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 33-34348-01
ENEX OIL & GAS INCOME PROGRAM V - SERIES 2, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0303857
(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 V - SERIES 2, L.P.
BALANCE SHEET
- -------------------------------------------------------------------------------
JUNE 30,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash $ 7,524
Accounts receivable - oil & gas sales 20,843
Other current assets 1,777
---------------------
Total current assets 30,144
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,007,365
Less accumulated depreciation and depletion 741,202
---------------------
Property, net 266,163
---------------------
TOTAL $ 296,307
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 10,999
Payable to general partner 23,638
---------------------
Total current liabilities 34,637
---------------------
NONCURRENT PAYABLE TO GENERAL PARTNER 70,915
---------------------
PARTNERS' CAPITAL:
Limited partners 186,148
General partner 4,607
---------------------
Total partners' capital 190,755
---------------------
TOTAL $ 296,307
=====================
</TABLE>
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL & GAS INCOME PROGRAM V - SERIES 2, 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 $ 45,540 $ 40,878 $ 88,260 $ 83,648
-------------- ----------------- ----------------- -----------------
EXPENSES:
Depreciation, depletion and amortization 14,174 26,229 28,005 51,455
Impairment of property - - 43,262 -
Lease operating expenses 18,790 12,506 36,107 31,764
Production taxes 2,552 2,373 4,887 5,009
General and administrative 6,919 6,336 15,032 16,368
-------------- ----------------- ----------------- -----------------
Total expenses 42,435 47,444 127,293 104,596
-------------- ----------------- ----------------- -----------------
INCOME (LOSS) FROM OPERATIONS 3,105 (6,566) (39,033) (20,948)
-------------- ----------------- ----------------- -----------------
OTHER INCOME:
Gain from sale of property - - 598 -
-------------- ----------------- ----------------- -----------------
NET INCOME (LOSS) $ 3,105 $ (6,566) $ (38,435) $ (20,948)
============== ================= ================= =================
</TABLE>
See accompanying notes to financial statements.
- ----------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
ENEX OIL AND GAS INCOME PROGRAM V - SERIES 2, 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 $ (38,435) $ (20,948)
------------------- --------------------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation, depletion and amortization 28,005 51,455
Impairment of property 43,262 -
Gain on sale of property (598) -
(Increase) decrease in:
Accounts receivable - oil & gas sales (1,781) (284)
Other current assets 16 99
(Decrease) in:
Accounts payable (177) (8,701)
Payable to general partner (4,246) (17,744)
------------------- --------------------
Total adjustments 64,481 24,825
------------------- --------------------
Net cash provided by operating activities 26,046 3,877
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property 598 -
Property additions - development costs (8,774) (3,101)
------------------- --------------------
Net cash used by investing activities (8,176) (3,101)
------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions (16,163) (11,662)
------------------- --------------------
NET INCREASE (DECREASE) IN CASH 1,707 (10,886)
CASH AT BEGINNING OF YEAR 5,817 14,237
------------------- --------------------
CASH AT END OF PERIOD $ 7,524 $ 3,351
=================== --==================
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
ENEX OIL & GAS INCOME PROGRAM V - SERIES 2, 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 $8,108, representing net revenues from the sale of oil
and gas produced from properties owned by the Company. This
distribution was made on April 30, 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. The terms and conditions of the proposed consolidation
are set forth in such preliminary proxy material.
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<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 $45,540 in 1996 from
$40,878 in 1995. This represents an increase of $4,662 (11%). Oil sales
increased by $2,093 (8%). A 15% increase in the average oil sales price
increased sales by $3,674. This increase was partially offset by a 6% decrease
in oil production. Gas sales increased by $2,569 (18%). A 58% increase in the
average gas sales price increased sales by $6,115. This increase was partially
offset by a 25% decrease in gas production. The decrease in oil production was
primarily the result of natural production declines. The increase in the average
oil sales price corresponds with higher prices in the overall market for the
sale of oil. The decrease in gas production was primarily due to the sale of the
Nunley Ranch acquisition, effective January 1, 1996, coupled with natural
production declines. The increase in the average gas sales price was due to
higher prices in the overall market for the sale of gas coupled with relatively
higher production from properties with a higher gas sales price.
Lease operating expenses increased to $18,791 in the second quarter of 1996 from
$12,506 in the second quarter of 1995. The increase of $6,285 (50%) is primarily
due to ad valorem taxes paid by the operator of the FEC acquisition in the
second quarter for the 1995 and 1996 tax years.
Depreciation and depletion expense decreased to $14,174 in the second quarter of
1996 from $23,257 in the second quarter of 1995. This represents a decrease of
$12,055 (46%). The changes in production, noted above, caused depreciation and
depletion expense to decrease by $4,265. A 35% decrease in the depletion rate
reduced depletion expense by an additional $7,790. The rate decrease was
primarily due to the lower property basis resulting from the recognition of an
impairment of property of $43,262 in the first quarter of 1996.
General and administrative expenses increased to $6,919 in the second quarter of
1996 from $6,336 in 1995. This increase of $583 (9%) is primarily due to more
staff time being required to manage the Company's operations in 1996.
First Six Months in 1995 Compared to First Six Months in 1996
Oil and gas sales for the first six months increased to $88,260 in 1996 from
$83,648 in 1995. This represents an increase of $4,612 (6%). Oil sales increased
by $6,155 (12%). An 11% increase in average oil prices increased sales by
$5,641. A 1% increase in oil production increased sales by an additional $514.
Gas sales decreased by $1,543 or 5%. A 32% decrease in gas production reduced
sales by $10,418. This decrease was partially offset by a 41% increase in the
average gas sales price. The increase in oil production was primarily the result
of increased production from the FEC acquisition in which the Company obtained
additional interests from farmouts during 1995, partially offset by natural
production declines. The decrease in gas production was primarily due to the
sale of the Nunley Ranch acquisition, effective January 1, 1996, coupled with
natural production declines. The increase in the average gas sales
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<PAGE>
price was due to higher prices in the overall gas market coupled with relatively
higher production from properties with a higher gas sales price.
Lease operating expenses increased to $36,108 in the first six month of 1996
from $31,764 in the first six months of 1995. The increase of $4,344 (14%) is
due to ad valorem taxes paid by the operator of the FEC acquisition in 1996 for
the 1995 and 1996 tax years.
Depreciation and depletion expense decreased to $28,005 in the first six months
of 1996 from $45,510 in the first six months of 1995. This represents a decrease
of $17,505 (38%). The changes in production, noted above, caused depreciation
and depletion expense to decrease by $15,768. A 6% decrease in the depletion
rate reduced depreciation and depletion expense by an additional $1,737. The
rate decrease was primarily due to the lower property basis resulting from the
recognition of an impairment of property of $43,262 in the first quarter of
1996.
Effective January 1, 1996, the Company sold its interest in the Nunley Ranch
acquisition for $598. The Company recognized a gain of $598 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 $43,262 for
certain oil and gas properties due to market indications that the carrying
amounts were not fully recoverable.
General and administrative expenses decreased to $15,032 in the first six months
of 1996 from $16,368 in 1995. This decrease of $1,336 (8%) 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. 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 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
I-6
<PAGE>
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.
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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.
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<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 V - SERIES 2, 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> 0000873974
<NAME> Enex Oil & Gas Income Program V-Series 2,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> 7524
<SECURITIES> 0
<RECEIVABLES> 20843
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30144
<PP&E> 1007364
<DEPRECIATION> 741201
<TOTAL-ASSETS> 296307
<CURRENT-LIABILITIES> 34637
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 190755
<TOTAL-LIABILITY-AND-EQUITY> 296307
<SALES> 88260
<TOTAL-REVENUES> 88260
<CGS> 40994
<TOTAL-COSTS> 112261
<OTHER-EXPENSES> 15032
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (38435)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
