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 0-18617
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 7, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0251427
(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 OIL & GAS INCOME PROGRAM IV - SERIES 7, L.P.
BALANCE SHEET
- ------------------------------------------------------------------------------
JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash $ 12,460
Accounts receivable - oil & gas sales 33,337
Other current assets 2,086
---------------------
Total current assets 47,883
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,726,988
Less accumulated depreciation and depletion 1,390,470
---------------------
Property, net 336,518
---------------------
TOTAL $ 384,401
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 39,577
Payable to general partner 828
---------------------
Total current liabilities 40,405
---------------------
PARTNERS' CAPITAL:
Limited partners 323,132
General partner 20,864
---------------------
Total partners' capital 343,996
---------------------
TOTAL $ 384,401
=====================
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
I-1
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM IV - SERIES 7, 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 $ 82,793 $ 92,090 $ 171,068 $ 191,369
--------------- ----------------- ----------------- -----------------
EXPENSES:
Depreciation, depletion and amortization 17,009 39,696 35,194 80,521
Impairment of property - - 73,979 -
Lease operating expenses 60,034 38,240 101,856 85,997
Production taxes 5,152 5,900 10,663 12,510
General and administrative 9,480 8,527 20,738 20,532
--------------- ----------------- ----------------- -----------------
Total expenses 91,675 92,363 242,430 199,560
--------------- ----------------- ----------------- -----------------
LOSS FROM OPERATIONS (8,882) (273) (71,362) (8,191)
--------------- ----------------- ----------------- -----------------
OTHER INCOME:
Gain on sale of property - - 1,066 -
--------------- ----------------- ----------------- -----------------
NET LOSS $ (8,882) $ (273) $ (70,296) $ (8,191)
=============== ================= ================= =================
</TABLE>
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
I-2
<PAGE>
<TABLE>
<CAPTION>
ENEX OIL AND GAS INCOME PROGRAM IV - SERIES 7, 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) $ (70,296) $ (8,191)
------------------- -------------------
Adjustments to reconcile net (loss) to net cash
provided by operating activities
Depreciation, depletion and amortization 35,194 80,521
Impairment of property 73,979 -
Gain on sale of property (1,066) -
(Increase) decrease in:
Accounts receivable - oil & gas sales 3,140 (788)
Receivable from affiliated limited partnership - (159)
Other current assets 18 (2)
Increase (decrease) in:
Accounts payable 13,071 (6,563)
Payable to general partner (2,403) (70,153)
------------------- -------------------
Total adjustments 121,933 2,856
------------------- -------------------
Net cash provided (used) by operating activities 51,637 (5,335)
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property 1,066 -
Property additions - development costs (38,405) (2,692)
------------------- -------------------
Net cash used by investing activities (37,339) (2,692)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (17,218) (10,465)
------------------- -------------------
NET (DECREASE) IN CASH (2,920) (18,492)
CASH AT BEGINNING OF YEAR 15,380 23,587
------------------- -------------------
CASH AT END OF PERIOD $ 12,460 $ 5,095
=================== ===================
</TABLE>
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
I-3
<PAGE>
ENEX OIL & GAS INCOME PROGRAM IV - 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.) 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. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
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 decreased to $82,793 in 1996 from
$92,090 in 1995. This represents a decrease of $9,297 (10%). Oil sales decreased
by $212 (1%). A 17% decrease in oil production reduced sales by $10,069. This
decrease was partially offset by a 21% increase in the average oil sales price.
Gas sales decreased by $9,085 (26%). A 32% decrease in gas production reduced
sales by $11,132. This decrease was partially offset by a 9% increase in the
average gas sales price. The decrease in oil production was primarily the result
of natural production declines. The decrease in gas production was primarily due
to the sale of the Nunley Ranch acquisition, effective January 1, 1996, and the
shut-in of production from the Binger acquisition to perform a workover,
together with natural production declines. The changes in average sales prices
correspond with changes in the overall market for the sale of oil and gas.
Lease operating expenses increased to $60,034 in the second quarter of 1996 from
$38,240 in the second quarter of 1995. The increase of $21,794 is primarily due
to the conversion of a well in the Binger acquisition to a gas injection well.
Depreciation and depletion expense decreased to $17,009 in the second quarter of
1996 from $37,186 in the second quarter of 1995. This represents a decrease of
$20,177 (54%). The changes in production, noted above, reduced depreciation and
depletion expense by $9,000. A 33% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $11,177. The rate decrease
was primarily due to the lower property basis resulting from the recognition of
an impairment of property of $73,979 in the first quarter of 1996.
General and administrative expenses increased to $9,480 in the second quarter of
1996 from $8,527 in 1995. This increase of $953 (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 decreased to $171,068 in 1996 from
$191,369 in 1995. This represents a decrease of $20,301 or 11%. Oil sales
increased by $2,951 (3%). A 14% increase in the average oil sales price
increased sales by $14,569. This increase was partially offset by a 10% decrease
in oil production. Gas sales decreased by $23,252 (30%). A 37% decrease in gas
production increased sales by $22,585. This increase was partially offset by a
21% decrease in the average gas sales price. The decrease in oil production was
primarily the result of natural production declines. The decrease in gas
production was primarily due to the sale of the Nunley Ranch acquisition,
effective January 1, 1996, and the shut-in of production from the Binger
acquisition to perform a workover, together with natural production declines.
The changes in average sales prices correspond with changes in the overall
market for the sale of oil and gas.
Lease operating expenses increased to $101,856 in the first six months of 1996
from $85,997 in the first six months of 1995. The increase of $15,859 (18%) is
primarily due to the conversion of a well in the Binger acquisition to a gas
injection well.
I-5
<PAGE>
Depreciation and depletion expense decreased to $35,194 in the first six months
of 1996 from $74,245 in the first six months of 1995. This represents a decrease
of $45,327 (56%). The changes in production, noted above, reduced depreciation
and depletion expense by $20,953. A 41% decrease in the depletion rate reduced
depreciation and depletion expense by an additional $24,374. The rate decrease
was primarily due to the lower property basis resulting from the recognition of
an impairment of property of $73,979 in the first quarter of 1996.
Effective January 1, 1996, the Company sold its interest in the Nunley Ranch
acquisition for $1,066. The Company recognized a gain of $1,066 on the sale.
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 $73,979 for
certain oil and gas properties due to market indications that the carrying
amounts were not fully recoverable.
General and administrative expenses increased to $20,738 in the first six months
of 1996 from $20,532 in 1995. This increase of $206 (1%) 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. In July 1995,
the Company reinstated distributions to its limited partners. 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.
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. The
terms and conditions of the proposed consolidation are set forth in such
preliminary proxy material.
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.
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 OIL & GAS INCOME
PROGRAM IV - 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
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> 0000864177
<NAME> Enex Oil & Gas Income Program IV-Series 7,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> 12460
<SECURITIES> 0
<RECEIVABLES> 33337
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 47883
<PP&E> 1726807
<DEPRECIATION> 1390289
<TOTAL-ASSETS> 384401
<CURRENT-LIABILITIES> 40405
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 343996
<TOTAL-LIABILITY-AND-EQUITY> 384401
<SALES> 171068
<TOTAL-REVENUES> 171068
<CGS> 112519
<TOTAL-COSTS> 221692
<OTHER-EXPENSES> 20738
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70296)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
