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 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 33-45253
ENEX OIL & GAS INCOME PROGRAM VI - SERIES 1, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0303885
(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 VI - SERIES 1, L.P.
BALANCE SHEET
- ---------------------------------------------------------------------------
JUNE 30,
ASSETS 1996
-----------------
(Unaudited)
CURRENT ASSETS:
<S> <C>
Cash $ 8,684
Accounts receivable - oil & gas sales 33,432
Other current assets 130
-----------------
Total current assets 42,246
-----------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests and related equipment & facilities 1,139,045
Less accumulated depreciation and depletion 505,081
-----------------
Property, net 633,964
-----------------
ORGANIZATION COSTS
(Net of accumulated amortization of $17,513) 22,902
-----------------
TOTAL $ 699,112
=================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 44,185
Note payable to general partner 22,602
Payable to general partner 28,592
-----------------
Total current liabilities 95,379
-----------------
NONCURRENT PAYABLE TO GENERAL PARTNER 37,186
-----------------
PARTNERS' CAPITAL:
Limited partners 551,743
General partner 14,804
-----------------
Total partners' capital 566,547
-----------------
TOTAL $ 699,112
=================
Number of $500 Limited Partner units outstanding 2,021
</TABLE>
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
I-1
<PAGE>
ENEX OIL & GAS INCOME PROGRAM VI - SERIES 1, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The 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 period.
2. A cash distribution was made to the limited partners of the Company in
the amount of $5,839 representing net revenues from the temporary
investment of proceeds from subscriptions by the Company. This
distribution was made on April 30, 1996.
3. On December 29, 1994, in order to partially finance the purchase of
producing oil and gas properties, the Company borrowed $87,000 from the
general partner. The resulting note payable to the general partner
bears interest at the general partner's borrowing rate of prime plus
three-fourths of one-percent. Principal repayments of $7,370 were
made on the note during the second quarter of 1996. The weighted
average principal outstanding during the second quarter of 1996 and
1995 was $27,786 and $77,718, respectively, and bore interest at an
average rate of 9.72% and 9.75% in the first quarter of 1996 and 1995,
respectively, and 9.49% and 9.66% in the first six months of 1996 and
1995, respectively.
4. 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.
5. 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.
In the first quarter of 1996, the Company recognized a non-cash
impairment provision of $201,736 for certain oil and gas properties
due to market indications that the carrying amounts were not fully
recoverable.
I-4
<PAGE>
Lease operating expenses decreased from $118,125 in the first six months of 1995
to $103,231 in the first six months of 1996. The decrease of $14,894 (13%) is
primarily due to lower operating costs incurred on the McBride acquisition in
1996, as a result of new techniques utilized to control paraffin build-up.
Depreciation and depletion expense decreased from $80,442 in the first six
months of 1995 to $56,183 in the first six months of 1996. This represents a
decrease of $24,259 (30%). The changes in production, noted above, reduced
depreciation and depletion expense by $11,846. An 18% decrease in the depletion
rate reduced depreciation and depletion expense by an additional $12,413. The
rate decrease is primarily due to the lower property basis resulting from the
recognition of an impairment of property for $201,736 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. 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. In the first quarter of 1996,
the Company recognized a non-cash impairment provision of $201,736 for certain
oil and gas properties due to market indications that the carrying amounts were
not fully recoverable.
General and administrative expenses decreased from $14,569 in the first six
months of 1995 to $14,379 in the first six months of 1996. This decrease of $190
(1%) 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's "available cash flow" is essentially equal to
the net amount of cash provided by operating 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 after
payment of its debt obligations. 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
I-6
<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 VI - 1, 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
November 7, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer
