United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-18328
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 4, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0251418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)
Issuer's telephone number:
(713) 358-8401
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes x No
Transitional Small Business Disclosure Format (Check one):
Yes No x
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 4, L.P.
BALANCE SHEET
- ----------------------------------------------------------------------------
JUNE 30,
ASSETS 1996
------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash ...................................................... $ 3,273
Accounts receivable - oil & gas sales ..................... 13,459
-----------
Total current assets ........................................ 16,732
-----------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests ........................................ 1,614,435
Less accumulated depletion ............................... 1,545,244
-----------
Property, net ............................................... 69,191
-----------
TOTAL ....................................................... $ 85,923
===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable ......................................... $ 133
Payable to general partner ............................... 13,599
-----------
Total current liabilities ................................... 13,732
-----------
NONCURRENT PAYABLE TO GENERAL PARTNER ....................... 81,594
-----------
PARTNERS' CAPITAL:
Limited partners ......................................... (16,019)
General partner .......................................... 6,616
-----------
Total partners' capital ..................................... (9,403)
-----------
TOTAL ....................................................... $ 85,923
===========
</TABLE>
See accompanying notes to financial statements.
- ---------------------------------------------------------------------------
I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 4, L.P.
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------
(UNAUDITED) QUARTER ENDED SIX MONTHS ENDED
--------------------- -------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
--------- --------- ----------- ----------
REVENUES:
<S> <C> <C> <C> <C>
Oil and gas sales ........ $ 13,481 $ 10,796 $ 25,385 $ 20,629
--------- --------- --------- ---------
EXPENSES:
Depletion ................ 12,209 10,940 13,452 21,537
Impairment of property ... -- -- 240,044 --
Production taxes ......... 82 104 181 221
General and administrative 2,743 2,468 6,282 4,864
--------- --------- --------- ---------
Total expenses ............. 15,034 13,512 259,959 26,622
--------- --------- --------- ---------
NET (LOSS) ................. $ (1,553) $ (2,716) $(234,574) $ (5,993)
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
- ----------------------------------------------------------------------------
I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 4, L.P.
STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS ENDED
------------------------
JUNE 30 JUNE 30,
1996 1995
-------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) ...................................... $(234,574) $ (5,993)
---------- ---------
Adjustments to reconcile net (loss) to net cash provided by operating
activities:
Depletion ..................................... 13,452 21,537
Impairment of property ........................ 240,044 --
(Increase) decrease in:
Accounts receivable - oil & gas sales ......... (698) 4,535
(Decrease) in:
Accounts payable ............................. (2,223) (3,327)
Payable to general partner ................... (12,855) (17,004)
---------- ---------
Total adjustments ............................... 237,720 5,741
---------- ---------
Net cash provided (used) by operating activities 3,146 (252)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions .......................... -- (5,822)
---------- ---------
NET INCREASE (DECREASE) IN CASH ................. 3,146 (6,074)
CASH AT BEGINNING OF YEAR ....................... 127 6,490
---------- ---------
CASH AT END OF PERIOD ........................... $ 3,273 $ 416
========== =========
</TABLE>
See accompanying notes to financial statements.
- -------------------------------------------------------------------------
I-3
<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 4, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The interim financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of results for the
interim periods.
I-4
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Second Quarter 1995 Compared to Second Quarter 1996
Oil and gas sales for the second quarter increased to $13,481 in 1996 from
$10,796 in 1995. This represents an increase of $2,685 (25%). Oil sales
increased by $1,298 or 20%. A 38% increase in the average net oil sales price
increased sales by $2,135. This increase was partially offset by a 13% decrease
in oil production. Gas sales increased by $1,387 or 32%. A 25% increase in the
average net gas sales price increased sales by $1,151. A 5% increase in gas
production increased sales by an additional $236. The decrease in oil production
was primarily due to natural production declines. The increase in gas production
was primarily due to increased production from the Speary acquisition on which a
compressor was successfully reworked. The increases in average net sales prices
correspond with higher prices in the overall market for the sale of oil and gas.
Depletion expense increased to $12,209 in the second quarter of 1996 from
$10,940 in the second quarter of 1995. This represents an increase of $1,269
(12%). A 14% increase in the depletion rate increased depletion expense by
$1,478. This increase was partially offset by the changes in production, noted
above. The increase in the depletion rate was due to higher production from
properties with a relatively higher depletion rate, partially offset by the
lower property basis resulting from the recognition of a $240,044 property
impairment in the first quarter of 1996.
General and administrative expenses increased to $2,743 in 1996 from $2,468 in
1995. This increase of $275 (11%) is primarily due to more staff time being
required to manage the Company's operations.
First Six Months in 1995 Compared to First Six Months in 1996
Oil and gas sales for the first six months increased to $25,385 in 1996 from
$20,629 in 1995. This represents an increase of $4,756 (23%). Oil sales
increased by $2,238 or 18%. A 36% increase in the average net oil sales price
increased sales by $3,972. This increase was partially offset by a 14% decrease
in oil production. Gas sales increased by $2,518 or 31%. A 45% increase in the
average net gas sales price increased sales by $3,286. This increase was
partially offset by a 10% decrease in gas production. The decreases in oil and
gas production were primarily due to natural production declines, partially
offset by higher gas production from the Speary acquisition on which a
compressor was successfully reworked. The increases in average net sales prices
correspond with higher prices in the overall market for the sale of oil and gas.
Depletion expense decreased to $13,452 in the first six months of 1996 from
$21,537 in the first six months of 1995. This represents a decrease of $8,085
(38%). The changes in production, noted above, reduced depletion expense by
$2,432. A 30% decrease in the depletion rate reduced depletion expense by an
additional $5,653. The decrease in the depletion rate was primarily due to the
lower property basis resulting from the recognition of a $240,044 property
impairment in the first quarter of 1996.
I-5
<PAGE>
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to be Disposed Of," which requires
certain assets to be reviewed for impairment whenever events or circumstances
indicate the carrying amount may not be recoverable. In the first quarter of
1996, the Company recognized a non-cash impairment provision of $240,044 for
certain oil and gas properties due to market conditions and reserve revisions on
the Lake Decade acquisition, which indicated that the carrying amounts were not
fully recoverable.
General and administrative expenses increased to $6,282 in 1996 from $4,864 in
1995. This increase of $1,418 (29%) is primarily due to more staff time being
required to manage the Company's operations.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations is a direct result of the amount of net
proceeds realized from the sale of oil and gas production. Accordingly, the
changes in cash flow from 1995 to 1996 are primarily due to the changes in oil
and gas sales described above. It is the general partner's intention to
distribute substantially all of the Company's available cash flow to the
Company's partners.
The Company discontinued the payment of distributions during 1995. The Company
will continue to recover its reserves and distribute to the limited partners the
net proceeds realized from the sale of oil and gas production after payment of
its debt obligations. Distribution amounts are subject to change if net revenues
are greater or less than expected. Based upon current projected cash flows from
the properties, it does not appear that the Company will have sufficient cash to
pay its operating expenses, repay its debt obligations and pay distributions.
I-6
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits to this report.
(b) The Company filed no reports on Form 8-K during the
quarter ended June 30, 1996.
II-1
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
ENEX 88-89 INCOME AND RETIREMENT
FUND - SERIES 4, L.P.
(Registrant)
By:ENEX RESOURCES CORPORATION
General Partner
By: /s/ R. E. Densford
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
August 13, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000854219
<NAME> Enex 88-89 Income & Retirement Fund - Sr 4, L.P.
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-START> jan-01-1996
<PERIOD-END> jun-30-1996
<CASH> 3273
<SECURITIES> 0
<RECEIVABLES> 13459
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16732
<PP&E> 1614435
<DEPRECIATION> 1545244
<TOTAL-ASSETS> 85923
<CURRENT-LIABILITIES> 13732
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (9403)
<TOTAL-LIABILITY-AND-EQUITY> 85923
<SALES> 25385
<TOTAL-REVENUES> 25385
<CGS> 181
<TOTAL-COSTS> 253677
<OTHER-EXPENSES> 6282
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (234574)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
