-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SouL8palb/aCQt/TV+AXq6Ef10Gu9iIgqoGkhtBMV5sftktj9zBBqCOht0I1W700 OHGv3wXPcRrPGL2ApCRs6Q== 0000314864-97-000004.txt : 19970226 0000314864-97-000004.hdr.sgml : 19970226 ACCESSION NUMBER: 0000314864-97-000004 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19970225 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENEX RESOURCES CORP CENTRAL INDEX KEY: 0000314864 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 930747806 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-09378 FILM NUMBER: 97542531 BUSINESS ADDRESS: STREET 1: 800 ROCKMEAD DRIVEW STREET 2: THREE KINGWOOD PLACE STE 200 CITY: KINGWOOD STATE: TX ZIP: 77339 BUSINESS PHONE: 7133588401 MAIL ADDRESS: STREET 1: THREE KINGWOOD PLACE STREET 2: STE 200 CITY: KINGSWOOD STATE: TX ZIP: 77339 10KSB/A 1 FORM 10KSB/A - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB/A AMENDMENT III (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from...............to............... Commission file number 0-9378 ENEX RESOURCES CORPORATION (Name of small business issuer in its charter) Delaware 93-0747806 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 800 Rockmead Drive Three Kingwood Place Kingwood, Texas 77339 (Address of principal executive offices)(Zip Code) Issuer's telephone number: (713) 358-8401 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.05 par value (Title of class) Check whether the issuer (1) 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 Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.[x] State issuer's revenues for its most recent fiscal year. $7,950,373 State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days (See definition of affiliate in Rule 12b-2 of the Exchange Act) $6,639,844 at March 1, 1996. Applicable Only to Corporate Registrants State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: At March 1, 1996 - 1,372,297. Documents Incorporated by Reference: NONE - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ TABLE OF CONTENTS FORM 10-KSB ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995 ENEX RESOURCES CORPORATION Item No. Part I Page - -------- -------- ------ 1 Description of Business I-1 2 Description of Property I-4 3 Legal Proceedings I-8 4 Submission of Matters to a Vote of Security Holders I-8 Part II --------- 5 Market for Common Equity and Related Stockholder Matters II-1 6 Management's Discussion and Analysis or Plan of Operation II-2 7 Financial Statements and Supplementary Data II-7 8 Changes In and Disagreements With Accountants on Accounting and Financial Disclosure II-26 Part III ----------- 9 Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act III-1 10 Executive Compensation III-4 11 Security Ownership of Certain Beneficial Owners and Management III-6 12 Certain Relationships and Related Transactions III-8 13 Exhibits and Reports on Form 8-K III-8 Signatures S-1 PART I Item 1. Description of Business General Enex Resources Corporation ("Enex" or the "Company") was incorporated on August 17, 1979 in Colorado. On June 30, 1992, the Company reincorporated in Delaware. The Company is engaged in the business of acquiring interests in producing oil and gas properties and managing oil and gas income limited partnerships. The Company's operations are concentrated in a single industry segment. The Company's principal executive offices are maintained at 800 Rockmead Drive, Three Kingwood Place, Kingwood, Texas 77339. The telephone number at these offices is (713) 358-8401. The Company has no regional offices. As of March 1, 1996, the Company and one of its subsidiaries, Enex Securities Corporation, employed 24 persons. All employees are engaged on a full-time basis. Since 1982, the Company has financed most of its oil and gas activities through the public sale of interests in limited partnerships formed to purchase and hold working interests and other operating and non operating interests in producing oil and gas properties (the "Partnerships"). Until 1986, most of the Company's ownership of proved reserves was derived through the purchase of producing properties by the Partnerships. The Company acts as general partner in, and contributes capital to, each such Partnership. As general partner, the Company has a 10% interest in the net revenues and gains generated by properties owned by these Partnerships, which, in most instances, will increase to 15% should the limited partners receive distributions in total equal to their aggregate subscriptions. As general partner, the Company is obligated to periodically offer to repurchase the interests of those limited partners electing to present their interests to the Company, except for interests in the Partnerships in Programs I, V and VI. Prior to 1993, 55 Partnerships commenced operations with aggregate investor subscriptions of $222.5 million received from 68,678 investors, including reinvestors. Producing property acquisitions for those Partnerships totaled approximately $199.6 million. During 1994, one Partnership commenced operations with aggregate subscriptions of $1.0 million received from 461 investors, including reinvestors. Producing property acquisitions for the Partnership totaled approximately $1.1 million, including $.1 million from borrowed funds. During 1995, four partnerships, with aggregate investor subscriptions totaling $33.0 million, were liquidated. Aggregate investor subscriptions through December 31, 1995 in all Partnerships totaled $223.5 million. The properties include interests in more than 11,000 wells in 14 states. In addition to these Partnership activities, the Company owns and manages oil and gas producing properties for its own account. Prior to May 1994, the Company marketed interests in the oil and gas partnerships it sponsored through its subsidiary, Enex Securities Corporation, a registered broker-dealer and member of the National Association of Securities Dealers, Inc., and through other registered broker-dealers. As the distributor of such interests, Enex Securities Corporation received commissions, substantially all of which were paid to dealers and others, and received other selling expense allowances. I-1 Approximately 40% of the Company's estimated future net revenues from proved reserves at December 31, 1995 is attributable to its interests in the Partnerships and approximately 60% is attributable to the properties owned directly by the Company. In acquiring properties for its own account, the Company is required to avoid conflicts of interest with the Partnerships for which it acts as general partner. Such requirements may restrict the Company's operations for its own account. The Company is also contingently liable for partnership obligations. Competition The business of exploring for, developing and producing oil and gas is intensely competitive. The Company competes with companies which have greater financial resources, larger staffs and labor forces, more equipment for exploration and longer operating experience than the Company. The oil and gas industry is dominated by a number of companies with greater assets and resources than the Company. Marketing and Prices The marketing and prices of oil and gas found and produced by the Company are affected by a number of factors which are beyond the Company's control, the exact nature of which cannot be accurately predicted. These factors include the quantity and price of crude oil imports, fluctuating supply and demand, the availability of adequate pipeline and other transportation facilities, the marketing of competitive fuels, state and federal regulation of oil and gas production, and distribution and other matters affecting the availability of a ready market. All of these factors are extremely volatile. In addition, in recent years there have been surpluses in crude oil and natural gas supplies which have caused a decline in oil and gas prices. Environmental and Conservation Regulation State regulatory authorities in the states in which the Company owns producing properties are empowered to make and enforce regulations to prevent waste of oil and gas and to protect correlative rights and opportunities to produce oil and gas between owners of a common reservoir. Each of such regulatory authorities also regulates the amount of oil and gas produced by assigning allowable rates of production, which may be increased or decreased in accordance with supply and demand. Requirements regarding the prevention and clean-up of pollution and similar environmental matters are also generally applicable. The existence of such regulations has had no material adverse effect on the Company's operations to date, and the cost of compliance has not yet been material. There are no material administrative or judicial proceedings arising under such laws or regulations pending against the Company. The Company is unable to assess or predict the impact that compliance with environmental and pollution control laws and regulations may have on its future operation, capital expenditures, earnings or competitive position. I-2 Recent Tax Laws In General. The operations of the Company are affected by federal income tax laws, particularly those provisions of the Internal Revenue Code of 1986, as amended, which provide certain tax benefits to owners of economic interests in oil and gas properties. In general, the major sources of federal income tax deduction available to the Company are the deductions for the greater of cost depletion or percentage depletion, if available, depreciation of tangible lease and well equipment and the deduction for intangible drilling and development costs. The Company is subject to regular income tax at graduated rates up to a maximum 34% rate. Additionally, the Company may also be subject to the corporate alternative minimum tax which is imposed at a rate of 20%. Tax preference items which may cause the Company to incur the alternative minimum tax include the following: * the excess of accelerated depreciation over depreciation using the alternative minimum tax lives and method * the limitation on the deduction of net operating losses to 90% of the Company's alternative minimum taxable income (with the disallowed portion of the net operating loss carried over to other years) * 75% of the excess of the Company's adjusted current earnings over its alternative minimum taxable income (determined without regard to such adjustment and prior to reduction by operating losses.) Item 2. Description of Property Oil and Gas Properties Until 1986, the Company had acquired most of its interests in producing oil and gas properties through purchases made by the Partnerships. Prior to 1993, the Partnerships acquired approximately $199.6 million of producing oil and gas properties. No properties were acquired for the Partnerships in 1993. A total of $1.1 million was spent on Partnership property acquisitions in 1994. The Company, as general partner, in most instances, has a 10% interest in the net revenues and gains generated by properties owned by these Partnerships, which, in most instances, increases to 15% should the limited partners receive distributions in total equal to their aggregate subscriptions. In addition to Partnership activities, the Company owns interests in 378 oil and gas productive properties for its own account, and is the operator of 161 properties. The total properties for its own account and the Partnerships include interests in more than 12,000 producing wells in 14 states. I-3 The producing oil and gas properties in which the Company owns interests are all located within the United States. The Company's interests in these properties (including properties in which the Company's interest is derived through the Partnerships for which it acts as general partner*) at December 31, 1995 are summarized below: * As general partner, the Company generally has a 10% interest in the net revenues and gains generated by the Partnerships' properties, which, in most instances, increases to 15% should the limited partners receive distributions in total equal to their aggregate subscriptions. In most instances, the Company has purchased additional interests in each Partnership which entitle the Company to an additional 3% to 53% of each Partnership's net income and capital. Unless otherwise indicated, quantitative information contained in this report regarding the Company's oil and gas properties, the production therefrom and related data includes the Company's indirect interest in the properties owned by the Partnerships.
Developed Acres Undeveloped Acres Gross Net Gross Net Working Interests 380,985 17,884 6,529 3,610 Royalty Interests 598,925 2,751 21,222 5,005
"Developed acres" are acres spaced or assigned to productive wells. "Undeveloped acres" are those leased acres on which wells have not been drilled or completed to a point that permits the production of commercial quantities of oil and gas, regardless of whether such acreage contains proved reserves. A "gross acre" is an acre in which an interest is owned. The number of gross acres is the total number of acres in which such interest is owned. A "net working interest acre" is deemed to exist when the sum of fractional working interests owned in gross acres equals one. The number of net working interest acres is the sum of fractional working interests owned in gross acres expressed as a whole number. A "net royalty acre" is deemed to exist when the sum of fractional royalty interests owned in gross acres equals one. The number of net royalty acres is the sum of fractional royalty interests owned in gross acres expressed as a whole number. I-4 Property Acquisitions The following acquisitions were made for the Company during 1994: McBride acquisition. Working interests in forty-one wells located in Caldwell and Bastrop Counties, Texas, were purchased in two transactions. The first transaction, for $663,493, was effective January 1, 1994. The second, for $134,900, was effective May 1, 1994. Larto Lake acquisition. Working interests in seven oil wells located primarily in Catahoula Parish, Louisiana, were purchased from a managed limited partnership effective October 1, 1994 for $199,928. Florida acquisition. Working interests in three wells located in Hendry County, Florida, were purchased from a managed limited partnership for $99,196 effective November 1, 1994. The following acquisitions were made for the Company during 1995: East Seven Sisters acquisition. Royalty interests in the Gorman Gas Unit in Duval County, Texas were purchased from four managed limited partnerships effective December 1, 1995 for $660,290. Blair acquisition. Working interests in nine wells located in WWW Field, Ward County, Texas were purchased from two managed limited partnerships effective December 1, 1995 for $18,450. Comite acquisition. Overriding royalty interests in four gas wells located in East Baton Rouge Parish, Louisiana, were purchased from four managed limited partnerships for $89,880 effective December 1, 1995. Net Oil and Gas Production The following table shows for the years ended December 31, 1995, 1994 and 1993, the approximate production attributable to the Company's oil and gas interests including interests derived through the Company's interests in the Partnerships. The figures in the table represent "net production"; i.e., production owned by the Company or the Partnerships and produced to the Company's interest after deducting royalty and other similar interests. All production occurred in the United States.
1995 1994 1993 ---------- ---------- ---------- Crude oil and condensate (Bbls) 200,778 194,467 157,440 Natural gas - leasehold or royalty (Mcf) 1,671,517 1,435,593 1,285,512 Natural gas liquids (Bbls) (1) 35,388 22,916 18,648 Natural gas - gas plant sales (Mcf) (1) 230,899 143,820 105,564
I-5 The following table sets forth the Company's average sales price per barrel of oil, per Mcf of gas, per barrel of natural gas liquids ("NGL"), per Mcf of gas plant gas sales and average production cost per unit produced for the years ended December 31, 1995, 1994 and 1993:
1995 1994 1993 ------ ------ ----- Average sales price per Bbl of crude oil and condensate $ 15.82 $ 14.74 $ 15.38 Average sales price per Mcf of natural gas 1.64 1.94 2.20 Average production cost per equivalent barrel of production 5.49 5.35 4.99 Average sales price per Bbl of NGL (1) 9.07 8.06 9.53 Average sales price per Mcf of gas plant gas (1) 1.51 1.71 1.67 Average production cost per equivalent Bbl of NGL production (1)(2) 6.89 9.84 (3) 7.17
(1) Natural gas liquids production and gas plant gas sales were obtained through gas processing plant ownership rather than through leasehold ownership. (2) Includes cost of gas purchased at plants for processing. (3) Includes the recognition of processing charges related to a lawsuit brought against the Company's interest in a gas plant. Without such charges, the average production cost would have been $7.11 per equivalent Bbl of NGL production in 1994. The following table shows, as of December 31, 1995, the approximate number of gross and net producing oil and gas wells in which the Company own interests, including wells in which the Company's interest is derived through its interests in the Partnerships:
Productive Oil Wells Productive Gas Wells Net Working Net Net Working Net Gross Interest Royalty Gross Interest Royalty Wells Wells Wells Wells Wells Wells 11,432 64.30 3.40 1,198 52.52 19.72
"Productive wells" are producing wells and wells capable of production, including shut-in wells. A "gross well" is a well in which an interest is held. The number of gross wells is the total number of wells in which an interest is owned. A "net working interest (`W.I.') well" is deemed to exist when the sum of fractional interests owned in gross W.I. wells equals one. The number of net W.I. wells is the sum of the fractional interests owned in gross W.I. wells, expressed as whole numbers and fractions thereof. I-6 A "net royalty well" is deemed to exist when the sum of fractional interests owned in gross royalty wells equals one. The number of net royalty wells is the sum of the fractional interests owned in gross royalty wells, expressed as whole numbers and fractions thereof. Oil and Gas Reserves Proved oil and gas reserves reported herein for the Company are based primarily on engineering studies performed by the Company's engineering staff. Proved oil and gas reserves reported herein for the Partnerships and for the Company's share of such Partnership reserves are based primarily on engineering studies performed by the petroleum engineering consulting firm of H. J. Gruy and Associates, Inc. The reserves included in this report are estimates only and should not be construed as exact quantities. Future conditions may affect recovery of estimated reserves and revenues, and all reserves may be subject to revision as more performance data becomes available. The proved reserves used in this report conform to the applicable definitions promulgated by the Securities and Exchange Commission. No major discovery or other favorable or adverse event that is believed to have caused a significant change in the estimated proved reserves has occurred since December 31, 1995. Drilling Activities In 1995, 1994 and 1993, the Company did not participate in any significant developmental drilling for its own account or as an operator of Partnership properties. Current Activities The Company is continuing to acquire interests in producing oil and gas properties and to operate properties both for its own account and for its managed limited partnerships. Offices The Company's corporate headquarters are at 800 Rockmead Drive, Three Kingwood Place, Kingwood, Texas, where it leases 13,354 square feet of office space for itself and on behalf of Enex Securities Corporation. Item 3. Legal Proceedings There are no material pending legal proceedings to which the Company or any of its subsidiaries are a party or to which any of their properties are subject. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. I-7 PART II Item 5. Market for Common Equity and Related Stockholder Matters The principal market where the Company's common stock is traded is the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"). Price Range of Common Stock The following table shows the range of closing prices for the common stock in the over-the-counter market for each quarter during the Company's past two fiscal years, as reported by the NASDAQ National Market System. The quotations represent prices in the over-the-counter market between dealers in securities and do not include retail markup, markdown or commissions and do not necessarily represent actual transactions.
1995 1994 Period High Low High Low ----------------- ------------------- First Quarter . . . . . . . . . . . . . . . . . . 10 1/4 8 1/4 8 1/2 7 1/2 Second Quarter . . . . . . . . . . . . . . . . 10 1/2 8 1/2 11 1/4 7 1/2 Third Quarter . . . . . . . . . . . . . . . . . . 9 1/2 7 3/4 13 10 1/2 Fourth Quarter . . . . . . . . . . . . . . . . . 9 7 3/4 12 9/16 8 1/4
Number of Equity Security Holders Number of Record Holders (as of March 1, 1996) Title of Class ----------------------------- Common Stock ($.05 par value) 1,107* (*) Includes "nominee" or "street" name holders of record. Dividends The Company continued to pay a $.10 per common share semi-annual dividend in July and December of 1995. The Company paid its first semi-annual dividend in June 1994. The Company also increased the dividends paid in 1994 to $.20 per common share. In 1993 the Company paid a cash dividend of $.19 per common share to shareholders. The payment of future cash dividends will depend on the Company's earnings, financial condition, capital requirements and other factors, although the Company intends to continue with regular dividends. II-1
Item 6. Managements Discussion and Analysis or Plan of Operation Selected Financial Data (Dollar amounts in thousands, except per share data) Selected Statement of Operations Data 1995 1994 1993 1992 1991 -------- ------------- --------- --------- ---------- Total revenues $ 7,950 $ 6,871 $ 6,247 $ 7,880 $ 6,543 Earnings before income taxes $ 870 $ 630 $ 968 $ 1,268 $ 671 Net income $ 1,269 $ 1,051 $ 932 $ 1,141 $ 833 Net income per primary share $ 0.90 $ 0.75 $ 0.69 $ 0.82 $ 0.58 Cash dividend declared per common share $ 0.20 $ 0.20 $ 0.19 $ 0.15 $ 0.12 Selected Balance Sheet Data Total assets $ 18,827 $ 19,236 $ 15,177 $ 17,698 $ 18,257 Long-term debt, excluding current maturities $ - $ 974 $ 259 $ 401 $ 745 Stockholders' equity $ 15,462 $ 14,214 $ 13,259 $ 12,343 $ 12,448 Stockholders' equity per share $ 11.65 $ 11.02 $ 10.60 $ 10.04 $ 8.62 Statistical: Cumulative number of limited partnerships formed 57 57 56 56 55 Cumulative amount of limited partnership capital raised $ 223,500 $223,500 $ 222,489 $ 222,489 $ 221,258 Proved reserves at December 31: Barrels of oil (000's) 907 1,089 633 765 550 Bcf of gas 11.57 12.45 10.56 7.79 8.25 Standardized measure of discounted future net cash flows of proved oil and gas reserves at December 31 $ 15,179 $ 13,448 $ 10,718 $ 9,280 $ 9,393
- ----------------------------------------------------------------------------- II-2 In 1995, Enex increased net income by reducing general and administrative expenses by over 27%. This allowed Enex to dramatically reduce its long-term and short-term debt, despite historically low prices for natural gas. At December 31, 1995, Enex had a debt-to-equity ratio of just 5% and a current ratio of 3.01 with no long-term debt. Liquidity and Capital Resources Operating activities provided cash flow of $2,541,845 in 1995 as compared to $2,341,038 in 1994 and $2,285,514 in 1993. The higher cash flow in 1995 was due to a $1,000,933 decrease in accounts receivable in 1995 as compared to a $377,758 increase in 1994 and an $86,248 decrease in accounts receivable in 1993. Enex's primary focus, in 1995, was the efficient management of its properties and partnerships to allow debt to be reduced. The Company was able to repay a net of $1,074,000 of its long-term debt in 1995. In 1994 and 1993, the Company borrowed a net $974,127 and $237,380, respectively, of long-term debt in order to finance the purchase of oil and gas properties and additional interests in its managed limited partnerships. In 1995, proceeds from the sale of property added $991,623 to the cash flow from operating activities. Proceeds added from the sale of properties were $45,392 and $26,627 in 1994 and 1993, respectively. Receipts collected on notes receivable from managed limited partnerships added $49,816 and $310,312 in 1995 and 1994, respectively, while an increase in notes receivable from managed limited partnerships used $253,480 in 1993. A significant portion of Enex's cash flow was reinvested in oil and gas properties. A total of $1,927,925 $2,990,574 and $2,413,418 was used for the acquisition and development of oil and gas properties during 1995, 1994 and 1993, respectively. In 1995, Enex acquired royalty interests in the Gorman gas unit in Duval County, Texas, overriding royalty interests in four gas wells located in East Baton Rouge Parish, Louisiana and working interests in nine wells located in WWW Field, Ward County, Texas from managed limited partnerships for $660,290, $89,880 and $18,450, respectively. In 1994, Enex acquired over 320,000 equivalent barrels of oil reserves through the purchase of interests in managed limited partnerships for $1,271,377. The Company also obtained working interests in 41 wells in McBride Field, in Caldwell and Bastrop Counties, Texas for $798,393. These wells, which are operated by the Company, have development potential which will allow the Company to increase future production. The Company also purchased working interests in the Larto Lake and Florida acquisitions in 1994 for $199,928 and $99,196, respectively. In 1993, the Company acquired working interests in nine gas wells located in San Patricio County, Texas and 17 gas wells and two oil wells located primarily in Freestone County, Texas. The Company used operating cash flow and net proceeds of $349,385 from the sale of mortgage-backed securities to finance all but $237,380 of these purchases, which was borrowed from a bank. The Company continued to pay a semi-annual dividend to its shareholders in 1995. This $.20 per share dividend utilized $268,200 in 1995. In 1994, the Company utilized $259,681 to initiate the payment of a semi-annual dividend, increasing the dividend payment to $.20 per share. A $.19 per share dividend used $239,491 in 1993. In addition to the property acquisitions made in 1994 and 1993, the Company also continued its stock repurchase program. The Company utilized $171,845 to purchase 19,161 shares of its common stock in 1994 and $159,881 to purchase 20,071 shares in 1993. II-3 Prepaid expenses and other current assets increased to $697,664 at December 31, 1995 from $421,406 at December 31, 1994. This represents an increase of $276,258 $. This increase is primarily the result of prepaid expenses related to the liquidation of six managed limited partnerships and the consolidation of 34 managed limited partnerships, which were both in progress at December 31, 1995. Such prepaid expenses include legal and accounting fees and the allocation of the staff time of the General Partner's personnel incurred in the preparation of SEC filings and other data utilized in the liquidation of six partnerships and for the consolidation of 34 partnerships. As a result of the higher net income and reduction of debt, working capital increased to $2,296,842 at December 31, 1995, from $1,709,722 at December 31, 1994. At December 31, 1995, the Company's current ratio was 2.35 and it had no long-term debt. Results of Operations Net income in 1995 increased to $1,269,400, from $1,051,476 in 1994 and $931,874 in 1993. This represents earnings per share of $.90 in 1995 as compared to $.75 in 1994 and $.69 in 1993. The increase in net income in 1995 as compared to 1994 was primarily the result of lower general and administrative expenses and a larger gain from the sale of properties. The increase from 1993 to 1994 was primarily attributable to lower income tax expense and higher revenues produced in 1994. Oil, gas and gas plant sales were $6,594,438 $ in 1995, $6,082,700 in 1994 and $5,604,624 in 1993. Sales increased by $511,738 or 8% in 1995 from 1994. Oil sales increased by $309,866 or 11% . A 3% increase in oil production increased sales by $93,018 A 7% increase in the average oil sales price increased oil sales by an additional $216,848. Gas sales decreased by $47,315 or 2%. A 16% decrease in the average gas sales price reduced sales by $506,785. This decrease was partially offset by a 15% increase in gas production. Gas plant sales increased by $249,187 or 58%. . A 58% increase in gas plant production increased sales by $242,067 . A 1% increase in the average gas plant products sales price increased sales by an additional $7,120. The increases in production were primarily the result of the recognition of the minority interest of Enex Program I Partners, L.P. ("Program I") for the entire year in 1995, partially offset by natural production declines. The changes in average sales prices correspond with changes in the overall market for the sale of oil, gas and gas plant products. Oil , gas and gas plant sales increased by $478,076 or 9% in 1994 from 1993. Oil sales increased $444,233 or 18% in 1994 from 1993. A 24% increase in production increased sales by$569,613 . This increase was partially offset by a 4% decrease in average oil prices. Gas sales increased by $43,036 or 2% in 1994 from 1993. A 12% increase in gas production increased sales by $326,412. This increase was partially offset by a 12% decrease in the average gas sales price. . Gas plant sales increased by 7% or $62,302 . A 29% increase in gas plant production increased sales by $105,269 . This increase was partially offset by a 9% decrease in average gas plant prices. The increases in production were primarily a result of the acquisition of additional interests in managed limited partnerships and oil and gas properties purchased in 1994, as noted above. Other revenues were $687,401 in 1995 as compared with $757,832 in 1994 and $560,854 in 1993. Such revenues included rig rental revenues of $106,144, $24,885 and $189,947 in 1995, 1994 and 1993, II-4 respectively, and gain recognized from the early receipt of notes receivable of $393,980, $201,000 and $175,660 in 1995, 1994 and 1993, respectively. Also included in the 1995 amount is mineral lease rental income of $105,686 to lease 2,113.73 acres in San Augustine County, Texas. Commission fee income of $45,089 was recorded in 1994. The decrease in other revenues from 1994 to 1995 and the increase in other revenues from 1993 to 1994 was primarily due to the reversal of a litigation contingency accrual, which was initially recorded in 1993, and the recognition of a related receivable, plus accrued interest, from an appellate court verdict which was rendered in December 1994 in favor of one of the Company's managed limited partnerships. The Company's share of the contingency reversal and receivable increased other income by $421,065 in 1994. See Note 8 of the Notes to Consolidated Financial Statements for further information. The receipt of unrecognized notes receivable was accelerated in 1995 as a result of the liquidation of four managed limited partnerships. As a result, there is no longer an unrecognized notes receivable. General and administrative expenses decreased to $1,689,742 in 1995 from $1,751,773 in 1994. In 1993 such expenses were $1,590,128. This represents a decrease of $62,031 or 4 % from 1994 to 1995. The decrease was primarily a result of lower employee compensation and legal expenses. The increase from 1993 to 1994 was primarily the result of the additional interests acquired in managed limited partnerships in 1994. These purchases added approximately $175,000 to general and administrative expenses. The 1993 general and administrative expenses included the recognition of a litigation contingency accrued in the third quarter of 1993. The Company's share of the contingency was $243,274, and was accrued to reflect a judgement against one of the Company's managed limited partnerships. The Company appealed the verdict and it was reversed in December 1994. The resultant income from the contingency accrual reversal was included in other income, as discussed above. See Note 8 of the Notes to Consolidated Financial Statements for further information. Lease operating expenses were $2,322,509 in 1995 as compared to $2,009,175 in 1994 and $1,662,666 in 1993. Lease operating expenses increased by $313,334 or 16% from 1994 to 1995. This increase was primarily the result of the increases in production, noted above. Lease operating expenses increased by $346,509 or 21 % from 1993 to 1994. This increase was primarily the result of operating costs incurred on properties and partnership interests acquired in 1994. The properties acquired during 1994 (McBride, Larto Lake and Florida acquisitions) added $146,762 to lease operating expenses, while the additional partnership interests acquired added approximately $250,000. Depletion, depreciation and amortization expense ("DD&A") was $1,909,857 in 1995, $1,517,278 in 1994 and $1,375,191 in 1993. DD&A increased by $392,579 or 26% from 1994 to 1995. A 9% increase in the depletion rate increased DD&A by $163,336 . The changes in production noted above, increased DD&A by an additional $229,243. The increase in the depletion rate was primarily the result of the acquisition of properties with a relatively higher depletion rate, partially offset by an upward revision of the gas reserves during 1995. DD&A increased by $142,087 or 10% from 1993 to 1994. The increases in production, noted above, increased DD&A expense by $245,029 in 1994. This increase was partially offset by a 6% decrease in the depletion rate. The decrease in the depletion rate was primarily due to an upward revision of the oil reserves during 1994 partially offset by a downward revision of the gas reserves, as a result of lower gas market prices. The company incurred $117,062 of net interest expense in 1995 and $116,858 in 1994. In 1993, the company recognized $7,889 of net interest income. Interest expense increased in 1995 and 1994 from 1993 due to the additional debt utilized to finance the purchase of property and partnership interests in 1994. The Company reduced its long-term debt by $1,074,000 or 56% in 1995. II-5 The Company recognized an income tax credit of $399,658 and $421,125 in 1995 and 1994, respectively and income tax expense of $36,227 in 1993. This represents an effective rate of 4% in 1993. The 1995 income tax credit and $160,389 of the income tax credit recognized in 1994 was the recognition of a portion of the Company's deferred tax asset that is expected to be realized in future years. The credit recognized in 1994 was also a result of the Company filing amended returns for $127,034 to reflect additional expenses allowed to the Company in prior years and from the carryback of a tax net operating loss of $133,702. At December 31, 1995, the Company had a substantial deferred tax asset of $4,154,415. Due to uncertainties inherent in the oil and gas market, a valuation allowance reserved all but $648,430 of the asset. Future Outlook In 1995, Enex reduced its debt by $1.074 million and has further decreased this obligation to just $250,000 as of March 6, 1996. It is anticipated that the debt will be completely repaid in the first half of 1996. This reduction was done without the benefit of favorable gas prices throughout most of 1995, which were at record low levels during the first half of 1995. After repayment of debt, the Company will resume its stock buyback program which authorizes the Company to purchase up to 50,000 shares of its common stock. The debt reduction further strengthened Enex's financial position as evidenced by the Company's debt-to-equity ratio of 5% and its current ratio of 2.35 to 1.0. During 1995, four managed limited partnerships, which were operating at marginal levels were liquidated. A major reorganization of the remaining managed limited partnerships is planned for 1996. This restructuring will allow us to revamp administrative processes, yielding further reductions in general and administrative expenses. Enex continues discussions with other oil and gas companies to effect a corporate buyout or other form of business combination. The Company will also increase the drilling of development locations on corporate and partnership properties. Larger properties with future development potential as well as current cash flow are sought by the Company. Our philosophy remains the same - to increase shareholder value by acquiring and developing oil and gas reserves at a reasonable cost. This philosophy continues to provide an attractive rate of return on our investments as well as positions the Company to capitalize on the great upside potential provided from oil and gas price appreciation. II-6 Item 7. Financial Statements and Supplementary Data INDEPENDENT AUDITORS' REPORT Enex Resources Corporation: We have audited the accompanying consolidated balance sheets of Enex Resources Corporation and its subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of Enex Resources Corporation's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Enex Resources Corporation and subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. As discussed in Note 10, the accompanying consolidated financial statements as of and for the years ended December 31, 1995 and 1994 have been restated. DELOITTE & TOUCHE LLP Houston, Texas March 18, 1996 (February 22, 1997 as to Note 10) II-7
ENEX RESOURCES CORPORATION CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994 - ----------------------------------------------------------------------------- ASSETS 1995 1994 -------------- ------------- (Restated) (Restated) CURRENT ASSETS: Cash and certificates of deposit $ 1,007,144 $ 647,485 Accounts receivable: Managed limited partnerships 756,741 1,226,046 Oil and gas sales 862,529 772,154 Joint owners 325,816 368,297 Receivable from property sales 123,202 - Notes receivable from managed limited partnerships 16,902 66,718 Federal income tax receivable 98,614 232,989 Prepaid expenses and other current assets 697,664 421,406 Deferred tax asset 112,174 99,501 -------------- ------------- Total current assets 4,000,786 3,834,596 -------------- ------------- PROPERTY: Oil and gas properties (successful efforts accounting method) Proved mineral interests and related equipment and facilities: Direct ownership 8,134,074 7,598,999 Derived from investment in managed limited partnerships 10,729,113 12,328,752 Furniture, fixtures and other (at cost) 341,507 327,364 -------------- ------------- Total property 19,204,694 20,255,115 Less accumulated depreciation, depletion and amortization 7,250,769 7,916,650 -------------- ------------- Property, net 11,953,925 12,338,465 -------------- ------------- OTHER ASSETS: Receivable from managed limited partnerships 2,171,636 2,655,172 Deferred tax asset 536,256 149,252 Other accounts receivable 156,252 241,065 Deferred organization expenses and other 8,233 17,387 -------------- ------------- Total other assets 2,872,377 3,062,876 -------------- ------------- TOTAL $ 18,827,088 $ 19,235,937 ============== =============
See accompanying notes to consolidated financial statements. - ------------------------------------------------------------------------------ II-8
ENEX RESOURCES CORPORATION CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994 - --------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 -------------- -------------- (Restated) (Restated) CURRENT LIABILITIES: Accounts payable $ 853,944 $ 1,174,874 Current portion of long-term debt 850,000 950,000 -------------- -------------- Total current liabilities 1,703,944 2,124,874 -------------- -------------- LONG-TERM DEBT: Note payable to a bank - 974,000 COMMITMENTS AND CONTINGENT LIABILITIES - - -------------- -------------- TOTAL LIABILITIES 1,703,944 3,098,874 -------------- -------------- MINORITY INTEREST 1,660,932 1,923,551 -------------- -------------- STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares issued Common stock, $.05 par value; 10,000,000 shares authorized; 1,642,859 shares issued at December 31, 1995 and 1,627,859 shares issued at December 31, 1994 82,143 81,393 Additional paid-in capital 9,944,967 9,814,617 Retained earnings 7,041,773 6,040,573 Less cost of treasury stock; 315,136 shares at December 31, 1995 and 337,936 shares at December 31, 1994 (1,606,671) (1,723,071) -------------- -------------- TOTAL STOCKHOLDERS' EQUITY 15,462,212 14,213,512 -------------- -------------- TOTAL $ 18,827,088 $ 19,235,937 ============== ==============
See accompanying notes to consolidated financial statements. - ------------------------------------------------------------------------ II-9
ENEX RESOURCES CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE YEARS ENDED DECEMBER 31, 1995 - ---------------------------------------------------------------------- 1995 1994 1993 -------------- ------------- ------------ REVENUES: (Restated) (Restated) Oil and gas sales $ 5,924,664 $ 5,662,113 $ 5,246,339 Gas plant sales 669,774 420,587 358,285 Gain from sale of property 614,758 2,812 4,513 Other revenues 687,401 757,832 560,854 Interest income 53,776 27,594 77,053 -------------- ------------- ------------ Total revenues 7,950,373 6,870,938 6,247,044 -------------- ------------- ------------ EXPENSES: General and administrative 1,689,742 1,751,773 1,590,128 Lease operating and other expenses 2,322,509 2,009,175 1,662,666 Gas purchases and plant operating expenses 503,438 460,207 259,950 Production taxes 368,014 334,576 321,844 Depreciation, depletion and amortization 1,909,857 1,517,278 1,375,191 Interest expense 170,838 144,452 69,164 -------------- ------------- ------------ Total expenses 6,964,398 6,217,461 5,278,943 -------------- ------------- ------------ Earnings before minority interest and income taxes 985,975 653,477 968,101 -------------- ------------- ------------ MINORITY INTEREST (116,233) (23,126) - -------------- ------------- ------------ Earnings before income taxes 869,742 630,351 968,101 -------------- ------------- ------------ INCOME TAX EXPENSE (CREDIT) Current - (260,736) 124,591 Deferred (399,658) (160,389) (88,364) -------------- ------------- ------------ Net income tax expense (credit) (399,658) (421,125) 36,227 -------------- ------------- ------------ NET INCOME $ 1,269,400 $ 1,051,476 $ 931,874 ============== ============= ============ PRIMARY EARNINGS PER SHARE $ 0.90 $ 0.75 $ 0.69 ============== ============= ============ FULLY DILUTED EARNINGS PER SHARE $ 0.90 $ 0.75 $ 0.69 ============== ============= ============
See accompanying notes to consolidated financial statements. - ----------------------------------------------------------------------------- II-10 ENEX RESOURCES CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE YEARS ENDED DECEMBER 31, 1995 - ------------------------------------------------------------------------------
Common Stock Additional -------------------------- Paid-in Retained Treasury Shares Amount Capital Earnings Stock Total ------------ ------------ ------------- ----------- ------------- ------------- BALANCE, January 1, 1993 1,572,930 $78,646 $9,503,868 $4,556,395 ($1,626,361) $12,512,548 Repurchase and retirement of common shares (5,071) (253) (45,140) (45,393) Exercise of stock options 32,000 1,600 98,150 99,750 Tax benefit from exercise of stock options 53,611 Reissue 8,565 shares of Treasury stock through SPP 20,260 40,684 60,944 Purchase of 15,000 shares of Treasury stock (114,488) Payment of $.19 per share cash dividend (239,491) (239,491) Net income 931,874 931,874 ------------ ------------ ------------- ----------- ------------- ------------- BALANCE, December 31, 1993 1,599,859 79,993 9,630,749 5,248,778 (1,700,165) 13,259,355 Exercise of stock options 28,000 1,400 89,850 91,250 Reissue 30,610 shares of Treasury stock through SPP 94,018 148,939 242,957 Purchase of 19,161 shares of Treasury stock (171,845) (171,845) Payment of $.20 per share cash dividend (259,681) (259,681) Net income 1,051,476 1,051,476 ------------ ------------ ------------- ----------- ------------- ------------- BALANCE, December 31, 1994 1,627,859 81,393 9,814,617 6,040,573 (1,723,071) 14,213,512 Exercise of stock options 15,000 750 45,750 46,500 Reissue 22,800 shares of Treasury stock through SPP 84,600 116,400 201,000 Payment of $.20 per share cash dividend (268,200) (268,200) Net income 1,269,400 1,269,400 ------------ ------------ ------------- ----------- ------------- ------------- BALANCE, December 31, 1995 1,642,859 $82,143 $9,944,967 $7,041,773 ($1,606,671) $15,462,212 ============ ============ ============= =========== ============= =============
See accompanying notes to consolidated financial statements. - ----------------------------------------------------------------------------- II-11
ENEX RESOURCES CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED DECEMBER 31, 1995 - ------------------------------------------------------------------------------ 1995 1994 1993 ------------- ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: (Restated) (Restated) Net income $ 1,269,400 $ 1,051,476 $ 931,874 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 1,909,857 1,517,278 1,375,191 Increase in deferred tax asset (399,677) (160,389) (88,364) Noncash expense from stock purchase plan 201,000 242,957 60,944 Net gain on sale of property (614,758) (2,812) (4,513) Minority interest share of net income after distributions (226,600) 23,126 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 1,000,933 (377,758) 86,248 (Increase) in prepaid expenses and other assets (277,380) (152,847) (59,339) Increase (decrease) in accounts payable (320,930) 247,900 65,699 (Decrease) in other liabilities - (47,893) (82,226) ------------- ------------- ------------ Net cash provided by operating activities 2,541,845 2,341,038 2,285,514 ------------- ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property 991,623 45,392 26,627 Property additions (1,927,925) (2,990,574) (2,413,418) (Increase) decrease in notes receivable from managed limited partnerships 49,816 310,312 (253,480) Decrease in temporary investments - - 3,784,949 ------------- ------------- ------------ Net cash provided (used) by investing activities (886,486) (2,634,870) 1,144,678 ------------- ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of short-term debt - - (3,435,564) Proceeds from issuance of long-term debt 260,000 2,805,583 1,215,690 Repayment of long-term debt (1,334,000) (1,831,456) (978,310) Purchase of treasury stock - (171,845) (114,488) Repurchase and retirement of capital stock - - (45,393) Proceeds from exercise of stock options 46,500 91,250 99,750 Payment of cash dividend (268,200) (259,681) (239,491) ------------- ------------- ------------ Net cash provided (used) by financing activities (1,295,700) 633,851 (3,497,806) ------------- ------------- ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 359,659 340,019 (67,614) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 647,485 307,466 375,080 ------------- ------------- ------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,007,144 $ 647,485 $ 307,466 ============= ============= ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 176,089 $ 139,201 $ 72,389 Income taxes - - $ 140,344 Noncash transaction - Sale of oil and gas property $ 123,202
See accompanying notes to consolidated financial statements. - ----------------------------------------------------------------------------- II-12 ENEX RESOURCES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED DECEMBER 31, 1995 (Restated) - ----------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General - Enex Resources Corporation (the "Company") acquires interests in producing oil and gas properties and sponsors and manages oil and gas income limited partnerships. At December 31, 1995, the Company served as managing general partner for 41 publicly offered limited partnerships of Enex Program I Partners, L.P., Enex Oil & Gas Income Programs II, III, IV, V, VI, Enex Income and Retirement Fund, Enex 88-89 Income and Retirement Fund, and Enex 90-91 Income and Retirement Fund (collectively, the "Partnerships"). The Partnerships own $163 million, at cost, of proved oil and gas properties in which the Company generally has a 10% interest as the general partner in addition to its proportional interest as a limited partner which ranges from 3% to 53%. Accumulated depreciation and depletion for such oil and gas properties at December 31, 1995 totalled $143 million. In addition to Partnership activities, the Company owns interests in 378 productive oil and gas properties for its own account, and is the operator of 161 properties. The total properties managed for its own account and the Partnerships include interests in more than 12,000 producing wells in 14 states. Principles of Consolidation - The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, Enex Securities Corporation and Gulf-Tex Maintenance Corporation and Enex Program I Partners, L.P. and the Company's pro rata share of the assets, liabilities, revenues and expenses of the managed limited partnerships in which it participates as the general partner. The Company uses pro rata consolidation for those partnership in which it owns less than a 50% interest and fully consolidates Enex Program I Partners, L.P. in which it owns greater than 50% interest. The equity of ninority partners in Enex Program I Partners, L.P. is shown in the consolidated balance as "minority interest". All intercompany balances and transactions have been eliminated in consolidation. Uses of Estimates - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of continent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. Accounts Receivable from Joint Owners - The General Partner, as operator for jointly-owned properties, bills joint owners monthly for cost expended by the General Partner for the joint owners' share of operating costs and capital expenditures. Other Accounts Receivable - The General Partner records, in consolidation, distributions to limited partnerships which exceed their pro rata ownership percentage as other accounts receivable. Distributions to limited partners exceed their pro rata ownership ercentage when distributions to the general partner have been curtailed. II-13 Oil and Gas Properties - The Company uses the successful efforts method of accounting for its oil and gas operations. Under this method, the costs of all development wells are capitalized. The costs of unsuccessful exploratory wells are charged to earnings. Capitalized costs are amortized on the units-of-production method based on production and estimated total proved reserves. The Company has not capitalized any internal costs into property. A ceiling test is performed quarterly wherein total capitalized costs may not exceed future undiscounted net revenues on a Company-wide basis. The acquisition costs of unproved oil and gas properties are capitalized and periodically assessed for impairment on an individual property basis. The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company has not determined the effect on its financial position or results of operations from the adoption of this statement in the first quarter of 1996. Furniture, Fixtures and Other - The Company records expenditures for furniture and fixtures at cost. Expenditures for improvements are capitalized. Expenditures for maintenance and repairs are charged to operations as incurred. The Company provides for depreciation of its furniture, fixtures and other equipment using the straight-line method over an estimated useful life not to exceed five years. Deferred Organization Expenses - The Company's pro rata share of the organization costs of the managed limited partnerships is being amortized on a straight-line basis over a five-year period. Commission Income - Through April 30, 1994, Enex Securities Corporation ("Securities") marketed interests in the Partnerships. Securities earned a commission of up to 10% of solicited subscriptions of which up to 8% was reallowed to soliciting dealers. Commission income was recognized upon the attainment of a $1 million level of subscriptions for Partnership interests and is presented in the accompanying consolidated financial statements net of reallowed commissions of approximately $92,000 and $9,000 in 1994 and 1993, respectively. Net commission income is included in other revenues in the Consolidated Statements of Income. Income Per Common Share - Primary and fully diluted earnings per common share are based on the weighted average number of shares of common stock and common share equivalents outstanding during the year. Common share equivalents include common stock options. The weighted average number of shares used to compute primary and fully diluted earnings per common share was: Primary Shares Fully Diluted Shares ---------------------- ----------------------- 1995 1,416,474 1,416,474 1994 1,397,870 1,397,870 1993 1,346,511 1,350,958 II-15 Managed Limited Partnerships - The Company serves as the general partner to the Partnerships and also participates as a limited partner to the extent of limited partnership interests purchased directly by the Company. The Company is generally entitled as general partner to 10% of partnership production revenues less 10% of partnership expenses, other than the costs of acquiring partnership properties. In most instances, at such time as the limited partners receive distributions in total equal to their aggregate subscriptions, the Company is entitled to 15% of such net revenues. The Company recognizes its share of these net revenues as they are sold. If, after certain time periods, the aggregate purchase price of the interests in certain programs plus cumulative distributions to the limited partners does not equal limited partner subscriptions (the "Deficiency"), the general partner will forego its 10% share of such Program's net revenues. The foregone net revenues will be allocated to the limited partners until such time as no Deficiency exists. During 1993, 1994 and 1995, the general partner's 10% share of Program II net revenues, totaling $37,122, $41,119 and $64,046, respectively, was allocated to the limited partners. During 1994 and 1995, the general partner's 10% share of Program I net revenues, totaling $31,830 and $99,154, respectively, was allocated to the limited partners. In addition to the above, the Company is reimbursed for direct expenditures made on behalf of the partnership operations. Overhead billed to the managed limited partnerships, which is treated as a reduction in general and administrative expenses, was $1,783,373, $2,240,194, and $1,953,176 in 1995, 1994 and 1993, respectively. Income Taxes - The Company uses the asset and liability method to account for deferred income taxes, which focuses on the future tax return consequences of temporary differences in determining the deferred tax balances. Under this method, the deferred tax expense is calculated as the change in the deferred tax balance sheet accounts during the period. Temporary differences are measured at the balance sheet date and are valued in accordance with current tax laws. See Note 4 for more information. Cash Flows - The Company presents its cash flows using the indirect method and considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Reclassifications - Certain reclassifications have been made to the prior year balances to conform to current year presentation. 2. COSTS REIMBURSABLE BY AND RECEIVABLE FROM MANAGED LIMITED PARTNERSHIPS Certain startup and ongoing general and administrative costs are incurred by the Company on behalf of its managed limited partnerships. These costs are allocated to the partnerships in accordance with the Partnership Agreements and are reimbursed to the Company over a period generally not to exceed five years. The anticipated receipt of such receivables have been scheduled in accordance with projected future net revenues and based upon historical collections. The receivables have been classified as current or non-current in accordance with such projections. The Company's balance sheet at December 31, 1995, also reflects a note receivable from a managed limited partnership. This note was a result of the company partially financing the purchase of an oil and gas interest made by the limited partnership. The resulting note is subject to a formal agreement with terms as discussed in Note 5, below. II-15 3. DEBT The long-term debt at December 31, 1995 consisted of a $850,000 loan from a bank under a $2.8 million revolving line of credit collaterized by substantially all of the assets of the Company. The bank loan bore interest at an average rate of 9.63% in 1995. The Company plans to repay the remaining portion of the outstanding debt in the first half of 1996. The long-term debt at December 31, 1994 consisted of a $1,924,000 loan from a bank under a $5.925 million revolving line of credit collaterized by substantially all of the assets of the Company. The bank loan bore interest at an average rate of 8.16% in 1994. In 1995, the Company repaid a net $1,074,000. 4. INCOME TAXES Total income tax expense for 1995, 1994 and 1993 was different from the amount computed by applying the federal statutory income tax rate of 34% to earnings before income taxes for the following reasons:
1995 1994 1993 ---------- ----------- ---------- Computed statutory tax expense $ 295,712 $ 214,319 $ 329,154 Increase (reduction) in taxes resulting from: Reduction in unrecognized deferred tax asset (697,250) (624,317) (300,473) Utilization of Section 29 tax credit - - (14,080) Other, net 1,880 (11,127) 21,626 ---------- ----------- ---------- Actual income tax expense credit $ (399,658) $ (421,125) $ 36,227 ========== =========== ==========
The components of income tax expense (credit) are as follows:
1995 1994 1993 ------------- ----------- --------- Income taxes currently payable (receivable) $ - $ (260,736) $ 124,591 Deferred income tax (credit) (399,658) (160,389) (88,364) ------------- ----------- ---------- Income tax expense (credit) $ (399,658) $ (421,125) $ 36,227 ============= ========== =========
II-16 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The tax effects of significant items comprising the Company's net deferred tax asset as of December 31, 1995 and 1994 were as follows:
December 31, 1995 December 31, 1994 ------------------ ------------------- Difference between tax and book net property basis $ 4,613 $ 27,591 Difference between basis in managed limited partnerships for financial reporting purposes and income tax purposes 3,796,403 4,229,761 Intangible drilling costs which remain capitalized for financial reporting purposes which were deducted for federal income tax purposes (74,483) (53,836) Net operating loss carryforward 478,565 293,772 (expires 2009-2010) Timing difference from lawsuit contingency (50,683) (45,281) ----------------- ----------------- Gross deferred tax asset 4,154,415 4,452,007 Valuation allowance (3,505,985) (4,203,254) ----------------- ----------------- Net deferred tax asset recognized $ 648,430 $ 248,753 ================= =================
The difference in basis of the managed limited partnerships is primarily the result of differences in the underlying properties of the partnerships. The valuation allowance reserves the net deferred tax asset due to uncertainties inherent in the oil and gas market. The Company estimated the amount of future tax benefit to be received from the deferred tax asset using estimated future net revenues and future tax expenses. The remaining amount of the gross deferred tax asset is reserved by a valuation allowance. The valuation allowance decreased by $697,269 and $640,091 in 1995 and 1994, respectively. II-17 5. NOTES RECEIVABLE FROM MANAGED LIMITED PARTNERSHIPS On December 3, 1990, a managed limited partnership borrowed $191,577 from the Company in order to finance workover costs. The Company received monthly principal payments from the partnership on the resulting demand note plus interest at the Company's borrowing rate of prime plus three-fourths of one percent on the unpaid principal. The note was repaid in 1994. On August 8, 1991, in conjunction with the EAC Acquisition, the Company acquired notes receivable from certain partnerships. The notes, which accrue interest at prime plus three-fourths of one percent, were recorded at their discounted realizable value. The gain recognized from the early receipt of notes was $393,980, $201,000 and $175,660 in 1995, 1994, and 1993, respectively. In 1993, five managed limited partnerships borrowed a total of $438,168 from the Company to repay bank debt and finance workover costs. The Company received monthly principal payments from the partnerships on the resulting demand notes plus interest at the Company's borrowing rate of prime plus three-fourths of one percent on the unpaid principal. In 1994, an additional $39,281 was borrowed by two limited partnerships to finance workover costs. Principal payments of $322,345 were received during 1994. At December 31, 1994, the total outstanding principal balance of the notes was $28,694. The notes were completely repaid in the first half of 1995. On December 29, 1994, in order to partially finance the purchase of a property acquisition a managed limited partnership borrowed a net $60,572 from the Company. The resulting note receivable bears interest at the Company's borrowing rate of prime plus three-fourths of one percent, or a weighted average of 9.76% during 1995 (9.25% at both December 31, 1994 and 1995.). Principal payments of $31,049 were received on the note receivable in 1995. At December 31, 1995, the outstanding principal balance was $29,523. 6. COMMON STOCK OPTIONS The Company has an incentive stock option plan and a nonqualified stock option plan, which authorize the issuance of options to purchase up to 362,000 shares of common stock to directors, officers and key employees. The Company has also granted options not covered by a plan. The options expire at various dates through 2003 and are exercisable at prices ranging from $3 - $8 per share. The exercise price of any options granted may not be less than the fair market value of the Company's stock at the date of the grant. The following table summarizes the Company's stock option activity:
1995 1994 1993 Number Average Number Average Number Average of shares price of shares price of shares price ------------ ------------- -------------- ------------- -------------- -------------- Outstanding, beginning of year 209,000 $ 4.69 237,000 $ 4.52 234,000 $ 3.42 Granted - - - - 55,000 8.00 Exercised (15,000) 3.10 (28,000) 3.26 (32,000) 3.12 ------------ ------------- -------------- ------------- -------------- -------------- Outstanding, end of year 194,000 $ 4.81 209,000 $ 4.69 237,000 $ 4.52 ============ ============= ============== ============= ============== ============== Exercisable at end of year 194,000 $ 4.81 209,000 $ 4.69 182,000 $ 4.68 ============ ============= ============== ============= ============== ==============
II-18 On May 19, 1992, the Company's shareholders approved the Enex Resources Corporation Employee Stock Purchase Program (the "SPP"). All full-time employees, officers and directors are eligible for participation in the SPP, which provides for the monthly contribution of shares of the Company's common stock equal to 50% of a participant's open market purchases of the Company's common stock for the preceding month (the "Stock Contribution"). The Stock Contribution is limited to a maximum of 2,500 shares per participant per SPP year. Each Stock Contribution, although immediately vested, is held in escrow for a six month holding period prior to its distribution to the participant. During 1995, 1994 and 1993, 22,800, 30,610 and 8,565 shares, respectively, were contributed to participants in the SPP. The Company recognized an expense of $201,000, $242,957 and $60,944 from the SPP in 1995, 1994 and 1993, respectively. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which sets forth accounting and disclosure requirements for stock based compensation arrangements. As allowed by SFAS 123, the Company has elected to continue to account for stock option grants in accordance with APB opinion No. 25; consequently, the issuance of SFAS 123 which will have no effect on the Company's financial condition or results of operations when it is implemented. 7. LEASE COMMITMENTS The Company is the lessee under noncancelable operating leases for office space and equipment. The following is a schedule of the Company's remaining future rental requirements under the leases as of December 31, 1995: 1996 $ 213,558 1997 176,109 1998 13,368 1999 8,912 -------------- Total payments required $ 411,947 -------------- Rent expense for all operating leases was $211,038, $254,004 and $265,666 for the years ended December 31, 1995, 1994 and 1993, respectively. 8. LITIGATION SETTLEMENTS The Company and one of its managed limited partnerships, Enex Program I Partners, L.P. ("Program I"), in which the Company owns general and limited partnership interests, were named as parties to a lawsuit filed by Texas Crude, Inc. ("Texas Crude"). Texas Crude sought to recover legal and other fees totaling $600,000. In August 1993, a judgement was granted in favor of Texas Crude for $414,203, plus interest by the 101st Judicial District Court of Texas. During the third quarter of 1993 Program I accrued a liability for $504,350 related to this judgement, of which $243,274 was the Company's share. The Company appealed the verdict and filed a counterclaim for funds that were wrongfully withheld by Texas Crude. In December 1994, the Fifth District Court of Appeals reversed the judgement of the trial court and rendered judgement in favor of the Company and Program I. Accordingly, the liability, initially recognized in 1993, was reversed in 1994 and Program I established a receivable for $254,588, of which the Company's share is $133,180. II-20 9. COMMITMENTS AND CONTINGENT LIABILITIES The Company is committed to offer to repurchase the limited partners' interests in its managed limited partnerships formed under the Programs (except for Programs I,V and VI) at annual intervals. The purchase price is based primarily on reserve reports prepared by independent petroleum engineers, reduced by a risk factor. Generally, for the first three annual purchase offers after the formation of a partnership, the Company's annual repurchase obligation is limited to the lesser of 10% to 25% of initial partnership subscriptions or $1,000,000 per partnership. As of December 31, 1995, such commitments totaled $3,952,698. During 1995, 1994 and 1993, the Company paid cash to repurchase limited partner interests as follows:
1995 1994 1993 ---------- ------------ --------- Program I $ 43,409 $ 750,019 $ 469,369 Program II 23,607 130,441 88,710 Program III 8,544 66,061 70,901 Program IV 7,847 98,351 17,899 Program V 13,875 63,730 58,424 Program VI 393 7,222 - Income and Retirement Fund 12,232 73,264 11,044 88-89 Income and Retirement Fund 5,987 43,022 2,014 90-91 Income and Retirement Fund 10,653 39,267 3,848 ---------- ------------ --------- TOTAL $ 126,547 $ 1,271,377 $ 722,209 ========== ============ =========
As general partner, the Company is contingently liable for all debts and actions of the managed limited partnerships. However, in management's opinion, the existing assets of the limited partnerships are sufficient to satisfy any such partnership indebtedness. The Company has an employment agreement with its founder and President, Gerald B. Eckley. The agreement, which was amended on May 19, 1992, provides that Mr. Eckley will be paid a minimum salary of $240,000 per year for a five year term. As long as Mr. Eckley is employed by the Company, the agreement will be automatically extended every May 19th for an additional year. The agreement provides for compensation continuation benefits in the event of Mr. Eckley's death or disability. If Mr. Eckley terminates the agreement following a change of control of the Company or because of a breach of the material provisions of the agreement or because performance of his duties becomes hazardous to his health, he will remain entitled to the full base compensation then in effect as severance pay until the normal expiration of the agreement. II-20 10. RESTATEMENT In connection with a review by the Staff of the Securities and Exchange Commission ("Staff") of the Company's filing on Form 10-K for the year ended December 31, 1995, the Company had discussions with the Staff regarding whether its investment in one majority owned partnership should be accounted for on the pro rata consolidation method or the full consolidation method. The Company owns a 53% interest in one partnership, Enex Program I Partners L.P. The Company's ownership percentage in its other 40 publicly offered limited partnerships is below 50%. The Company has historically used the pro rata consolidation method for all investments in limited partnerships, regardless of ownership percentage, since it is industry practice to do so. The Staff concluded, however, that other accounting literature, which requires full consolidation of majority-owned partnerships, took precedence over industry practice. Accordingly, the Company has restated its consolidated financial statements to fully consolidate its interest in Enex Program I Partners, L.P. for the periods in which it owned a majority interest, namely the period from December 1, 1994 to December 31, 1995. The change to the full consolidation method causes a change in the presentation of most of the previously reported amounts in the consolidated financial statements of the Company for the periods mentioned, but it does not cause any difference in the historically reported amounts of net income, earnings per share or stockholders' equity. The effects of the restatement are summarized as follows: Consolidated Statements of Income
For the years ended December 31, 1995 1994 As As Previously As Previously As Reported Restated Reported Restated --------------- ------------- ------------- ----------- Revenues $6,391,769 $7,950,373 $6,743,212 $6,870,938 Expenses 5,522,027 6,964,398 6,112,861 6,217,461 Earnings Before Income Taxes 869,742 860,742 630,351 630,351 Minority Interest - 116,233 - 28,126 Net Income 1,269,400 1,269,400 1,051,476 1,051,476 Primary Earnings Per Share .90 .90 .75 .75 Fully Diluted Earnings Per .90 .90 .75 .75 Share
II-21 Consolidated Balance Sheets
For the years ended December 31, 1995 1994 As As Previously As Previously As Reported Restated Reported Restated ---------- ------------ ----------- ---------- Current Assets $4,740,779 $4,000,786 $4,376,649 $3,834,596 Property - Net 9,580,418 11,953,925 10,032,184 12,338,465 Total Assets 17,037,322 18,827,088 17,230,644 19,235,937 Current Liabilities 1,575,110 1,703,944 2,043,132 2,124,874 Long-term Debt - - 974,000 974,000 Total Liabilities 1,575,110 1,703,944 3,017,132 3,098,874 Minority Interests - 1,660,932 - 1,923,551 Stockholders Equity 15,462,212 15,462,212 14,213,512 14,213,512
II-22 Proved Oil and Gas Reserves Quantities (Unaudited) The following presents an estimate of the Company's proved oil and gas reserve quantities. Oil reserves are stated in barrels and natural gas reserves in thousand cubic feet ("Mcf"). All of the Company's reserves are located within the United States.
Oil Natural Gas PROVED DEVELOPED AND UNDEVELOPED RESERVES: (Barrels) (Mcf) --------------- --------------- January 1, 1993 765,297 7,790,537 Revisions of previous estimates (78,008) 1,281,240 Purchases of minerals in place 107,164 2,775,978 Sales of minerals in place (3,623) (413) Production (157,440) (1,285,512) --------------- --------------- December 31, 1993 633,390 10,561,830 Revisions of previous estimates 167,620 (672,816) Purchases of minerals in place 490,774 4,022,385 Sales of minerals in place (8,130) (29,767) Production (194,467) (1,435,593) --------------- --------------- December 31, 1994 1,089,187 12,446,039 Revisions of previous estimates (6,586) 711,925 Purchases of minerals in place 31,887 727,929 Sales of minerals in place (6,841) (643,277) Production (200,778) (1,671,517) --------------- --------------- December 31, 1995 906,869 11,571,099 =============== =============== Minority Interest in Developed and Undeveloped Reserves 84,895 2,373,524 =============== =============== PROVED DEVELOPED RESERVES: December 31, 1993 630,987 10,393,884 =============== =============== December 31, 1994 995,637 12,290,064 =============== =============== December 31, 1995 808,829 11,407,758 =============== =============== Minority Interest in Proved Developed Reserves 84,895 2,373,524 =============== ================
II-23 ENEX RESOURCES CORPORATION SUPPLEMENTARY OIL AND GAS INFORMATION - ----------------------------------------------------------------------------- Costs Incurred The following costs were incurred in connection with the Company's oil and gas activities for the years ended December 31:
1995 1994 1993 ---------- ------------ ------------ Acquisition of proved mineral interests and related equipment and facilities $ 411,545 $ 2,415,803 $2,000,625 Development costs 1,516,380 551,488 354,313
Capitalized Costs The following presents the Company's capitalized costs at December 31, relating to its oil and gas activities: 1995 1994 ------------ ------------ Proved mineral interests and related equipment and facilities $ 18,863,187 $ 19,927,751 Accumulated depreciation, depletion and amortization 6,967,242 7,652,829 II-24 Standardized Measure of Discounted Future Net Cash Flows and Changes Therein Relating to Proved Oil and Gas Reserves at December 31, 1995, 1994 and 1993 (Unaudited) - --------------------------------------------------------------- The following presents the Company's standardized measure of discounted future net cash flows as of December 31:
1995 1994 1993 --------------- --------------- ---------------- Future cash inflows $ 39,963,675 $ 38,142,479 $ 31,790,790 Future production and development costs (15,363,195) (15,330,091) (11,854,142) --------------- --------------- ---------------- Future net cash flows before income taxes 24,600,480 22,812,388 19,936,648 10% annual discount (9,421,006) (8,606,239) (7,991,008) Future income taxes, net of 10% annual discount - (758,358) (1,227,681) --------------- --------------- ---------------- Standardized measure of future discounted net cash flows of proved oil and gas reserves $ 15,179,474 $ 13,447,791 $ 10,717,959 =============== =============== ================ Minority interest in standardized measure of future discounted net cash flows of proved oil and gas reserves $ 2,783,461 $ 3,013,127 $ - =============== =============== ================
The future net cash flows were computed using year-end prices and costs and year-end statutory tax rates that relate to proved oil and gas reserves in which the Company has an interest. The following presents the principal sources of change in the standardized measure of discounted future net cash flows during 1995, 1994 and 1993:
1995 1994 1993 ------------- -------------- -------------- Sales and transfers of oil and gas produced, net of production costs $ (3,234,141) $ (3,318,362) $ (3,261,829) Net changes in prices and production costs 2,316,665 (1,740,278) 265,663 Purchases of minerals in place 815,480 5,552,744 2,590,014 Sales of minerals in place (580,008) (97,533) (12,196) Revisions of previous quantity estimates 582,703 236,046 704,128 Accretion of discount 1,420,615 1,194,564 1,044,400 Net change in income taxes 758,358 469,323 (63,470) Changes in production rates (timing) and other (347,989) 433,328 171,462 ------------- -------------- -------------- Change in standardized measure of discounted future net cash flows $ 1,731,683 $ 2,729,832 $ 1,438,172 ============= ============== ==============
II-25 In addition to the above presented oil and gas reserves, the Company also has interests in certain gas processing plants and gas gathering systems. The total estimated future production of plant products is 293,892 barrels. The discounted future net cash flows (net of estimated future income taxes) relating to the Company's interests in these facilities are estimated to be approximately $795,818 . The minority interest in this future production is 137,456 barrels and $372,212 of the discounted future net cash flows. This valuation procedure does not purport to represent the fair market value of the Company's oil and gas properties. An estimate of fair market value would also take into account, among other factors, anticipated changes in future prices of oil and gas and related development and production costs and the likelihood of future recoveries of oil and gas quantities different from the current estimate of proved reserves. ------------------------------------------------------------ II-26 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure Not applicable II-27 Part III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act ------------------------------------------------------------------ Information related to this Item has been omitted pursuant to General Instruction E(3). Such information is incorporated herein by reference to the Proxy Statement for the 1996 Annual Meeting of Shareholders, which is intended to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report. Item 10. Executive Compensation Information related to this Item has been omitted pursuant to General Instruction E(3). Such information is incorporated herein by reference to the Proxy Statement for the 1996 Annual Meeting of Shareholders, which is intended to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report. Item 11. Security Ownership of Certain Beneficial Owners and Management Information related to this Item has been omitted pursuant to General Instruction E(3). Such information is incorporated herein by reference to the Proxy Statement for the 1996 Annual Meeting of Shareholders, which is intended to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report. Item 12. Certain Relationships and Related Transactions See Note 1 to the Consolidated Financial Statements for information regarding the Company's stock repurchase from EDP. Not Applicable Item 13. Exhibits and Reports on Form 8-K Sequential Page No. -------------- (a) Exhibits (3) (a) Certificate of Incorporation of the Company as currently in effect. Incorporated by reference to the Registrant's Current Report on Form 8-K dated June 30, 1992 where the same appeared as Exhibit 2. (b) By-Laws of the Company as currently in effect. Incorporated by reference to the Registrant's Current Report on Form 8-K, dated June 30, 1992, where the same appeared as Exhibit 3. III-1 (4) (a) Articles Four, Six, Seven, Fourteen, Fifteen, Seventeen and Twenty of the Company's Certificate of Incorporation and Article II of the Company's By-Laws. See Exhibits 3(a) and 3(b). (b) Form of Rights Agreement dated as of September 4, 1990 between the Company's predecessor-in-interest, Enex Resources Corporation, a Colorado corporation (the "Predecessor")and American Securities Transfer, Incorporated, as Rights Agent, which includes as exhibits thereto the Form of Rights Certificate and the Summary of Rights to Purchase Common Stock. Incorporated by reference to the Predecessor's Current Report on Form 8-K, dated as of September 4, 1990, where the same appeared as Exhibit 4. (9) Not Applicable (10) (a) Employment Agreement between the Company and Gerald B. Eckley, as amended May 19, 1992. Incorporated by reference to the Predecessor's Current Report on Form 8-K dated May 19, 1992, where the same appeared as Exhibit 2. (b) Enex Employees Stock Purchase Program. Incorporated by reference to the Registration Statement on Form S-8 in Registration Statement No. 33-48644 filed with the Securities and Exchange Commission on March 22, 1993, where the same appeared as Exhibit 4. (c) 1991 Non-qualified Stock Option Award Program. Incorporated by reference to the Registration Statement on Form S-8 in Registration Statement No. 33-60086 filed with the Securities and Exchange Commission on March 22, 1993, where the same appeared as Exhibit 4. (d) 1990 Non-qualified Stock Option Plan. Incorporated by reference to the Registration Statement on Form S-8 in Registration Statement No. 33-60084 filed with the Securities and Exchange Commission on March 22, 1993, where the same appeared as Exhibit 4. (e) 1984 Incentive Stock Option Plan and 1979 Employees Non-qualified Stock Option Plan. Incorporated by reference to the Registration Statement on Form S-8 in Registration Statement No. 2-93688 filed with the Securities and Exchange Commission on July 1, 1992, where the same appeared as Exhibits 4(a) and 4(b). (11) Not Applicable (13) Not Applicable (18) Not Applicable (19) Not Applicable III-2 (22) Subsidiaries of Registrant. Incorporated by reference to Annual Report Form 10-K filed with the Securities and Exchange Commission on March 16, 1992. (23) Not Applicable (24) Not Applicable (25) Not Applicable (28) Not Applicable (29) Not Applicable (b) Reports on Form 8-K No current report on Form 8-K was filed by the Company during the last quarter of the period covered by this report. III-3
EXHIBIT 11 Enex Resources Corporation Statement re: Computation of Per Share Earnings For the year ended December 31, 1995 Primary Fully-diluted Earnings per Earnings per Share Share ------------------------------- Net Income $1,269,400 $1,269,400 ------------------------------- Divided By: Weighted average shares 1,323,204 1,323,204 Plus: Common Stock Equivalents 93,270 93,270 ------------------------------- (for stock options - treasury stock method) Adjusted weighted average shares 1,416,474 1,416,474 ------------------------------- Earnings per Share $0.90 $0.90 ===============================
EXHIBIT 11 Enex Resources Corporation Statement re: Computation of Per Share Earnings For the year ended December 31, 1994 Primary Fully-diluted Earnings per Earnings per Share Share ------------------------------- Net Income $1,051,476 $1,051,476 ------------------------------- Divided By: Weighted average shares 1,284,409 1,284,409 Plus: Common Stock Equivalents 113,461 113,461 ------------------------------- (for stock options - treasury stock method) Adjusted weighted average shares 1,397,870 1,397,870 ------------------------------- Earnings per Share $0.75 $0.75 ===============================
EXHIBIT 11 Enex Resources Corporation Statement re: Computation of Per Share Earnings For the year ended December 31, 1993 Primary Fully-diluted Earnings per Earnings per Share Share -------------------------------- Net Income $931,874 $931,874 -------------------------------- Divided By: Weighted average shares 1,243,277 1,243,277 Plus: Common Stock Equivalents 103,234 107,681 -------------------------------- (for stock options - treasury stock method) Adjusted weighted average shares 1,346,511 1,350,958 -------------------------------- Earnings per Share $0.69 $0.69 ================================
EXHIBIT 24 Consent of Independent Auditors Enex Resources Corporation: We consent to the incorporation by reference of our report dated March 18, 1996, appearing in this Annual Report on Form 10-KSB of Enex Resources Corporation for the year ended December 31, 1995 in the Enex Employee Stock Purchase Plan filed in Registration Statement No. 33-48644 on Form S-8 on March 22, 1993; in the 1984 Incentive Stock Option Plan and 1979 Employees Non-qualified Stock Option Plan filed in Registration Statement No. 2-93688 on Form S-8 on July 1, 1992; in the 1990 Non-Qualified Stock Option Plan filed in Registration Statement No. 33-60084 on Form S-8 on March 22, 1993 and the 1991 Non- Qualified Stock Option Award Program filed in Registration Statement No. 33-60086 on Form S-8 on March 22, 1993. DELOITTE & TOUCHE, LLP Houston, Texas February 24, 1997 SIGNATURES In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ENEX RESOURCES CORPORATION February 21, 1997 By: /s/ G. B. Eckley --------------------------- G. B. Eckley, President In accordance with the Exchange Act, this report has been signed below on February 21, 1997, by the following persons in the capacities indicated. ENEX RESOURCES CORPORATION By: /s/ G. B. Eckley President, Chief Executive Officer and Director ---------------------- G. B. Eckley /s/ R. E. Densford Vice President, Secretary, Treasurer, Chief Financial Officer and Director ---------------------- R. E. Densford /s/ James A. Klein Controller and Chief Accounting Officer ---------------------- James A. Klein S-1 /s/ Robert D. Carl, III --------------------------------- Robert D. Carl, III Director /s/ Martin J. Freedman --------------------------------- Martin J. Freedman Director /s/ William C. Hooper, Jr. --------------------------------- William C. Hooper, Jr. Director /s/ Tom Shorney --------------------------------- Tom Shorney Director /s/ Stuart Strasner --------------------------------- Stuart Strasner Director S-2 EX-27 2 FDS -- (RESTATED)
5 (Replace this text with the legend) 0000314864 Enex Resources Corporation year dec-31-1995 jan-01-1995 dec-31-1995 1007144 0 2993642 0 0 4000786 19204694 7250769 18827088 1703944 0 0 0 82143 15380069 18827088 7281839 7950373 3193961 6964398 3599599 0 170838 869742 (399658) 0 0 0 0 1269400 0.90 0.90
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