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 0-18322
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) 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
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<CAPTION>
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
BALANCE SHEET
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JUNE 30,
ASSETS 1996
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(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash $ 12,455
Accounts receivable - oil & gas sales 29,394
Other current assets 981
-------------
Total current assets 42,830
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OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 2,877,073
Less accumulated depreciation and depletion 2,807,439
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Property, net 69,634
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TOTAL $ 112,464
=============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 19,049
Payable to general partner 29,145
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Total current liabilities 48,194
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NONCURRENT PAYABLE TO GENERAL PARTNER 58,290
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PARTNERS' CAPITAL:
Limited partners (17,916)
General partner 23,896
-------------
Total partners' capital 5,980
-------------
TOTAL $ 112,464
=============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 3, L.P.
STATEMENTS OF OPERATIONS
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(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 $ 43,946 $ 25,190 $ 82,575 $ 68,425
--------------- ----------------- ----------------- -----------------
EXPENSES:
Depreciation and depletion 6,924 9,545 15,395 22,924
Impairment of property - - 538,207 -
Lease operating expenses 18,029 12,117 32,248 34,343
Production taxes 3,920 2,731 8,026 7,232
General and administrative 4,454 5,294 9,280 9,924
--------------- ----------------- ----------------- -----------------
Total expenses 33,327 29,687 603,156 74,423
--------------- ----------------- ----------------- -----------------
NET INCOME (LOSS) $ 10,619 $ (4,497) $ (520,581) $ (5,998)
=============== ================= ================= =================
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL AND GAS INCOME PROGRAM IV - SERIES 3, L.P.
STATEMENTS OF CASH FLOWS
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(UNAUDITED)
SIX MONTHS ENDED
--------------------------------------------
JUNE 30, JUNE 30,
1996 1995
------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (520,581) $ (5,998)
------------------- -------------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and depletion 15,395 22,924
Impairment of property 538,207 -
(Increase) decrease in:
Accounts receivable - oil & gas sales (11,891) 12,943
Other current assets - -
Increase (decrease) in:
Accounts payable (9,320) (20,453)
Payable to general partner 1,635 3,193
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Total adjustments 534,026 18,607
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Net cash provided by operating activities 13,445 12,609
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CASH FLOWS FROM INVESTING ACTIVITIES:
Property (additions) credits - development costs (1,034) 985
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (24,755)
------------------- -------------------
NET INCREASE (DECREASE) IN CASH 12,411 (11,161)
CASH AT BEGINNING OF YEAR 44 17,235
------------------- -------------------
CASH AT END OF PERIOD $ 12,455 $ 6,074
=================== ===================
</TABLE>
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.
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<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
Second Quarter 1995 Compared to Second Quarter 1996
Oil and gas sales for the second quarter increased to $43,946 in 1996 from
$25,190 in 1995. This represents an increase of $18,756 (74%). Oil sales
increased by $1,152 (6%). A 33% increase in the average oil sales price
increased sales by $5,447. This increase was partially offset by a 21% decrease
in oil production. Gas sales increased by $17,604 (402%). A 492% increase in the
average gas sales price increased sales by $18,268. This increase was partially
offset by a 15% decrease in gas production. The increase in average oil sales
price corresponds with higher prices in the overall market for the sale of oil.
The decrease in oil production was primarily the result of natural production
declines, which were especially pronounced on the Brighton acquisition. The
decrease in gas production was primarily due to natural production declines. The
increase in the average gas sales price was primarily a result of higher prices
in the overall market for the sale of gas coupled with relatively lower net
profits royalty paid on the Lake Decade acquisition, which incurred higher lease
operating expenses in 1996.
Lease operating expenses increased to $18,029 in 1996 from $12,117 in 1995. The
increase of $5,912 (49%) is primarily due to higher operating costs at the Lake
Decade acquisition in 1996.
Depreciation and depletion expense decreased to $6,924 in the second quarter of
1996 from $9,545 in the second quarter of 1995. This represents a decrease of
$2,621 (27%). The changes in production, noted above, reduced depreciation and
depletion expense by $1,754. An 11% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $867. 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.
General and administrative expenses decreased to $4,454 in the second quarter of
1996 from $5,294 in the second quarter of 1995. This decrease of $840 (16%) is
primarily due to less 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 $82,575 in 1996 from
$68,425 in 1995. This represents an increase of $14,150 (21%). Oil sales
decreased by $5,434 (12%). A 23% decrease in oil production reduced sales by
$10,665. This decrease was partially offset by a 14% increase in the average oil
sales price. Gas sales increased by $19,584 (91%). A 155% increase in the
average gas sales price increased sales by $24,935. This increase was partially
offset by a 25% decrease in gas production. The increase in average oil sales
price corresponds with higher prices in the overall market for the sale of oil.
The decrease in oil production was primarily the result of natural production
declines, which were especially pronounced on the Brighton acquisition. The
decrease in gas production was primarily due to natural production declines,
which were especially pronounced on the Lake Decade acquisition. The increase in
the
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<PAGE>
average gas sales price was primarily a result of higher prices in the overall
market for the sale of gas coupled with relatively lower net profits royalty
paid on the Lake Decade acquisition, which incurred higher lease operating
expenses in 1996.
Lease operating expenses decreased to $32,248 in the first six months of 1996
from $34,343 in the first six months of 1995. The decrease of $2,095 (6%) is
primarily due to the changes in production, noted above.
Depreciation and depletion expense decreased to $15,395 in the first six months
of 1996 from $22,924 in the first six months of 1995. This represents a decrease
of $7,529 (33%). The changes in production, noted above, reduced depreciation
and depletion expense by $5,403. A 12% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $2,126. 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 decreased to $9,280 in the first six months
of 1996 from $9,924 in the first six months of 1995. This decrease of $644 (6%)
is primarily due to less staff time being required to manage the Company's
operations.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations is a direct result of the amount of net
proceeds realized from the sale of oil and gas production 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 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 during 1995. Future
distributions are dependent upon, among other things, an increase in prices
received for oil and gas. The Company will continue to recover its reserves and
distribute to the limited partners the net proceeds realized form the sale of
oil and gas production. Distribution amounts are subject to change if net
revenues are greater or less than expected. Future periodic distributions will
be made once sufficient net revenues are accumulated.
As of June 30, 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 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 OIL & GAS INCOME
PROGRAM IV - SERIES 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
August 11, 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> 0000854221
<NAME> Enex Oil & Gas Income Program IV-Series 3,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> 12455
<SECURITIES> 0
<RECEIVABLES> 29394
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42830
<PP&E> 2877073
<DEPRECIATION> 2807439
<TOTAL-ASSETS> 112464
<CURRENT-LIABILITIES> 48194
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5980
<TOTAL-LIABILITY-AND-EQUITY> 112464
<SALES> 82575
<TOTAL-REVENUES> 82575
<CGS> 40274
<TOTAL-COSTS> 593876
<OTHER-EXPENSES> 9280
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (520581)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
