United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 0-18396
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0259724
(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 7, L.P.
BALANCE SHEET
- ----------------------------------------------------------------------------
September 30,
ASSETS 1996
-------------------
CURRENT ASSETS:
<S> <C>
Cash $ 24,862
Accounts receivable - oil & gas sales 8,218
---------------------
Total current assets 33,080
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests 1,341,371
Less accumulated depletion 983,220
---------------------
Property, net 358,151
---------------------
TOTAL $ 391,231
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to general partner $ 2,662
---------------------
PARTNERS' CAPITAL:
Limited partners 376,780
General partner 11,789
---------------------
Total partners' capital 388,569
---------------------
TOTAL $ 391,231
=====================
Number of $500 Limited Partner units outstanding 3,089
</TABLE>
See accompanying notes to financial statements.
- ----------------------------------------------------------------------------
I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------
(UNAUDITED) QUARTER ENDED NINE MONTHS ENDED
------------------------------------- ----------------------------------------
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
---------------- ----------------- ----------------- -------------------
REVENUES:
<S> <C> <C> <C> <C>
Oil and gas sales $ 37,806 $ 23,909 $ 108,426 $ 78,103
---------------- ----------------- ----------------- -------------------
EXPENSES:
Depletion and amortization 19,273 17,653 54,560 55,376
Production taxes 2,646 1,801 7,960 8,007
General and administrative 3,321 3,014 11,221 8,627
---------------- ----------------- ----------------- -------------------
Total expenses 25,240 22,468 73,741 72,010
---------------- ----------------- ----------------- -------------------
NET INCOME $ 12,566 $ 1,441 $ 34,685 $ 6,093
================ ================= ================= ===================
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------
I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
- ------------------------------------------------------------------------------
PER $500
LIMITED
PARTNER
GENERAL LIMITED UNIT OUT-
TOTAL PARTNER PARTNERS STANDING
-------------- ------------- -------------- --------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 $ 541 312 $ 3 596 $ 537 716 $ 175
CASH DISTRIBUTIONS (101,385) (10,137) (91,248) (30)
NET INCOME (LOSS) (13,101) 10,447 (23,548) (8)
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1994 426,826 3,906 422,920 137
CASH DISTRIBUTIONS (41,020) (4,103) (36,917) (12)
NET INCOME (LOSS) 3,993 7,490 (3,497) (1)
-------------- ------------- -------------- --------
BALANCE, DECEMBER 31, 1995 $ 389,799 $ 7,293 $ 382,506 $ 124
CASH DISTRIBUTIONS (35,915) (4,429) (31,486) (10)
NET INCOME (LOSS) 34,685 8,925 25,760 8
-------------- ------------- -------------- --------
BALANCE, SEPTEMBER 30, 1996 $ 388,569 $ 11,789 $ 376,780 (1) $ 122
============== ============= ============== ========
</TABLE>
(1) Includes 313 units purchased by the general partner as a limited partner.
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
I-3
<PAGE>
<TABLE>
<CAPTION>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, L.P.
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------
(UNAUDITED)
NINE MONTHS ENDED
--------------------------------------------
September 30, September 30,
1996 1995
------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 34,685 $ 6,093
------------------- -------------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depletion and amortization 54,560 55,376
Decrease in:
Accounts receivable - oil & gas sales 144 1,797
(Decrease) in:
Accounts payable (1,058) (2,887)
Payable to general partner (36,558) (20,595)
------------------- -------------------
Total adjustments 17,088 33,691
------------------- -------------------
Net cash provided by operating activities 51,773 39,784
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (35,915) (32,226)
------------------- -------------------
NET INCREASE (DECREASE) IN CASH 15,858 7,558
CASH AT BEGINNING OF YEAR 9,004 8,149
------------------- -------------------
CASH AT END OF PERIOD $ 24,862 $ 15,707
=================== ===================
</TABLE>
See accompanying notes to financial statements.
- ---------------------------------------------------------------------------
I-4
<PAGE>
ENEX 88-89 INCOME AND RETIREMENT FUND - SERIES 7, 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. A cash distribution was made to the limited partners of the Company in
the amount of $10,965, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on July 31, 1996.
3. On August 9, 1996, the Company's General Partner submitted preliminary
proxy material to the Securities Exchange Commission with respect to a
proposed consolidation of the Company with 33 other managed limited
partnerships. On November 13, 1996, the Company submitted amended
preliminary proxy material to the SEC with respect to this
consolidation. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
4. 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. Prior to this pronouncement, the
Company assessed properties on an aggregate basis. Upon adoption of
SFAS 121, the Company began assessing properties on an individual
basis, wherein total capitalized costs may not exceed the property's
fair market value. The fair market value of each property was
determined by H. J. Gruy and Associates, ("Gruy"). To determine the
fair market value, Gruy estimated each property's oil and gas
reserves, applied certain assumptions regarding price and cost
escalations, applied a 10% discount factor for time and certain
discount factors for risk, location, type of ownership interest,
category of reserves, operational characteristics, and other factors.
I-5
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Third Quarter 1995 Compared to Third Quarter 1996
Oil and gas sales for the third quarter increased to $37,806 in 1996 from
$23,909 in 1995. This represents an increase of $13,897 (58%). Oil sales
increased by $2,269 or 80%. A 37% increase in the average net oil sales price
increased sales by $2,557. This increase was partially offset by a 4% decrease
in oil production. Gas sales increased by $11,628 or 70%. A 5% increase in gas
production increased sales by $788. A 63% increase in average net gas prices
increased sales by an additional $10,840. The decrease in oil production was
primarily the result of natural production declines. The increase in gas
production was primarily the result of higher production from the Wardner Ranch
acquisition which was shut-in for a rework during the third quarter of 1995. The
changes in average net sales prices correspond with changes in the overall
market for the sale of oil and gas.
Depletion expense increased to $19,273 in the third quarter of 1996 from $17,653
in the third quarter of 1995. This represents an increase of $1,620 (9%). A 12%
increase in the depletion rate increased depletion expense by $2,086. This
increase was partially offset by the changes in production, noted above. The
increase in the depletion rate was primarily the result of a downward revision
of the gas reserves during December 1995, partially offset by an upward revision
of the oil reserves during December 1995.
General and administrative expenses increased to $3,321 in 1996 from $3,014 in
1995. This increase of $307 (10%) is primarily due to more staff time being
required to manage the Company's operations.
First Nine Months in 1995 Compared to First Nine Months in 1996
- ----------------------------------------------------------------
Oil and gas sales for the first nine months increased to $108,426 in 1996 from
$78,103 in 1995. This represents an increase of $30,323 (39%). Oil sales
increased by $521 or 2%. A 16% increase in the net average oil sales price
increased sales by $3,592. This increase was partially offset by a 12% decrease
in oil production. Gas sales increased by $29,802 or 56%. A 5% increase in gas
production increased sales by $2,632. A 49% increase in average net gas prices
increased sales by an additional $27,170. The decrease in oil production was
primarily the result of natural production declines. The increase in gas
production was due to higher production from the Wardner Ranch acquisition which
was shut-in for a rework in the second quarter of 1995. The changes in average
net sales prices correspond with changes in the overall market for the sale of
oil and gas.
Depletion expense increased to $54,560 in the first nine months of 1996 from
$53,832 in the first nine months of 1995. This represents an increase of $728
(1%). The changes in production, noted above, increased depletion expense by
$405. A 1% increase in the depletion rate increased depletion expense by an
additional $323. The increase in the depletion rate was a result of a downward
revision of the gas reserves during December 1995, partially offset by an upward
revision of the oil reserves during December 1995.
I-6
<PAGE>
General and administrative expenses increased to $11,221 in 1996 from $8,627 in
1995. This increase of $2,594 (30%) 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's "available cash flow" is essentially equal to
the net amount of cash provided by operating, financing and investing
activities.
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.
Distribution amounts are subject to change if net revenues are greater or less
than expected. Nonetheless, the general partner believes the Company will
continue to have sufficient cash flow to fund operations and to maintain a
regular pattern of distributions.
On August 9, 1996, the Company's General Partner submitted preliminary proxy
material to the Securities Exchange Commission with respect to a proposed
consolidation of the Company with 33 other managed limited partnerships. On
November 13, 1996, the Company submitted amended preliminary proxy material to
the SEC with respect to this consolidation. The terms and conditions of the
proposed consolidation are set forth in such preliminary proxy material.
I-7
<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 September 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 7, 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
December 23, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000862023
<NAME> Enex 88-89 Income & Retirement Fund - Sr 7, L.P.
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> dec-31-1996
<PERIOD-START> jan-01-1996
<PERIOD-END> sep-30-1996
<CASH> 24862
<SECURITIES> 0
<RECEIVABLES> 8218
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33080
<PP&E> 1341371
<DEPRECIATION> 983220
<TOTAL-ASSETS> 391231
<CURRENT-LIABILITIES> 2662
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 388569
<TOTAL-LIABILITY-AND-EQUITY> 391231
<SALES> 108426
<TOTAL-REVENUES> 108426
<CGS> 7960
<TOTAL-COSTS> 73741
<OTHER-EXPENSES> 65781
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34685
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
