United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 0-18322
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0251421
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)
Issuer's telephone number (713) 358-8401
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
BALANCE SHEET
- -------------------------------------------------------------------------------
MARCH 31,
ASSETS 1995
--------------
(Unaudited)
CURRENT ASSETS:
Cash $ 5,866
Accounts receivable - oil & gas sales 31,662
Other current assets 981
-------------
Total current assets 38,509
-------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 2,876,553
Less accumulated depreciation and depletion 2,794,889
-------------
Property, net 81,664
-------------
TOTAL $ 120,173
=============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 31,157
Payable to general partner 29,343
-------------
Total current liabilities 60,500
-------------
NONCURRENT LIABILITIES
Note payable to general partner 58,686
-------------
PARTNERS' CAPITAL:
Limited partners (21,155)
General partner 22,142
-------------
Total partners' capital 987
-------------
TOTAL $ 120,173
=============
See accompanying notes to financial statements.
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ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
(UNAUDITED) THREE MONTHS ENDED
---------------------------
MARCH 31, MARCH 31,
1996 1995
------------ ------------
REVENUES:
Oil and gas sales $ 38,629 43,235
------------ ------------
EXPENSES:
Depreciation, depletion and amortization 2,845 13,379
Impairment of property 538,207 -
Lease operating expenses 14,219 22,226
Production taxes 4,106 4,501
General and administrative 4,826 4,630
------------ ------------
Total expenses 564,203 44,736
------------ ------------
NET LOSS $ (525,574) (1,501)
============ ============
See accompanying notes to financial statements.
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ENEX OIL AND GAS INCOME PROGRAM IV - SERIES 3, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
THREE MONTHS ENDED
-----------------------------
MARCH 31, MARCH 31,
1996 1995
------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (525,574) (1,501)
------------- ----------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, depletion and amortization 2,845 13,379
Impairment of property 538,207 -
(Increase) decrease in:
Accounts receivable - oil & gas sales (14,159) 689
Increase (decrease) in:
Accounts payable 2,788 (5,079)
Payable to general partner 2,229 2,876
------------- ----------
Total adjustments 531,910 11,865
------------- ----------
Net cash provided by operating activities 6,336 10,364
------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions - development costs (514) (541)
------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (13,295)
------------- ----------
NET INCREASE (DECREASE) IN CASH 5,822 (3,472)
CASH AT BEGINNING OF YEAR 44 17,235
------------- ----------
CASH AT END OF PERIOD $ 5,866 13,763
============= ==========
See accompanying notes to financial statements.
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<PAGE>
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The interim financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of results for the interim periods.
2. The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standard ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of," which requires certain assets to be reviewed for
impairment whenever events or circumstances indicate the carrying
amount may not be recoverable. In the first quarter of 1996, the
Company recognized a non-cash impairment provision of $538,207 for
certain oil and gas properties due to market conditions and reserve
revisions which indicated that the carrying amounts were not fully
recoverable.
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<PAGE>
Item 2Management's Discussion and Analysis or Plan of Operation.
First Quarter 1996 Compared to First Quarter 1995
Oil and gas sales for the first quarter decreased from $43,235 in 1995 to
$38,629 in 1996. This represents a decrease of $4,606 (11%). Oil sales decreased
by $6,586 or 25%. A 24% decrease in oil production reduced sales by $6,301. A 1%
decrease in average oil sales prices reduced sales by an additional $285. Gas
sales increased by $1,980 or 12%. A 66% increase in average gas sales prices
increased sales by $7,578. This increase was partially offset by a 33% decrease
in gas production. The decrease in oil production was primarily the result of
natural production declines, which were especially pronounced on the Brighton
acquisition. The slight decrease in average oil sales prices was primarily due
to relatively higher production from the Bagley acquisition, which has a
relatively lower oil sales price, partially offset by higher prices in the
overall market for the sale of oil. The decrease in gas production was primarily
due to natural production declines which were especially pronounced on the Lake
Decade acquisition. The increase in average gas sales prices was primarily due
to relatively higher production from the Bagley acquisition, which has a
relatively higher gas sales price, coupled with higher prices in the overall
market for the sale of gas.
Lease operating expenses decreased from $22,226 in the first quarter of 1995 to
$14,219 in the first quarter of 1996. The decrease of $8,007, or 36%, is
primarily due to the lower production from the Brighton and Lake Decade
acquisitions, as noted above.
Depreciation and depletion expense decreased from $13,379 in the first quarter
of 1995 to $2,845 in the first quarter of 1996. This represents a decrease of
$10,534 (79%). The changes in production, noted above, caused depreciation and
depletion expense to decrease by $3,654. A 71% decrease in the depletion rate
reduced depreciation and depletion expense by an additional $6,880. The rate
decrease was primarily due to the lower property basis resulting from the
recognition of a $538,207 impairment of property in the first quarter of 1996.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to be Disposed Of," which requires
certain assets to be reviewed for impairment whenever events or circumstances
indicate the carrying amount may not be recoverable. In the first quarter of
1996, the Company recognized a non-cash impairment provision of $538,207 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 from $4,630 in the first quarter
of 1995 to $4,826 in the first quarter of 1996. This increase of $196 (4%) is
primarily due to $1,761 higher direct expenses incurred by the Company in 1996,
partially offfset by less staff time being required to manage the Company's
operations.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations is a direct result of the amount of net
proceeds realized from the sale of oil and gas production after the payment of
its debt obligations. Accordingly, the changes in cash flow from 1995 to 1996
are primarily due to the changes in oil
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<PAGE>
and gas sales described above. It is the general partner's intention to
distribute substantially all of the Company's remaining available cash flow to
the Company's partners.
The Company discontinued the payment of distributions in the third quarter of
1995. Future distributions are dependent upon among other things, the prices
received for oil and gas. The Company will continue to recover its reserves and
reduce its obligations in 1996. The general partner does not intend to
accelerate the repayment of the debt beyond the cash flow provided by operating
activities. Based upon current projected cash flows from its property, it does
not appear that the Company will have sufficient cash to pay its operating
expenses, repay its debt obligations and pay distributions in the near future.
As of March 31, 1996, the Company had no material commitments for capital
expenditures. The Company does not intend to engage in any significant
developmental drilling activity.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits to this report.
(b) The Company filed no reports on Form 8-K
during the quarter ended March 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENEX OIL & GAS INCOME
PROGRAM IV - 3, L.P.
(Registrant)
By:ENEX RESOURCES CORPORATION
General Partner
By: /s/ R. E. Densford
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
May 11, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
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<NAME> Enex Oil & Gas Income Program IV - Series 3, L.P.
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<PERIOD-START> jan-01-1996
<PERIOD-END> mar-31-1996
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