned Directly of Class
Limited Partner Enex Resources 938 14.4928%
Item 12. Certain Relationships and Related Transactions
See the Statements of Operations included in the Financial
Statements in Item 7 of this report for information concerning general and
administrative costs incurred by Enex and allocated to the Company, and Note 1
to such Financial Statements for information concerning payments to Enex
Securities Corporation, a wholly owned subsidiary of Enex and to Enex for
certain offering and organization expenses incurred by the Company.
See Item Number 2 - "Description of Property" in this report for a
description of the properties operated by Enex. Enex operates susch properties
under the terms of a Joint Operating Agreement ("JOA"). Overhead charges allowed
to third parties under the JOA in accordance with the Council of Petroleum
Accountants Societies are not charged to the Company. Such costs are considered
to be within the general and administrative overhead charges allocated to the
Company.
Item 13. Exhibits and Reports on Form 8-K
Sequential
Page No.
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(a) Exhibits
(3) a. Certificate of Limited Partnership, as amended.
Incorporated by reference to Exhibit 3(a) to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1988.
b. Amended Agreement of Limited Partnership.
Incorporated by reference to Exhibit 3(a) for the
Registration Statement on Form S-1 (No. 33-
20897) of Enex Oil and Gas Income Program
IV filed with the Securities and Exchange
Commission on April 1, 1988.
(4) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(18) Not Applicable
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SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ENEX OIL AND GAS INCOME PROGRAM IV -
SERIES 1, L.P.
By: ENEX RESOURCES CORPORATION
the General Partner
November 7, 1996 By: /s/ G. B. Eckley
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G. B. Eckley, President
In accordance with the Exchange Act, this report has been
signed below on November7, 1996, by the following persons in the capacities
indicated.
ENEX RESOURCES CORPORATION General Partner
By: /s/ G. B. Eckley
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G. B. Eckley, President
/s/ G. B. Eckley
President, Chief Executive
------------------ Officer and Director
G. B. Eckley
/s/ R. E. Densford Vice President, Secretary, Treasurer,
Chief Financial Officer and Director
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R. E. Densford
/s/ James A. Klein Controller and Chief Accounting Officer
-----------------
James A. Klein
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